Archive for May, 2015

New Tech Efforts Revolutionizing Restaurant Labor

Monday, May 18th, 2015

Steve Jackson, the CEO of 560-unit pizza chain Hungry Howie’s Pizza, admits he was a latecomer to the technology revolution enveloping the business, especially in the pizza segment. It was still a lot easier to pick up a phone than it was to boot up a computer, after all, he had told himself.

But he got on board six years ago when his Madison Heights, Mich.-based chain added online ordering, and then extended ordering options to its mobile app.

Since then, mobile ordering at Hungry Howie’s has soared by about 30 to 40 percent per year, and the efforts are taking sales along for the ride. So far this year, same-store sales are up more than 10 percent.

“Technology has become a very big part of our business,” Jackson said. “Sometimes I wonder whether we’re in the technology business more than the pizza business.”

Restaurants are in a technological arms race, adding mobile apps, online functionality, social and digital media capabilities and plenty back-of-house applications, all in the name of updating business models.

Many of these efforts are revolutionizing restaurant labor. Tools are enabling owners to improve operations, reduce labor costs and even keep from running afoul of government regulators and litigious customers.

The efforts can free up managers and staff to focus on customers, which is a must in an intensely competitive business.

Driving efficiencies

The move by Chili’s Grill & Bar to overhaul its restaurants’ kitchens in 2011 has enabled the chain to expand its menu, which has helped drive sales. But it has also improved efficiency within the kitchens, helping Chili’s and its franchisees improve profits.

Tabletop tablet technology added by many chains, including Chili’s, Applebee’s and this year across many brands at Darden Restaurants, is in part designed to improve wait staff efficiency. Because customers can order their own drinks, appetizers, desserts and pay their own bills using the tablet, speed of service improves, and wait staff can handle more tables.

The rapid development of mobile applications, meanwhile, is also being done in part to make employees more efficient, enabling customers to choose their meals on their phone or pay with the touch of a button.

“If a store takes 100 orders online and the average phone call takes one and a half
minutes, do the math,” Jackson said of Hungry Howie’s efforts.

He said the company hasn’t reduced the number of workers in stores or the number of hours. But staff is now freed to handle other items. They can also answer the phone calls that do come in, reducing the number of hang-ups when people are placed on hold.

Reducing costs

Technology-centered efforts in the restaurant industry are coming at a time when businesses are increasingly pressured on the labor front — typically the second highest cost center behind food costs. By 2016, for instance, 15 states will have minimum wage rates of at least $9 per hour, and many will have rates of at least $10. Cities like Seattle, Los Angeles, Chicago and New York have pushed, or are pushing, minimum wage pay even higher than that.

General macro-economic labor pressures are also hitting restaurants. The industry hired more than 150,000 people between December and February, according to federal data. That’s the highest three-month rate of hiring in the industry’s recorded history. Such hiring puts pressure on restaurants to increase wages and
benefits to recruit and retain top talent.

And there are social pressures as well, with protests and union efforts aimed at pressuring minimum wage rates at restaurants and retail businesses as high as $15. McDonald’s Corp., one of the top targets of these protests, stepped into the ring by offering to raise pay at corporate stores to $1 an hour above local minimum wage rates. While that’s only about 1,500 locations, it nevertheless could help establish a market price for quick-service employees. Walmart, Target and other retailers are
raising pay, too.

Together, all of this makes efficient labor more important. That makes scheduling software programs increasingly popular in the restaurant business.

HotSchedules, a software based labor management solution for restaurants and retail, can help enable restaurants to manage employees’ hours effectively, ensuring that locations are properly staffed based on historical data for a particular day and time. This helps employees with easier shift trades, so workers who want to trade a shift can do so without asking around for someone to cover for them. It also helps restaurants monitor worker hours so they’re not going over 30 hours a week — it lets the company run afoul of rules classifying such workers as full-time, and thus eligible for health benefits.

The platform can help with overtime, automating whether workers are in danger of overtime and enabling managers to cut hours earlier in the week, so they’re not sent home on a Saturday night.

David Cantu, the company’s chief revenue officer, said the system doesn’t just help drive efficiency and trim costs, but also helps improve sales because employees are focused on the guest, improving experience and customer service.

He said that sales-challenged restaurants could shift staff from the back of the house to the front of the house to focus on service and improve sales.

“This provides visibility not just to managers, but to leadership [as well],” Cantu said. “They can focus on keeping customers happy.”

While technology adoption is important because customers expect it, workers want it, too.
“It’s just a sign of things to come,” Cantu said. He noted that the HotSchedules app is downloaded between 25,000 to 30,000 times a month, and that 72 percent of system log-ins come through that app.

Not everything is about high-tech labor efficiency. St. Louis-based salad and pizza concept Crushed Red Urban Bake & Chop Shop is using technology to enforce hand washing.

The chain’s founder, Chris LaRocca, installed voice recognition technology machines just above soap dispensers in the company’s restrooms, which identify each worker and ensures that they wash their hands before returning to work. Workers are required to wash their hands at the beginning of each shift and then every hour during their shift. The system monitors that rule.

LaRocca and managers get reports on hand washing and workers are informed when they don’t meet the requirements. For those that consistently miss company goals, it can be the difference between getting a raise and not getting a raise.

“It’s all relative,” he said. “A lawsuit is a lot of money. What would you rather have? I know of a number of restaurateurs [who are] crippled because of poor hand washing habits and their restaurants have closed. I don’t want to be that guy.”

He said it isn’t hard once employees get used to the culture, and after a while, employees compete to see who can wash their hands over 100 percent of the required number.

“We’re instilling habits in employees,” LaRocca said. “Whether they stay here or go somewhere else.”

Some of the restaurant industry’s technology adoption combines old-style technology with new capabilities to provide restaurants with more possibilities. Total Connect Now is a cloud-based phone system from Portsmouth, N.H.-based Unified Office that uses voice over Internet protocol, or VOIP, technology to enable restaurants and chains to develop virtual call centers.

The phone lines are used with software, viewed on a large screen, to help workers monitor the calls. They know how many calls are coming in, how long they take and how long before customers will hang up. It can even provide specific lines for Spanish-speaking customers. The system is particularly helpful for quick-service chains and pizza concepts that get a lot of call-in orders, said Raymond Pasquale, the founder and CEO of Unified Office.

“It allows more owners to capture more revenue,” Pasquale said.

Like phones, videos have been around for some time, but technology changes are enabling restaurants to do more.

Colorado-based Envysion, which provides surveillance tools, was founded by former executives from MCI and Level 3 Communications — “hard-core Internet guys,” CEO and cofounder Matt Steinfort says. They decided the video surveillance industry was ripe for
Internet disruption.

They developed a system and quickly got a customer in Chipotle Mexican Grill Inc. in 2007. Soon after Chipotle adopted the system, the chain realized the potential benefits in employee training, Steinfort said.

“It started with a loss prevention focus, if we had access to video and integrated it with the POS system and with cash management,” he said. “But what they discovered is all the other applications.”

Video has improved image quality that now can show more detail. The Envysion system connects video that is available through a web interface with the restaurant’s point-of-sale and kitchen management systems, and any other available data.

That enables managers to see what’s going on in the restaurant at all times while also comparing it with data they have available to monitor operations and sales. Restaurants can analyze the data and the video to train workers, improve speed of service and see what works, and what doesn’t.

“We create data and insights from video. Things like speed of service, whether customers are waiting [or] abandoned the line,” Steinfort said. “They see demographics [or] whether a cashier is following the best practices … we augment an operator’s ability to understand store-level performance by adding a layer of video context.”

D-Carr Investments, a 10-unit KFC franchisee in Florida, turned to the company’s system two years ago as supervisors were looking for ways to combat employee theft.

They, too, figured out quickly what kind of benefits a video system could have.

“You don’t want people to steal from you,” said Bernie Quintero, director of operations for D-Carr. “But here’s the thing: We went past the point of doing that. It’s a great training process for our stores. We use it for training and developing behavior.

“We’ve done everything from training cooks and supporting cooks in the kitchen to working with cashiers and managers when they’re working with customers,” he said.
Managers and leadership can check videos from their own tablets or smartphones at any time. Quintero will often look in on restaurants on Saturday nights when he’s not doing anything else.

With the efforts, D-Carr’s profits improved by $300,000 its first year with the system. Within a month of installing the cameras, the company held a suggestive selling contest encouraging servers to up-sell customers on the company’s mini cakes. In a typical month the company might sell 100 to 200 cakes. That month the stores sold 1,700.

“We’re watching video and calling the stores we’re watching and telling them they’re doing a great job, you win this week,” Quintero said. “That is a ridiculous amount of cakes. It worked out pretty well.”

Finally, enhanced video capabilities can save on every restaurant’s nightmare: Lawsuits. Shortly after installing the system, Quintero said that a manager called him to report a slip-and-fall claim. A mother had complained that her son fell and hit his head on a slippery floor.

Quintero pulled the video on his phone, and saw that the incident was a setup. “We got a letter from their attorney,” he said. “We sent out the video, and that was the end of it.