How A Minimum Wage Increase Could Impact Foodservice Design

While economists and politicians continue to debate the impact a minimum wage increase will have on businesses, members of the foodservice industry are better served minding their P's by focusing on processes, procedures, people, products and platforms, writes consultant Juan Martinez.

Will the government increase the minimum wage and if so how will this impact the restaurant industry? This is a big question on the minds of many in the foodservice industry. We all presume the government will increase the minimum wage but it's anybody's guess as to when it might happen. As for the impact it will have on the foodservice industry, well, that's nowhere near as clear. Some economists predict an increase in the minimum wage won't cut jobs in the restaurant industry but will slow hiring, particularly among fast food chains where low costs are keys to survival.

While we can't control the government's actions we can focus on ways that minimize the impact a mandatory wage hike will have on profitability by letting individual members of the foodservice industry work their magic by developing new and innovative ways to drive efficiencies.

In fact, the pending minimum wage increase represents but one concern the restaurant industry needs to address. Challenges such as food costs, real estate costs along with other forces are forcing brands to create more compact and inexpensive concepts.

So what is the solution to help mitigate rising costs?

It is simple: Mind your P's, your operating and investment parameters!

  • Process and procedures to deliver the menu
  • Place design
  • People (labor) deployment
  • Products and promotions
  • Equipment and technology platforms

The processes and procedures developed can make a big difference. The simpler it is to make a product and deliver menu innovation, the less labor it will take. The customer, in turn, receives better service and a higher quality product, since the simpler process facilitates more consistent execution. The application of several industrial engineering techniques such as time and motion and work sampling can provide great insights to optimize these, in order to deliver efficient menu innovation.

Optimum place design is key. A smaller, more compact and more efficient back and front of house design will result in the same impact, as outlined above. Don't design small for the sake of making it smaller, rather focus on designing space efficiency and the end result will come out in the right fashion. By the way, a smaller back of the house reduces the amount of energy a foodservice operation needs to function, further affecting profitability.

Using the right people (labor) deployment techniques and tools is the best way to optimize this very expensive resource. Work content-activity based labor systems, with controls in the software that provides on-going information to the operators on how the labor is being used is a must.

New platforms, whether equipment or technology, can help keep operating costs down while driving better customer service and product quality. Sometimes the platforms may cost more on the front end but if they provide a payback it is money well spent. Let's not forget in this conversation different ordering methods like kiosks, online and smart phone and even electronic payment systems, but also different ordering modes, like catering.

So you can get preoccupied with the minimum wage increase discussion and hope for the best in an area that often seems to be out of the control of the typical person, or you can take action to drive efficiencies in all the operating and investment parameters (The P's), so the eventual minimum wage increase impacts your brand less.

The choice is yours! 

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