Efficiency is one of the great buzz words being tossed around in the foodservice industry today. Just about every foodservice company is struggling to determine what it means for their business to be more efficient in light of the challenging business environment.
So in an attempt to get my mind around what the term efficiency really means, I did what most anyone else would do in this day and age: I consulted Google for a definition. And what I got back was a not-so-efficient universe of 123 million results. Luckily, Merriam Webster provided the definition at the top of the list.
Webster defines efficiency as an effective operation as measured by a comparison of production with cost. It’s a pretty simple definition, really. Yet the idea of being efficient seems to be sweeping the industry. That’s because in a business climate that is not conducive to growth, foodservice companies continue to pursue efficiency to stabilize their profitability and allow their businesses to bide some time until the conditions improve. Before the focus shifts back on top-line growth, many companies are spending time improving the internal workings of their businesses and refining their supplier relationships.
On the one hand, this seems like a pretty reasonable approach. After all, consumer confidence remains shaky, unemployment remains an issue and the credit market remains stalled, preventing many foodservice operators from expanding or renovating their businesses. Not a day goes by that I don’t learn of some new effort to purchase equipment and supplies more efficiently or to consume energy and other natural resources more efficiently.
On the other hand, I am left to wonder why it took so long for the concept of efficiency to become such a high priority. Shouldn’t looking for ways to drive efficiency be part of a company’s daily grind? In foodservice, where margins tend to be razor-thin, the idea of driving efficiency seems to take a back seat to generating top-line growth when times are good.
Making a business efficient is not something people can simply check off a to-do list. Rather, it’s a direction that the business leaders must continue to travel even in the best of times. That’s because continuing to drive efficiencies helps make certain that any new growth a company generates is profitable by keeping the operation’s costs in line with production. And, really, isn’t profitable growth the ultimate goal for any business?
The other stumbling block in the pursuit of efficiency is when business leaders mistake it with actual cost cutting. The two concepts are very different. As consultant Juan Martinez points out in his FE&S blog Foodservice by Design, slicing cost in the name of efficiency “could spell doom by cutting into an organization at its leanest points, and possibly into areas that are critical to the concept’s success.”
It is important to understand how proposed changes will affect the actual consumers of a foodservice operation. Changes that benefit the operator may not necessarily have a positive impact on the customers’ experience. Any efficiency a business introduces must not disrupt the balance between the organization and the customer. Probably more so than other industries, this is paramount in foodservice where customers seem to have countless options from which to choose.
From all economic indications, real growth in the foodservice industry will be difficult to come by for the next year or more. So those organizations that want to enhance their position will do so by optimizing their efficiency to ensure profitable growth, no matter the market conditions.