Are you a Foodservice Efficiency Expert?

Remember the hay days of the stock market growth, when anyone could become a day trader and reap big pay-offs by simply turning on their computers?  It seems as if we all had it figured out so long as we did not pick the wrong stock. We know how that phenomenon ended.

Well, the foodservice industry may be encountering a similar phenomenon: the advent of efficiency experts. With customer dollars harder to come by these days and the cost of doing business still increasing, many foodservice operators continue to look for ways to drive efficiency into their business. So, by default, many foodservice professionals, including those from manufacturers, dealers and consultants, have become efficiency experts as we try to help our customers achieve their goals.

As efficiency experts, both on-staff and as a vendor partner, we are being asked to identify and find ways to eliminate excess and waste across all levels in the organization to help foodservice operators become more profitable.  After all, these tough times call for such a need.

With your role as an efficiency expert continuing to emerge, I would like to offer two warnings for you to heed.

First Warning: Make sure that the truly focuses on driving efficiency and is not just a cost-cutting initiative.  

The prior, if done right, can drive long-term growth and improvement, the latter, could spell doom by cutting into an organization at its leanest points, and possibly into areas that are critical to the concept’s success, especially those that impact the users of the foodservice concept.

Maybe the best way to look at this is to consider the true theoretical definition of the word efficiency, in the form of a mathematical equation: 

Efficiency Gain = (Change in Customer Benefit or Impact) / (Change in Operating or Capital Cost)

Foodservice operations gain efficiency when they make better use of their resources. In other words, a foodservice operation realizes a gain in efficiency when the business is able to achieve equal or greater output through equal or less input.  For foodservice operations, the input can come in the form of product ingredients, facility investment, labor deployment, equipment and décor, to name but a few.  It is easy to think that lowering the cost of any of these expense items could easily translate into a gain in efficiency.  But are these really gains in efficiency or are they simply cost reductions?

Without considering how these changes will impact the other side of the equation, in this case the customers’ experience with a foodservice operation, it is difficult to accurately gage whether the operation has simply cut costs or truly become more efficient.

Second Warning: Be careful with incremental changes that happen from year to year.

A large quick service hamburger concept began to tinker with its flagship product.  First the chain made changes to the meat.  Then management tinkered with the bun. Changes to the condiments, like using light mayonnaise, came next. Finally, the restaurant chain altered the process of assembling its flagship product. As the restaurant chain implemented each of these changes over the course of several years, consumers did not voice much concern. But consumers did notice that the product tasted different and they used their wallets to voice their displeasure, as was evident by the fact that during this period of time, which spanned several years, the product sales gradually declined.

At the behest of the chain’s president, one of the concept’s founders compared the existing product to the original one he helped develop. When placing the original product design next to what was the current iteration, he came to the realization that the two menu items were dramatically different.  For the sake of cost cutting, the product had been re-engineered to drive higher profit levels. The sum of these changes also resulted in a change in taste, which customers eventually did notice. The lesson learned from this exercise is to benchmark the impact multiple changes will have on a product and to use caution when making incremental changes.

Just like in the prior product example, changes to a product component, décor, equipment, labor deployment and facility may not be visible if done a bit at a time, but when you put them all together during a time period, they can have an impact.  To reduce the likelihood of the latter happening, I would suggest keeping in the radar screen the impact to the customer, as the changes are being made, as well as the right benchmark to compare to.  The objective would be to make sure the change in customer benefit is higher than the cost savings, particularly over the long term.  Often a short term improvement can influence a brand to make a change that is not sustainable.

Labor is a big area that concepts are trying to better manage in order to reduce their operating costs. While saving money is a valid reason to implement a labor management system, it should not be done at the expense of having the right labor in the right place at the right time. In other words, don’t discount the impact such changes will have on the customer experience. 

So are you an efficiency expert?  Like the day traders from a decade or so ago, we all can be.  Make sure that if you are going to be an efficiency expert  that you understand the impact of the customer hospitality and service when considering profit improvement efforts, since the true definition of efficiency is output divided by input.    Companies must optimize efficiency, especially in the current environment, but they must do it by making sure they balance the profit increasing needs of the shareholders, with the customer hospitality and overall service needs.  Balancing these 2 as changes are made is critical, to be able to ensure the change is geared to drive long-term gains.