CHAPTER 2 - Productivity in the restaurant industry: how to

CHAPTER 2 - Productivity in the restaurant industry: how to measure productivity and improve process management.

Hindrances to productivity in the restaurant industry

The balanced scorecard for efficient productivity control

-Bad planning and indistinct business idea

-Too much diversity in operations

-Lack of motivation

-Deficient marketing and development work

-Weak management

-Lack of delegation and focus

-Too rapid growth

-Wrong investment decisions

-Large amount of fixed costs

-Weak level of economic control

-Productivity comes from both customer and service provider satisfaction

The objects of control: not only economic control but holistic control for long-term result development like customer and staff satisfaction, product development that require a functional computer-based information.

The measures of the balanced scorecard must meet these requirements:

1. based on users' aims and needs

2. sufficient number of measures (not too many)

3. account the various levels of the organizations

4. ensure the continuity, clarity and goal-orientation of the control procedures

5. measures of different aspects must be compatible

The essential factor in all planning and controll activities is understanding the relationship of cause and effect in practical everyday functions, business events and measures.

Productibity control

Productivity planning, monitoring and control

Use hard key figures (the use of labor + premises + raw materials and capital) for controlling the relationship of input and output or soft (indirect) figures.

Use cost-volume-profit analysis technique to ascertain the turnover, cost of sales, gross profits and the possible waste of raw materials (frequency calculation & sales information)

Manage the use of staff : planning shift schedule and setting hourly wage, collective agreement as long as the ability to bring out the best of labor (work atmosphere, motivation, training)

The elements of profitability: productivity and economy

Productivity, economy and profitability are different aspects of the same phenomenon: the goal of controlling productivity and economy is improving profitability by

1.reducing cost w/o reducing output

2. increasing unit output w/o changes in the costs per unit

3. be optimizing the invested capital in relation to the operation

Special characteristics of the restaurant industry from the point of view of productive and profitable operations.

-Intensive competition: price competition => quality image (long term)

-Low net profit percentage (net profit/turnover x 100) because of price competition => must control processes efficiently to prevent mistakes that can cause extra costs.

-Long opening hours, seasonal variations in level of sales: cost controll through controlling labor costs (shift schedule - efficiency)

-Customers' on-going interest in the quality of product: keep balance between quality and cost => best economic results.

-Continuous need for investment (facilities maintenance)

-Imagined purchase benefit and the importance of controlling the use of raw materials: wholesale (much cheaper) + best use little waste.

-Constant need for renewal: fresh ideas, the fewer the products, the easier it is to operate efficiently .

-The importance of cost center management: Goal : low level of operation, low work and business management cost.