By Robert A. Jacobson
For nearly 40 years, a mid-western United States restaurant chain with more than 50 locations was run as a highly successful business in the family-style management of its founder. But when executives of the successor generation almost doubled the organization’s size by acquiring 40 more stores, company profits declined.
The acquired stores were in much worse shape than expected and, most important, the management that came along with the acquisition had been accustomed to a corporate organization, very different from family business practices.
At this point a productivity firm was called in. The firm with a record of implementing change in organizations, generates cost savings and profit improvements for its clients, particularly through behavioral change, motivation and process improvement. If there seems to be an opportunity for significant improvements within a company, the firm sends a team of analysts and productivity engineers into the organization at its own cost.
Analyzing productivity conditions generally takes about three weeks. If the analysis confirms the opportunity, the firm offers a productivity team to install new systems and bring about the proposed cost savings and profit improvements. The firm guarantees its work, so there is no risk to the client.
Since the restaurant organization was barely breaking even, top management knew something had to be done. With the firm’s help, they focused on the enhancing employee productivity, providing more training, restructuring area manager roles and emphasizing increased sales of their most profitable food and beverage items.
Numerous products are available for purchase in a fast-food restaurant and most have a limited shelf life, often less than 24 hours. Daily operations are very predictable and, with effective management, can be very profitable.
The productivity firm’s initial focus was on forecasting expected business for the coming week, the key determinant of how many supplies to acquire and how much staff to schedule. Previously, forecasts for the coming week were based on the previous week’s results — no account had been taken of special events, holidays, seasonal variations and the like. The new forecasting system predicted upcoming business based on levels during that same season on the previous year.
The firm installed a “volume tally” system to measure traffic and service flow on an hour by hour basis. “Food Preparation” and “Waste” charts were prepared to track planned and actual usage. Data gathered resulted in major efficiencies in each restaurant. A “Ready for Revenue Activity Checklist” was installed at each restaurant to make sure everything was prepared for the high-volume lunch and dinner customer flow.
Additional focus came from installation of the Daily/Weekly Operating Report (DWOR) which measures such things as guest check averages, customer complaints, labor yield, ingredient yield, energy consumption, and cash discrepancies. This report had the immediate effect of creating greater awareness among the entire staff of goals and performance.
To compare savings, four main baselines were measured: ingredients used and saved, hours worked, guest check average and energy usage. With the intense involvement of the productivity firm’s behavioral-change experts, there was a significant increase in “upselling” to generate higher average guest checks; labor yield improved and mangers gradually became more adept at planning, training and delegating.
Profits rapidly improved as the new techniques of management control were adopted. Fortunately, the area managers and supervisors across the chain were involved during the entire change, so they accepted the procedures willingly, realizing the benefits of motivation and measurement. All concerned were pleased to share credit for the increased productivity and the rebuilding of a culture of success.
Robert A. Jacobson is chairman of the board of the Association of Productivity Specialists.