Great Service in an Era of Labour Costs and Technology

Customer Service at Mcdonalds
(Image via Bustle)

Great Service in an Era of Labour Costs & Technology

Will Guidara, one of the owners of Eleven Madison Avenue in New York, has been quoted as saying that it’s “compassion and passion [that] gives a fantastic dining experience.”

As every successful restaurateur will tell you, passion is the reason that they started their venture in the first place. It’s what continues to drive their activities. But passion alone can only take you so far.

Jay Rayner, the UK food critic, has recently written that he, “does not regard the table primarily as a place of nutrition. That’s just something which, happily, comes with the territory. It’s a place of joy.”

Furthermore, “the point of nice restaurants [is that] they’re meant to be places that keep all [your] terrible problems at bay. They’re meant to offer something consistent and reliable.”

Service – which we see as the compassion part of the equation – is vital to create this haven of joy. However, this is a rather labour intensive (and therefore costly) activity. So how can a F&B business keep costs down and still offer the hospitality and compassion necessary to support the passion of the operation and still stay in business, much less make a profit?

At one end of the scale there are restaurants such as Quay and Attica. Their prices are high, but they deliver outstanding service with a premium food offer that ultimately delivers value for money for their clientele. Their aim is to provide a dining experience that is second to none with, to borrow the tagline from the Ritz Carlton chain, “Ladies and Gentlemen serving Ladies and Gentlemen.” The entirety of the holistic phenomenon of these institutions is predicated on a High Touch philosophy.

Attica Restaurant
(Image via Institute of Managers and Leaders)

At the other end of the scale is McDonald’s which has revamped its ordering process to be much more reliant on technology and contact-less interactions. McDonald’s has moved towards a modified High Tech environment.

What is common to both is a commitment to customer service. Macca’s knows that, in general, the customer doesn’t need or want a high-touch experience. Macca’s is also smart enough to have that one-to-one interaction, if and when required.

Quay Restaurant in Sydney offering outstanding service with a premium food offer.
(Image via Open Table)

This flexibility is the key. It is about understanding where and when to put humans into the equation and when to take them out.

Let’s look at an example to understand where the pressure points are. For a venue that turns over $800,000 per year, labour costs, based on averages from ATO data, work out to about $750/day. Given an average award rate of $25/hour means that there is room to have 30 person hours of labour (e.g. 4 people working 7.5 hours/day; 6 people working 5 hours/day). Because $750 does not really buy a lot of time, many operators have used a number of tactics to make their labour dollar stretch:

• Underpaying/over-working staff – an illegal strategy that is wrong in every way imaginable.

• Hiring people aged 20 and younger – a legal strategy, but one that generally suffers from inexperienced/inefficient staff potentially providing mediocre service.

• Reducing opening hours – while this reduces variable costs, it spreads fixed costs (rent, security, website, etc.) over shorter hours potentially decreasing profitability.

• Adding in a Sunday and Public Holiday loading – an upfront method of covering costs, but can deter some customers from coming in.

• Cutting back on the menu – e.g. poached eggs only, no fried items.

• Stocking mostly pre-made items in a refrigerated display cabinet – allows for less skilled workers to prepare food but at the cost of serving fresh food for your customers.

With the exception of the illegal, all of these are methods to cope with labour costs. However, they all sacrifice a level of customer service which may, in turn, erode the foundations for a sustainable business.

The vast majority of F&B outlets can’t, and don’t want to, offer Quay/Attica service. Therefore, the substitution of technology for services or portions of a service currently provided by humans, where appropriate, is necessary and suitable in modern F&B environments. We want to stress here that our ideas do not involve letting any existing staff go. The idea of introducing technology is about using current staff wisely so that levels of customer service go up. For front of house operations, it’s about letting technology do the things that your customers value less and offering the human touch for those aspects that are more highly valued.

Apps that enable table reservation on the go (Image via Quora)

The most obvious use of technology substituting for human interaction is with bookings. The vast majority of reservations are now made through online booking services with no subsequent loss of customer service. This is true for other forms of technology taking over human activity.

Research by Cornell University in the US has found that the implementation of table top technology through which customers can both order and pay, increases both customer satisfaction and table turn. Customers value the time saving from being able to order and pay when they want and having their High Touch interactions when orders are delivered or problems resolved.

iPad Kiosk at Philadelphia Airport
(Image via Travel Weekly)

Table top technology, or now app-based processes, allow customers to receive better and more complete information. It also allows customers to order more extras than normally would be the case. At McDonald’s, while the phrase, “Do you want fries with that?” has largely disappeared, the upsell possibilities from the digital menu has more than compensated for its loss.

A menu supported by Mr Yum allows your customer to view your menu online, refine their menu search and look up menu item definitions within seconds.

(Image via Broadsheet)

Technology has for years played a big a role in the Back of House with staff rosters, general admin, training, menu engineering and overall kitchen management and significantly reduced person-hours. More recently the technology and software has become further integrated thus reducing time spent on gathering and analysing data freeing up resources to concentrate more on the front of house service. The next quantum leap will be the routine adoption of robotics in kitchens taking over certain repetitive tasks in food preparation/cooking in an effort to reduce labour costs.

Apps enabling easy staff organisation and communication
(Image via Tech Crunch)

The key to providing and retaining a great service reputation in an era of rapid digitisation of services is focus on what is important to your customers and then re-tool your operations to achieve this customer service imperative finding a balance between compassion and cost savings.

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Cover Image: Quay Restaurant staff Sydney (Image via The West Australia)