The Economics of Tipping

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A reminder for all of us.

I still occasionally get the guest who will say, “I can buy this wine for half this price at the store.”  Which is true, but it doesn’t come with a staff to serve it and a crew of chefs ready to cook you an incredible meal from a fully stocked kitchen.  I wonder if the same people have ever priced grapes at the grocery store.  If they want to get really serious about cutting out the mark up, that would be an even cheaper place to start.  Better yet, if they buy seeded grapes they could plant the seeds and never have to pay for a bottle of wine again.

Most of you understand the absurdity of this logic.  Those who do not understand have already stopped reading to go buy grapes.  At each step along the process of making the bottle of wine the cost of goods and service, along with a healthy profit margin, are passed along to the next stage.  From grape to cellar, farmers, vintners, bottlers, distributors, and restaurants all add to the price of the bottle in advance.  There is one exception to this rule.  The person who opens the bottle and pours it actually makes that wine less expensive.  At the most basic level, the person who serves the wine pays for part of the bottle for you.

Read the full post at Tips For Improving Your Tips

Independent vs Corporate Restaurant Priorities

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Where menu prices are really determined

This morning I read an article regarding the rising costs of food and how restaurants will respond.  In the article former server Charles Ferruzza finds a pair of local restaurant owners who say they will refuse to raise prices to compensate for the increase in costs.  The owners discuss absorbing the costs themselves or reducing portion sizes to keep prices constant.  While I am certain no owner was eager to have an article written about their pending price hike, there is another side to this story.  The difference in priorities between an independent owner and corporate shareholders is something that explains a great deal about the restaurant industry.

Independent restaurant owners directly profit from the money spent at their restaurants.  They have the autonomy to determine what is best for their restaurants long term.  Maintaining profitability in the long term is more important than immediate profits.  They determine how much of the profit they take as income and how much is reinvested into the restaurant.  If they are convinced that foregoing short term profits is better for the long term profitability of the restaurant, they can proceed in that manner.  This in reality is the owner offering to subsidize the guest’s meal to keep them returning.   For the individual owner of a profitable restaurant, this short term hit can be seen as a long term investment in the restaurant.

Read the full post at The Manager’s Office

Hot Schedules Reviewed: Part One

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The future of scheduling?

A few months ago the restaurant I work at (and who my opinions in no way represent) began using the Hot Schedules program for scheduling.  For those of you not familiar with this system, it is a web based system for scheduling employees.  It is experiencing incredibly rapid growth and is becoming more commonplace within the restaurant industry.  I have waited to become acclimated with the system before writing about it.  These are my thoughts as a user of this system.

There were difficulties in launching the program.  It took a few weeks to work out all the bugs from the time the system was adopted.  One of the primary difficulties was employees without access to the internet.  I work at a restaurant where the servers make well above the national average.  Some servers whether by choice or financial difficulties do not have a computer at home.  Many cooks and bussers also had the same difficulties.  Some companies accommodate for this problem by having the system set up to allow their staff to access this system through their POS terminals.  Mine does not.  This should be taken as a disclaimer.  Choosing to allow that access would remedy a great number of the issues I will address in this review.

Read the full post at The Manager’s Office

When visiting the Hot Schedules website they offer four significant advantages to their system: communication, time savings, reduced turnover, and labor cost controls.  I will address the program using the same criteria to give both advantages and disadvantages.

Communication: Any hot schedules user can send messages to any other user or to all users.  A message can also be sent to any subgroup (servers, hosts, etc) within the system.  Each message sent requires checking a disclaimer box stating you will be responsible for messages sent through the system.  This allows for managers to communicate with employees about promotions or a server to send a mass message to other servers to get shifts covered.  These messages are copied to the recipient’s email and sent via text message if the recipient chooses.

In other words it is just like facebook, twitter, or email.  Some people have none of those and if the temptation to see the pictures from last Saturday night on facebook or forwarded emails from their Aunt weren’t enough to get them online, this won’t be either.  For those people who are routinely online it is just one more account to have to check on a regular basis.  Sending a mass email would have a greater likelihood of being read quickly and can be done for free.

Communication is also a two edged sword. All users, including management, must use diplomacy and judgment.  Nothing says “welcome home” like returning from vacation to find hostile messages waiting for you chastising you for poor customer feedback during your absence.  The text message feature is a bonus, but this means that a shift change will result in three text messages (confirming you released it, confirming someone else picked it up, and confirming it has been approved).  I am not aware of any co-workers who still have the text message feature active after the onslaught of texts lead to our phones blowing up like 12 year old girls at a sleepover.

Time Savings: On their website, the company claims that managers typically report a 75% reduction in the time it takes to write a schedule.  Having written more than a few schedules myself over the years I can attest to the time it can consume.  Having all of the requests off and availabilities in one place would be very convenient.  The system allows servers to make these requests and update them up until the schedule is posted.  It also takes the place of managers having to approve shift changes by hand.

The managers who report a 75% time reduction must have had a horrendous system in place before.  The system is user friendly, but it does not do all of the work for you.  The time spent inputting and working out scheduling conflicts is still there.  It simply brings all of the information to one place.  When I wrote schedules I typically would do so from a table on the floor.  This allowed me to be accessible to my staff and keep an eye on what was happening.  This option is not available when doing the schedule online where all of the information is now kept.

The time savings is also completely wiped out by the time spent after the schedule is written.  Shift changes that once required an initial in the “blue book” now require the employee giving up the shift to go home and change it online.  The employee who wants the shift must wait for this to occur to pick up the shift online.  Then both employees must wait for a manager to update the system from the office.  Again this would be greatly remedied by having the system live through the POS system.  The result is a manager fielding a phone call from either employee asking them to approve it.  They then have to go to the office, login (the automatic logout time is very short) and approve the shift.  All of these are additional steps the place the manager in the office instead of on the floor.

This isn’t even the most time consuming aspect of the system.  If a manager decides to move you to a different station with an earlier in time or call you in early for a special party, things get really interesting.  The POS system prevents you from clocking in before the time it is told from Hot Schedules at the beginning of the day.  This is the mechanism by which they are able to achieve labor savings. This means that the manager must manually clock you in.  This is a minor inconvenience when done once.  When done multiple times per shift several times per week it can drive a manager to drink.

Tomorrow in part two I will address the main selling points of Hot Schedules.  The issues I discussed today would be easily overlooked to gain the cost savings they promote on their website.  Do these claims really pan out?  Are there more unforeseen problems ahead?  Check out part two to find out.  In the meantime I need to go log into Hot Schedules to see if my shift change had been approved yet.

Cost vs Profit

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In a previous post about why restaurants charge for different extras, I discussed the difference between the guest’s perception of profits and reality.  It is not uncommon to hear a guest say, “I can buy this for half as much at the grocery store.”  The problem is that food in a restaurant carries far more costs than the price of the food on a plate.  I thought of a number of different ways to address this.  The easiest way to explain a complex topic is in relatable terms.  For this reason I have decided to look at the topic by addressing the most common item on restaurant menus: The Cheeseburger.

A friend in the business was able to supply me with the actual numbers from a Midwestern restaurant that is part of a far larger national chain.  These are the actual costs broken down to their individual components on a hamburger.  I won’t name the chain for obvious reasons, but it is fair to say that their volume allows them to buy these items for less than their independent counterparts.  Here is how the actual cost of a half-pound cheeseburger and fries break down.

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