Restaurant Management

Top 6 Restaurant Cash Handling Blunders You Must Stop

Cash Register for Cash Handling Blunders

By David Scott Peters
TheRestaurantExpert.com

If you have poor cash handling procedures in place in your restaurant, no other system you put in place will matter. I don’t care how efficient your restaurant is, if every penny of your sales isn’t deposited in the bank, there won’t be enough money to pay your bills. Cash controls must take top priority. No matter what you think needs to be addressed first, I tell restaurant owners to prioritize the review of restaurant cash handling procedures over everything else.

Here are some samples of classic cash handling errors we see in restaurants all the time:

  1. Change in a glass or a drawer. This is a practice used to simplify the nightly deposit. It is used two different ways. First, it’s a time saver to avoid counting loose change. Second, it is used to make the nightly deposit balance exactly to what the point of sales system says the cash balance should be.
  2. A week’s worth of unsecured checks in an unlocked filing cabinet. We often see this when the general manager or the owner is the only one allowed to make a bank run, when there is not enough cash to deposit due to credit card purchases or because the owner or manager is just plain lazy.
  3. A bin with a year’s worth of used non-voided paper gift certificates. While management was doing the right thing making sure all of the gift certificates used were accounted for on a nightly basis, they failed to write the word void on them and then saved them in an unsecured clear bin. Any employee could steal a small amount on a daily basis and reuse them to keep cash sales.
  4. Customer checks taped to the office wall. Many restaurants cater or hold banquets on premise. This means you will have customers leave a deposit check to guarantee the party will happen. This practice is meant to cover costs if they cancel. The challenge comes when the owner or manager doesn’t deposit the checks and tapes them to the wall, because you don’t know if payment is good. A dishonest employee could steal the checks or use the information to steal your customer’s identity and conduct check fraud.
  5. Credit card numbers recorded in a book. In July 2010, a new law was enacted that makes it illegal to retain customers’ credit card numbers in anything other than a secure online record keeping system that meets the law’s requirements. Failing to follow the law’s requirements can result in fines as much as $5,000 for each credit card number kept.
  6. Blank checks and forged checks to routinely pay for deliveries. It is a common practice that restaurant owners leave blank checks to pay for invoices, or they allow a key employee, who is not authorized to sign checks, to simply forge their signature to pay for invoices. This exposes you to a great deal of liability.

If you any of these procedures is in place in your restaurant, know that you’re leaving yourself open to theft and liability. It is your responsibility to make sure ALL of your money makes it into the bank on a daily basis. You must eliminate poor cash handling procedures, eliminate the majority of ways your cash can be stolen and avoid costly fines through proper systems.

David Scott Peters is a restaurant consultant, event speaker and founder of TheRestaurantExpert.com, a company committed to the success of independent restaurants. TheRestaurantExpert.com offers an exclusive online restaurant management software designed specifically to meet the complete operational needs of independent operators, including holding their managers accountable and running a profitable business. Combined with one-on-one coaching and group workshops, TheRestaurantExpert.com is helping independent restaurants find success in the highly competitive restaurant industry. Download a free report to discover the #1 secret to lowering food and labor costs and running the independent restaurant you’ve always dreamed of. Learn more about how David can help you at www.TheRestaurantExpert.com.

OSHA 101 for Restaurants

Chef and Inspector - OSHA for Restaurants

Last month, we were at the Pennsylvania Foodservice Expo in Pittsburgh, PA, and had the pleasure of attending a seminar given by Thomas Barnowski, Director of Corporate and Public Safety Education at Northampton Community College.  The seminar, called You Can’t Afford to Ignore OSHA, was a great hour-long introduction to OSHA, and the safety rules and regulations that govern general industry.

While Mr. Barnowski’s presentation was not specific to restaurants, one key takeaway from the presentation was that OSHA’s own website www.osha.gov provides a wealth of information and resources for all industries, including restaurants.

If you are unfamiliar with OSHA and the standards in the OSH Act, we’ve put together a short introduction here.

What is OSHA?

OSHA, the Occupational Safety and Health Administration, was established in 1970 when Richard Nixon signed into law the Occupational Safety and Health Act (OSH Act).  At that time, there was a real need for governmental oversight of all industries due to a rising number of workplace deaths and injuries.  According to osha.gov, by the end of the 1960’s, the number of deaths due to workplace hazards had risen to 14,000 per year with 56 million workers; currently, that number is approximately 4,500 deaths per year with 127 million full time workers in the United States.

I thought OSHA regulations were for manufacturers and other industrial companies – What does OSHA have to do with my restaurant?

In addition to specialized areas like construction, maritime, and agriculture, OSHA enforces regulations that cover general industry, including restaurants.   As a restaurant owner, you are subject to the same standards as a company that operates a manufacturing plant; the implementation of those standards may differ, however.  For example, under OSHA regulations, employers must provide their employees with personal protective equipment.  At a restaurant, that might mean supplying employees with special cut-resistant gloves, whereas a manufacturing business might have to supply its employees with a welding mask, respirator, or hearing protection.

As a restaurant owner/operator, you should also be aware of new disclosure rules that took effect in 2015.  Under these new rules, employers must report to OSHA any work-related fatalities, in-patient hospitalizations, amputations, or loss of an eye, within 8 hours.  The new rules are particularly relevant to restaurants whose employees who are more likely to sustain reportable cuts, burns, and lifting injuries.

What are employers expected to do under the OSH Act?

Under the OSH Act, “employers are responsible for providing a safe and healthful workplace” and “to keep their workplace free of serious recognized hazards”.  While those statements may sound subjective, the many standards in the OSH Act detail specific employer responsibilities for everything from means of egress to hazardous material procedures.  OSHA also publishes standard interpretation letters that explain how the standards apply in particular circumstances.

There are a few other requirements that you must follow to maintain compliance with the OSH Act:

  • Post an official OSHA poster in a highly visible area of your workplace. The poster notifies employees of their rights under the OSH Act and lists your obligations as an employer.
  • Keep accurate records of workplace accidents and injuries.
  • Report any work-related fatalities, inpatient hospitalizations, amputations, and losses of an eye to OSHA within 8 hours of being notified of the event.
  • Ensure that employees and their representatives have access to their medical records.
  • Maintain a no-retaliation policy for employees that bring up safety concerns or contact OSHA.

 

Which OSHA standards apply to my restaurant?

The answer is, any and all of them, depending on the nature of your operation.  For example, if your specialty is making ice cream using liquid nitrogen, then you will have to put safety procedures into place regarding the use of that substance, whereas the average pizza shop would not have the same requirements.  However, we were able to come up with a list of general things that you can do to maintain a safe work environment in your restaurant.

What can I do to make my restaurant safer?

  • Communication – One of the most important things that you can do to ensure a safe, healthy workplace is to open effective lines of communication with your employees. Effective communication means more than just telling employees what to do, it also means listening to them and acting on their feedback.  When employees feel like their employer is listening to them, particularly about safety concerns, they are much more likely to become invested in the process of making the restaurant safer, and less likely to bring their concerns directly to OSHA.
  • Training– Under the OSH Act, employers are responsible for training their employees on the health and safety aspects of their jobs.  This includes training them to use the tools and machines that are necessary to perform their jobs, training them on safety procedures, and training them on emergency preparedness.  OSHA also states that the training must use a language and vocabulary that employees can understand, so if your employees do not comprehend English, then you have to train them using their language.  You should also document your training practices; if a reportable accident ever occurs, you will have to prove to the OSHA inspector that the employee involved had adequate training to do the job.
  • Ergonomics – Did you know that, according to OSHA, sprains and strains are the most common types of injury in restaurants? It makes sense if you think about it – restaurant employees are constantly standing, bending, lifting, and performing repetitive actions.  Chopping vegetables for 6-8 hours per day, every day, can certainly result in a repetitive use strain if not done correctly and with the proper tools.  Care should be taken to make sure that employees have the equipment that they need to perform their jobs safely and efficiently.  Prep stations should be at a comfortable height so that prep cooks don’t have to stoop all day.  Use ergonomically designed shelving so that employees are lifting heavy items from the proper heights, and are not straining to lift items above a comfortable level.
  • Floors – Slips and falls can result in serious injuries, but they are among the most preventable. Make sure that floors are clean, not slippery, and that there are no obstructions in employees’ way.  Check carpeted areas routinely to make sure that there are no tears or ends pulling up; doing so will protect patrons as well as employees.  Also, make sure that if employees are standing for long periods of time at prep stations and cooking stations, you install some type of padded surface to avoid leg and back strain.
  • Machinery – Train employees on the safe operation of machinery like deli slicers, meat grinders, stovetops, ovens, and refrigeration units. Make sure that equipment guards remain in place and are functional.  Clean and service equipment regularly to prevent malfunction.  Implement a proper lockout/tagout procedure for equipment that is not in service.
  • Heat – There are two concerns regarding heat in a commercial kitchen. The most obvious is burns; employees can easily burn themselves on hot pans, hot oil splash, and even hot plates.  Train employees how to work safely in each circumstance where they have the potential to get burned.  The second concern regarding heat is heat exhaustion.  Commercial kitchens can easily reach temperatures of over 100 degrees, and employees can be exposed to heat exhaustion and even heat stroke, particularly when they are on their feet for 8-10 hours at a time.  To prevent this, give kitchen employees frequent breaks in a cooler room (even the walk-in cooler), and encourage them to hydrate often with water or an electrolyte replacement drink.  Note: have cooks steer clear of coffee and caffeinated drinks because they can dehydrate you even further.
  • Cuts – There’s no way around working with sharp objects in a restaurant. Knives, graters, peelers, mandolins, and various other cutting instruments are a necessary part of daily prep work in a commercial kitchen.  The best way to ensure safety when working with sharp tools is to properly train your employees in their use.  However, even professional chefs with years of knife-work experience get cut from time to time.  Distractions happen, and cutting objects are not very forgiving.  For that reason, invest in cut-resistant gloves for employees that will be working with sharp cutting instruments.  There are many types available at various price points, and most are machine washable.
  • Chemicals – Unless you’re a molecular gastronomist, experimenting with different chemical reactions in your food, your restaurant’s use of chemicals will most likely be confined to various cleaning solutions. Train employees in their proper use, including mixing and storage.  Make sure that all chemicals are properly labeled and have hazard warnings on them.  Finally, keep a binder of Safety Data Sheets (SDS) and train employees how to read them.

As a restaurateur, one of your main priorities should be keeping your staff safe and healthy; it will not only engender loyalty, but will save you money in the long run on lower turnover and training costs.  While OSHA is feared by many business owners, it can be a great resource to help you create a safe environment.  Refer to the OSHA standards often and you should find answers to many of the safety questions that you or your employees have.

Have you ever had an experience with OSHA, good or bad?  Let us know in the comments below.

Improving Employee Retention in Your Restaurant

Ask any restaurant owner about something they struggle with, and the problem of keeping good employees will make the list almost every single time. The real issues begin when employees don’t stick around very long, leaving owners understaffed and scrambling.

The restaurant industry offers a unique flexibility of schedule that appeals to many. Whether it is the student looking to work when not in class, or the performer looking to subsidize their passion, the industry attracts all kinds of people with unique scheduling needs. That also means that those same employees might not see their job at your restaurant as their top priority. The restaurant industry has an above-average turnover rate. In 2016, the general industry employee turnover rate was 46.1%. In the restaurants and accommodations sector, the turnover rate was at a whopping 72.9% in 2016, up from a rate of 72.2% in 2015, that is a pretty big difference.

Now you might be saying to yourself, ‘Well everyone in the industry has a high turnover rate, that is just how things are. Why should I make changes to improve my retention rate?’

Good question. Other than the immediate struggles of being left understaffed, every time you lose an hourly employee it can cost upwards of $3,500 to hire and train a new one. Now imagine every time someone walks out the door, $3,500 of your dollars are walking out with them. Really puts things into perspective, doesn’t it?

Hiring Employees

A great way to improve your employee retention is by starting at the very beginning, and by that, I mean the hiring process. The first thing is having patience. You may feel like you are in a rush to make sure that all your shifts are covered, but in the long run you will thank yourself for selecting the right candidate and not just the first person to walk in the door.

One of the most common practices in the industry, when looking at a potential employee’s resume, is to hire someone with experience and not consider your company culture. An employee with a positive attitude can be trained to do things the way that you do them, but a bad fit for your culture will always be a bad fit. An employee that is a poor fit usually leaves and ends up costing you money. In that case, you’ll be back to square one, typically with a few bad stories to tell.

Another thing to look at while you have their resume in your hand, is the frequency at which they move jobs. If someone switches places of employment every few months, that is a red flag that they won’t have a problem doing that to you. Take time to consider why they might need to switch jobs so much.

Hiring Managers

If you are seeking a manager, consider hiring from within your restaurant. Let employees know that you are looking for someone to help with special projects, you may be surprised by the response. Employees you would not have originally considered may be looking to take on more responsibility, while those that seem more likely to jump at the opportunity are happy to stay in their current position.

Through these special projects, you will be able to determine who is good at doing the work of a manager. If they are not good at the special projects, don’t get upset with them, don’t fire them, simply move them back into the current position without participating in any more different projects. This way you don’t lose an employee, but you are able to determine who can handle the role of manager.

For those that excel, approach them with the idea of becoming a manager-in-training. If they are onboard, start training them for the position. Some will do well, and some might not. For those that don’t, you now have a well-trained supervisor that can handle things on occasion and those who do wow you can now become a manager.

There are many benefits that come with hiring within your company. When you hire from within the company you know the person already fits your company culture, they won’t have to deal with your other employees testing them as a newcomer, and they know how to do things your way.  Another benefit is that current employees will see that you promote from within and will have something to motivate them to continue to do their best in hopes of advancing.

You will need to consider the best ways to transition an employee to the manager roll in terms of their coworkers. During your special projects, be sure to observe how they handle having authority over their coworkers, and probably friends. You don’t want them to be a doormat, but you also don’t want them to overcompensate and become too harsh. It is a fine line that needs to be observed.

Training

The training process is a critical time in helping to improve employee retention. It is tempting to pair your new employee with a veteran and leave them to it with minimal supervision. The problem is, if the veteran employee has developed bad habits they could be passing them on to your entire staff.

Train your employees on the correct way to do their job and when. When training, it is also critical to remember that people have different ways of learning. Some learn by seeing, some by hearing, and others by doing.  Try to incorporate all aspect when doing your initial training.

If your new employee makes mistakes, don’t immediately jump to the conclusion that they are a bad fit. When something is done incorrectly, retrain them on the proper way to do it. After the third time they make a mistake, you might want to sit down and evaluate whether they don’t know how to correctly complete the task or they simply don’t care.

A consistent orientation process and ongoing training will help to keep all your employees on the same page with the way you do things, creating an overall more pleasant work environment.

The Competitive Edge

There is always the concern that a well-trained employee might simply decide to work for a different restaurant. A few things can be done to try and convince your staff that your business is the best fit for them.

The most obvious way to keep employees is by offering them competitive pay with the opportunities for increased pay. Nurture long-term goals and provide the opportunity for advancement. Pay for classes and training, an example of this would be to pay for ServSafe certifications.

Do your best to schedule your employees well. Don’t always give the same employees the slower shifts, and give the occasional shift choice. That being said, we all know that sometimes you can’t make everyone happy, occasionally some people won’t be happy with their shift and that is okay.

Also, don’t underestimate the value of free incentives such as offering a shift meal. It will cost you a little but pales in comparison to the costs of constant hiring and training new employees.

Leaving

Sometimes no matter what you do, an employee is going to leave. This is a great opportunity to have a candid conversation with them about why they are leaving and if any changes could be made to your process to encourage employee retention.

One thing you can do is conduct an exit interview and ask them a few questions about their time with you.  A few questions you might like to ask are:

  1. Why are you leaving?
  2. What could we have done better?
  3. What does your new company offer that made you decide to leave?
  4. Were you comfortable talking to your manager about work problems?
  5. Were you given the tools to succeed at your job?
  6. What did you like most about your job? And what would you change about it?
  7. What was your best or worst day on the job?

Keep in mind with an exit interview that the employee might say some things you disagree with or don’t like hearing. Try to keep an open mind. Don’t argue with the exiting employee. It won’t do either of you any good to end your relationship on bad terms. Most likely you won’t seriously consider making all the changes they suggest but they might be able to give you some insight into a problem or educate you on a problem you didn’t even know was happening.

Retaining good employees is a struggle across the restaurant industry. By taking the right steps during hiring, training, and doing your best to remain competitive as an employer, you can give your restaurant a great foundation for creating a stellar staff and a happy work environment.

Tipping: A Thing of the Past or a Continued Tradition

Tipping to express your gratitude for good service from a restaurant’s wait staff has been a long-standing tradition in the United States. So, whenever you receive your bill at a restaurant and you find the gratuity line nowhere to be found, it can be a bit out of the ordinary. But, in some restaurants, this has become the norm.

Some restaurants have taken it upon themselves to ensure their front of house workers and kitchen staff are receiving equitable wages by instituting no-tipping policies and raising their prices by 15-20% instead.  They claim that these higher prices enable them to pay all of their employees a higher wage. Advocates for the no-tipping movement also insist that not giving customers the chance to tip poorly can give the service industry a more professional appearance and shrink the income gap between the wait staff and cooks.

Americans have become accustomed to rewarding wait staff with a tip but in other areas of the world, the service industry is handled differently. For example, many restaurants in France operate service compris, or “service is included”. With this model, prices have absorbed the cost of service. If you receive extraordinary service, leaving an additional 1 to 2 percent tip can be appreciated. In contrast, if you are at a restaurant in Japan, tipping is not a typical part of the culture. Leaving a tip can be seen as rude and will often be refused by the staff.

Originally, tipping came about “to insure promptitude” in the service industry. Mid-19th century Americans began using tips as a show of wealth and knowledge of European gentility rules, and by the 1900’s, tipping was a common practice.

But isn’t that what minimum wage is for? Not exactly. The only employers required to pay tipped employees the full state minimum wage before tips are in Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. The other 43 states require employers to pay tipped employees a minimum cash wage at or above $2.13. In other words, if your wages are set at $2.13, a regular 8-hour shift will earn you $17.04 pre-taxes. Even with their subjective nature, tips can help those in the service industry have a livable wage. For more information on your state’s tipping law, please refer to the standards set by the United States Department of Labor.

No-tipping policies have been a hard change for both customers and servers to get used to. Tipping has become so ingrained in the American dining experience and can keep restaurant prices low. But because tipping is very subjective, it’s easy to see that it may not always be a fair practice. While some customers may over tip their server, others may have a mission to only tip 10 percent anywhere they go, regardless of actual service quality. It’s not easy getting customers to relinquish their control over how much their server is rewarded, especially in a post-recession world. So instead of trying to change a single way of thinking, restauranteurs have the challenge of altering two ideologies.

In late 2015, Joe’s Crab Shack became the first casual-dining chain to try using a no-tipping policy in 18 of its nationwide restaurants. After the first six months of implementation, there were only four that continued to use the policy. To make up for the difference, the restaurant raised wages by increasing menu pricing. As a result, Joe’s Crab Shack saw less customer traffic and a large turnover in staff who couldn’t/wouldn’t conform with the wage change. At least in chain establishments, gratuity-included dining hasn’t quite caught on.

While Joe’s Crab Shack customers didn’t take to the no-tipping policy, there are numerous restaurants in San Francisco, Pittsburgh, New York City, and more that are getting along just fine with the added policy.   Most of them are operated by “celebrity” chefs that have pricing power that the rest of the market doesn’t enjoy.

What’s your view on implementing a no-tipping policy? Tell us in the comments below.

 

 

Secure Your Kitchen: A Guide to Increasing Safety in Your Commercial Kitchen

Commercial kitchens are notorious for the hustle and bustle that happens behind the doors; while the customers might see the relaxed atmosphere of the dining room, the kitchen is anything but. That being said, it is also one of the most dangerous rooms in your restaurant. With a few easy steps, you can help ensure the safety of your employees and patrons, and protect against financial losses.

Fire Safety

The biggest hazard to a commercial kitchen is a fire. Nearly 8,000 eating and drinking establishments report a fire each year, according to 2006-2010 data tabulated by the National Fire Protection Association (NFPA). Fire causes over $246 million in restaurant property damage each year and can devastate a restaurant, leading to lost revenues and even permanent closure.

A great way to combat a fire is by installing an effective kitchen fire suppression system. Look for a  system from a company that provides trained technicians to install the system, provide routine inspections, and service the equipment. Current U.S. codes require a UL3000 hood extinguishing system along with a k-rated fire extinguisher.

Be proactive about fire safety by maintaining and inspecting your fire alarm system. Try to create a schedule to inspect the alarms on a regular basis. Check to make sure that the batteries are still in working order. The alarm will let you know when the batteries are getting low by beeping periodically even when there is no smoke. Experts recommend checking your fire alarms every six

months. While checking don’t forget to check the batteries for corrosion, which can also cause the alarm to malfunction.

 

In the event of a fire, ensure that all posted signs are easy to read and visible, not only for employees but patrons as well. Make sure to keep you evacuation routes clear. This is a safety measure, but if routes are blocked it can also be a code violation.

Ensure that all posted signs are easy to read and visible, not only for employees but patrons as well. You don’t want to see anyone harmed if something should happen.

Having properly functioning fire alarms can alert not only your employees and patrons, but also the fire department of any serious situations. Regular fire drills and well-displayed evacuation routes also help to ensure the safety of everyone. Practice the drills to help identify any area of confusion that should be remedied before an actual fire breaks out.

Equipment Safety

In addition to fire, improper equipment is a huge concern in a commercial kitchen. Deep fryers are not only a concern for fire safety but also for burns.  Hot oil is very dangerous and requires a 16-inch clearance to ensure that all staff members are safe. Keep in mind that child labor laws do not permit workers younger than 16 to cook or use a deep fryer. Always have team members wear steam gloves when changing or filtering the oil to protect against burns. Another aspect of fryer safety is keeping the floor near the fryer very clean; oil from the fryer can easily make its way to the floor and cause a fall leading to injury.

Keeping your kitchen as grease free as possible increases not only safety but productivity. Commercial kitchens are full of grease. Cleaning grease traps on a 6-month interval may be an industry standard, increasing the cleaning frequency based upon how quickly the grease accumulates helps cut back on the likelihood of blockages. According to the EPA, grease is the primary cause of sewer blockages that lead to overflows in the kitchen.

Knives are one of the most commonly used tools in a chef’s arsenal and present a constant danger in a commercial kitchen. Believe it or not, dull blades are more likely to slip and cause injuries, so keep you knives sharp. Utensils made of high carbon stainless steel hold their sharpness longer and might be a good investment so you aren’t spending lots of time sharpening blades. It is also important to avoid knives with wood handles as they are more likely to become oily and slip from the users grasp.

Training

One of the most helpful ways to improve your kitchen safety is to provide your staff with the appropriate training. Staff should always be trained on the proper way to use new equipment and the dangers that are associated with improper use.

In addition to new equipment training, consider sharing with your team a few other pieces of information to help keep your kitchen safe.

Train your staff to:

  • Properly use a fire extinguisher
  • Clean up grease
  • Never throw water on a grease fire
  • Store flammable liquids properly
  • Use chemical solutions correctly
  • Be able to power down equipment – Train at least one worker per shift on how to correctly shut off the gas and electrical power in case of an emergency.

Sometimes it is difficult to make your safety training engaging, yet quick, and easy to grasp. Colorful visuals, customized posters, and videos are all good tools to help teach your employees without causing them to zone out from boredom.

Nobody likes to micromanage employees and make them feel incompetent, but it is a good idea to supervise the handling of the equipment occasionally to make sure that it is being used safely.  You can give your employees all the tools they need but if they aren’t using them correctly it won’t improve the conditions of your kitchen.

Another benefit of revisiting your safety measures is that a safe and clean kitchen leads to higher employee morale and productivity,  not to mention the benefit of avoiding lost revenue due to down time from an accident or permanent closure. At the end of the day, the biggest benefit is still ensuring the safety of your staff and patrons. By checking for fire hazards, monitoring your equipment, and training your employees you can improve the safety of your kitchen, protecting your restaurant from disaster.

Loyalty Programs: The Profit Behind the Rewards

The phrase “customer loyalty program” often brings to mind images of punch cards and freebies, but loyalty programs have evolved through the years into so much more. Technology and data mining techniques have turned the programs from cheap promotional tactics into big data goldmines that allow smart establishments to tailor their marketing to each customer.  In this article, we’re going to take a look at the different types of loyalty programs, why your restaurant needs one, and the best practices for implementing it.

How it works

In the restaurant industry, there are two basic types of loyalty programs: points based systems or tiered systems. Points-based systems reward customers for dollars spent or frequency of visits, while tiered systems benefit long-time customers by awarding them special access and exclusive opportunities.  To determine what type of system would work best at your restaurant, consider which behaviors you would like to reward.

Why You Should Implement a Loyalty Program

The numbers are in and they show that it is much more lucrative to focus on creating loyalty in your customers than gaining new customers. A study by Bain & Company reported that a 5% improvement in customer loyalty can increase lifetime profits by as much as 95%. Even more, a whopping 70% of customers who participate in loyalty programs report purchasing more.  New business is great but it costs more to acquire a new customer than retaining an existing one: in some cases, up to 6 or 7 times more.

Some restaurants who have implemented loyalty programs have also seen a reduction in attrition and an increase in referrals.

The kind of loyalty that influences the frequency of a customer’s visits occurs when customers relate to a dining establishment. Take a look at the demographic that you would like to focus on and make sure that your business positioning and processes align with those of that demographic. Creating a customer persona could be helpful during this process. Customer personas are fictional, generalized representations of your ideal customers.

For example, in a college town, your customer persona is probably an early 20-something looking for a meal at the most affordable price point. If you are located in a more family friendly area the persona might look more like someone in their mid-30’s who is willing to spend a little bit more for a higher quality meal.

Return on Investment

Having a loyalty program can also do wonders for collecting customer data. By tracking the items purchased, the frequency of visits, and dollars spent, you can determine the best areas to invest your money. Managers or owners can even take the gathered analytics to analyze the popularity of a dish and determine what other items could be purchased to pair with it and increase sales. For example, if one of your all-time best sellers is a poultry dish, you might want to consider ordering a new chardonnay known to pair nicely with chicken.  You’re customers receive a better all-around experience and you see an increase in profits.

These same analytics can be used to analyze customer behaviors, which can then be organized into data to develop promotions that are designed specifically to appeal to a certain group of customers.  The ultimate goal is to create motivational offers to influence a customer, increasing the frequency of return visits as well as per-visit spending.

Loyalty Program Best Practices

  • Provide an Immediate Incentive
    • That instant reward for signing up might be just enough to convince any customers that are on the fence about joining to take the plunge.
  • Make it Easy to Join
    • Don’t force your target audience to have to scour your website to find your sign-up page. Have it in a highly visible spot as well as talking to your staff about encouraging customers to sign-up in the restaurant. Signing up should take no longer than a few minutes.
  • Take only the information you absolutely need
    • Customers don’t want to spend their time filling out long surveys just to sign up for your program. Try to limit your questions to essentials like name, birthday, and email address.
  • Personalize offerings to members
    • Loyalty programs often fail because their offerings are too general. By creating specialized incentives based on what the customer has previously purchased you are more likely to see them walking through your door.

What Not to Do

  • Limited Time Offers
    • Limited time offers can be a great way to get customers in the door and increase traffic, but these strategies are not enough to create loyal customers. Spending money on these promotions may see an uptick in new customers but these are the same customers who are not likely to return until you run another promotion.
  • Don’t Have Customers Wondering if the Rewards Will Work
    • Make sure your employees are well versed in redeeming your loyalty system. It can lead to frustration on both sides if customers are trying to use a loyalty program reward and aren’t able to because of faulty programming or a poor system. Your relationship with the customer is the most important thing.
  • Don’t Forget to Use the Data
    • Customers will expect relevant offers in exchange for the personal information they are providing. It is crucial to make use of the information provided to tailor your message as much as possible.

Loyalty programs may seem like they are geared more towards benefiting the customer but in the end, it is a mutually beneficial relationship. The value of the data gathered, and brand loyalty that is inspired far outweigh the costs of a few perks. By implementing and utilizing a loyalty program your restaurant could see a significant increase in profits.

 

 

 

A Seasonal Hiring Guide for Restaurants

We all remember our first jobs; usually a summer gig to make a little bit of extra cash while school was out of session.  We can still feel the nervousness of putting in our application and anxiously waiting to hear back about an interview. Then, after securing the job, there was that first day of work and the intimidation of training. Finally, that first paycheck made it all worth it. You’ve dreamed for the past two weeks about what you will spend your hard earned cash on. That is until you rip open that first envelope and confirm with your parents that, yes that really is the right amount of taxes to be taken out. Seasonal jobs are a lot of people’s first introduction into the workforce. But what about the other end of it – that of the employer?  Being on the other end can be just as stressful as being the job seeker.

Hiring seasonal help is often necessary to the restaurant industry. Whether it is for the summer season or the holiday rush, seasonal hires can help businesses handle the extra workload that isn’t present during other times of the year. Being well staffed has its advantages. Your business will be able to easily adjust to the workload fluctuations that come along with the change in seasons. If customer demand increases, a well-staffed restaurant will be able to respond positively and ensure a good customer experience. When restaurants have the right employees and enough employees, customer service goes up along with customer satisfaction and 86% of consumers are willing to pay up to 25% more for a better customer experience.

Don’t forget that having enough seasonal help leads to shorter wait times and faster service; with faster service comes a quicker turnover rate of customers, which in turn leads to higher profits. Finally, offering seasonal help will help to give your full-time employees more flexibility in their schedules during the holidays/summer season. Keeping your regular help happy is crucial in retaining them during the months when you don’t need the seasonal help.

People remember their first job and they also remember if it was a good fit for them or a total disaster.  To ensure that you find yourself in a well-staffed, pleasant work environment this season take a look at a few pieces of advice to help secure the best employees for your restaurant.

  1. Know What You Want

The best way to start your search is with a solid idea of who you need and what you want them to do. Be clear on the responsibilities of the position. Are you looking for previous experience in the industry? Or are you willing to train them completely? Something to keep in mind is that you can always train someone but you cannot adjust their personality to fit your business or to mesh well with your current employees. You want quality over quantity. A few characteristics to be on the lookout for are:

  • Good interpersonal skills
  • Great personality
  • Good customers service
  • Smile, make eye contact, communicate well
  • fits with your full time staff
  • Don’t have a lot of prior commitments
  • Don’t need a lot of time off
  1. Revisit Job Descriptions

It can be tempting to reuse the job descriptions that you created in years previous but don’t. Check your descriptions and requirements for accuracy before posting anywhere. Oftentimes, jobs change over time and you don’t realize how much until the needs aren’t met. Ask any employees currently performing that job for a list of their duties and requirements so you can accurately present the position and reach the best candidates.

  1. Promote the Benefits

Attract the best candidates and convince them that your establishment is a good fit for them by advocating the best parts of your workplace. Is it a fun place to work? Do you offer a discount on meals? Are you willing to work around vacation schedules? Mention perks like that in your job postings or during the interview process to show good candidates why they should choose your business over another. Most potential employees have put in applications to multiple businesses in hopes of being sure to secure a position, so what you put in your description can make all the difference.

  1. Know Your Audience

Who are you looking for and what do they like? If you are looking to hire millennials and iGens in your restaurant maybe look more towards social media to promote you job listings. Chances are that if someone is already a patron of your business and following your social accounts they might be interested in working with you. Especially if you offer a discount on meals! If you are considering hiring retirees perhaps go a more traditional route and put an ad for your job openings in the local paper or on the radio. Also, don’t count out the tried but true tactic of putting a “Now Hiring” sign in your window.

  1. Start Early

It may feel like you have all the time in the world, but summer will be upon you before you even know it. To be safe, start your recruiting process a solid two months in advance of when you need your seasonal employees to start. Keep in mind that your core demographic such as college students and high school students are going to need to make it through finals before they can even think about starting to train in your restaurant.

Starting early will also help you to get the process going before the summer hiring frenzy begins. A lot of college students put in applications during their spring breaks in hopes of securing a summer job.

When hiring, fill in your key positions first. That way you know that you will be covered and not scrambling at the last minute to find only a decent fit for a position that is crucial to your operations.

  1. Be Consistent

As it is with food, consistency is paramount. Make sure that your recruiting processes are consistent across the board. If all employees are required to go through the same experiences you have a better chance of a consistent work environment. Employees also spend a lot of time together talking; you don’t want them to be chatting and realize you hired the neighbor kid on the spot and made them go through 3 different interviews. Save time by having a process in place for interviewing, call backs, and onboarding so that the process can be smooth and efficient.

  1. Mind the Gaps

Once you do have your staff hired, be sure to have a system of checks and balances to track their progress and watch for red flags. Some people can seem like a perfect fit during the interview process but once they join the team they just don’t fit into the natural workflow. It’s not ideal but it does happen and it’s better to know that earlier rather than later when you can’t do much to amend the damage.

With the busier and more lucrative months comes a higher workload level and seasonal hires can be a great way to help distribute the demand. Even though they are temporary employees it is still important to determine if they are a good fit for your business. By starting early, knowing what you want, advertising your openings, and having a consistent hiring process you are on your way to finding seasonal employees that have the potential to mesh with your business and maybe even become a returning and trusted employee. Best of luck in your search!

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How Much Does Restaurant Furniture Cost? FAQ’s from the files of East Coast Chair & Barstool

How much does restaurant furniture cost
If you’ve ever asked “how much does restaurant furniture cost”, you probably got a somewhat unsatisfactory answer like “it depends on what you get”.  While this is certainly true – restaurant furniture can range from a few thousand dollars up to serious five figure digits – we figured that we could at least layout some common scenarios to give you an approximation of the cost to furnish your restaurant.

To keep it simple, all of these scenarios are based on a dining space of 1500 square feet with 20 tables, 8 booths, 60 chairs, and 10 bar stools.  There are 3 scenarios: a budget friendly option for a restaurant owner that wants the most economical furniture to get started, a mid-level option for a restaurant owner that wants great looking furniture at a great price, and an option for a restaurant owner that wants to create an ambiance around their furniture without breaking the bank.

Scenario 1 – Economy Furniture Cost

20 – Resin 36” x 36” Table Tops = $600

60 – Gladiator Metal Ladder Back Chairs with Vinyl Seat = $1500

10 – Gladiator Metal Ladder Back Barstools with Vinyl Seat = $500

8 – Standard Vinyl Upholstered Booths = $1500

Furniture Cost = $4100.00

 

Scenario 2 – Mid-Level Furniture Cost

20 – Solid Wood Butcher Block Tables = $2920

60 – Viktor Steel TOLIX style restaurant chairs = $3780

10 – Viktor Steel TOLIX style barstools – $710

8 – Vinyl Upholstered Restaurant Booths – $1640

Furniture Cost = $9050.00

 

Scenario 3 – Reclaimed Wood Furniture Cost

20 – Reclaimed Barnwood Tables = $4400

60 – Simon Steel Café Chairs with Reclaimed Wood Seats = $6000

10 – Simon Steel Café Barstools with Reclaimed Wood Seats = $1100

8 – Custom Reclaimed Barn Wood Booths = $4200

Furniture Cost = $15700.00

 

All of these scenarios are based on just a few of the furniture options that are commonly available at East Coast Chair & Barstool, where we sell direct to restaurants and keep costs low by cutting out the middle man.  True, you could go to a dealer or niche manufacturer and buy furniture that cost 3-5x more, but the only difference would be the price tag.

Have a question about furniture cost?  Leave a comment below and we’ll be glad to help.

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How to Prepare Your Restaurant for a PR Crisis

PR Plan

Running a restaurant is a big responsibility. You have employees, vendors, and customers all counting on you to succeed. This pressure is magnified even more so when there’s an unexpected crisis thrown into the mix.

Whether it’s a health hazard or an earthquake, your restaurant needs to be prepared to deal with the fallout and snap into crisis mode. These crises happen without a moment’s notice and can be catastrophic if not dealt with correctly. So how does your restaurant begin to prepare for the unexpected?

Avoid Being the “Ostrich”:

When a crisis does strike, your restaurant needs to be fast-acting to acknowledge the issue and take the appropriate steps to work towards a solution.

The very last thing you want your organization to be facing at the height of a disaster is a media outrage because you didn’t make any sort of statement. There is no playing the ostrich here; you cannot stick your head in the sand and pretend your problems will go away. You need to be clear, succinct, and precise with your plan internally and to the public. This can be done with a crisis management agenda.

Creating this plan can help you remain calm in times of crises which, in turn, can lead to better decision-making. Every restaurant should have an agenda for managing critical situations, the size of which will depend on the size of your operation and the issue at hand.

How to Compile a Crisis Management Agenda:

  • Brainstorm the risks faced by your restaurant such as food safety, insurance liabilities, and potential disasters (before they occur).
  • Create a checklist or plan of what should happen when an emergency happens.
  • Designate a task force of individuals who will carry out the step-by-step plan.
  • Delegate tasks and information to be disseminated internally and externally of the restaurant.
  • Identify key organizations that need to be notified such as fire, police, and ambulance services.
  • Make a list of audiences that need to be informed: reporters, legal entities, insurance companies. Don’t forget how you plan to address employees and the public.

PlanThis agenda should be shared with upper level management and designated employees that are appointed in the agenda. For an effective strategy, this information can easily be spread with Google Docs. Using Google Docs can lessen paper usage and, in case of a fire, will ensure you plan stays intact.

Having a crisis management procedure in place can lessen panic and give you a roadmap for navigating the seas of this crisis.

Keep Your Emotions in Check:

It’s without a doubt that going through a crisis that puts your livelihood in jeopardy is a stressful time. It’s also a crucial time to remain level-headed throughout the crisis. By acknowledging the issues your restaurant is facing and following your crisis management agenda, you can use your team to direct your efforts appropriately, even if you’re still in shock while the situation unfolds.

Not keeping your emotions in check can cause more issues if you act on them. Instead of acting brashly, use your emotions to convey sincerity and genuine concern. Maintaining a calm and professional demeanor can not only begin to fix customer perception but also inspire a more civil view for employees.

Emotions

For example, Applebee’s had a tumultuous public relations nightmare in 2013. Long story short, Applebee’s fired a staff member for posting a negative comment that a customer had written (due to a privacy violation) and then praised another staff member through a post that also had the customer’s name. Applebee’s posted on Facebook stating the reason they had fired the first staff member, which invited many comments from followers. In the middle of the night, the Applebee’s social media team posted an update on the post, which got lost in the 17,000 comments currently on the post. The social media team began tagging the people who had commented and copy/pasting the update their comments, leading to more heckling and an additional 16,000 comments. The social media team could have waited until a reasonable hour and posted a new update, not a comment, instead of adding fuel to the fire.

Moral of the story? Think before you act impulsively.

Say Sorry and Mean It:

Apologizing is not an easy step for any business, but it is a necessary evil in trying to repair the public’s trust. While making an apology, focus on being sincere. After all, what is an apology without feeling the deepest regret about the actions that occurred? With an honest-to-goodness apology to the affected parties, a business is taking ownership of the situation and can give it credibility.

micIn making this heartfelt apology, you will also want to take timing into account. If a crisis occurs, a restaurant’s timely apology is important in keeping customers on their side. Even if your team is working behind the scenes to better the situation, it is imperative that these actions are communicated and not done in silence. The longer an apology takes, the less customers will take it seriously.

Go further for your customers and add a side of great customer service to your apology. From late 2015 to early 2016, about 40 Chipotle customers were sickened from E. coli contaminants; a tough blow to a restaurant chain that prided themselves on fresh food free of genetically-modified organisms. Making an apology statement turned advertisement in major newspapers nationwide, Chipotle founder, Steve Ells, addressed the outbreaks, apologized, and made promises of more thorough food safety standards. To bring people back into its restaurants, Chipotle launched their brief rewards program, direct mail offers, and mobile promotions to earn free burritos.

Unfortunately, the world can change at the drop of a hat: people make snap judgments, tectonic plates collide, and food is not handled with proper care. But that doesn’t mean your restaurant can’t be prepared to combat these crises when they happen. Having a plan, keeping your emotions in check, and truly apologizing are crucial elements in preparing your restaurant for a future crisis. Remember the best offense is a good defense.

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A Guide to Bar and Restaurant Insurance

There are a lot of exciting and interesting parts of the restaurant industry. While insurance probably doesn’t make your top 3 most exciting topics, that doesn’t mean that it isn’t important. Can you imagine if your business went up in flames and you didn’t have any sort of insurance to cover the losses? You could spend the rest of your days paying for a business that didn’t even exist anymore.  Certain insurances are required just to be able to open your restaurant while others are supplemental and might just be a good idea to have. We spoke with Steve Scuilli Vice President of Exchange Underwriters Inc., a man with 25+ years of experience in the insurance industry, to get you an expert opinion on what you need to know about insuring your restaurant.

Who Needs Restaurant Insurance?

Basically, all businesses in the restaurant and food industry need some sort of restaurant insurance. Bars, cafés, diners, delis, fast food restaurants, lounges, pubs, breweries, and pizza places all require some sort of insurance specifically designed for the food industry.

Do you remember Chi-Chi’s, the Mexican restaurant that is now infamous for having the largest outbreak of Hepatitis A in U.S. restaurant history? The restaurant was already suffering from bankruptcy when the cases came to light. Due to the outbreak, hundreds of people were sickened, one needed a liver transplant and four people sadly died.  Green onions from Mexico that were used to make salsa were the cause of the outbreak. The fault was with the suppliers but Chi-Chi’s was not financially stable enough and did not have enough liability insurance to meet all the claims that came out after the outbreak. Perhaps if they had enough insurance they would still be around today.

While every business in the food industry needs some form of insurance the types can vary based upon the business itself. For example, an ice cream shop and a bar with both need general liability insurance but the ice cream shop will probably not need liquor liability insurance. Some policies will be state requirements, some are just a good idea, and some form of life insurance might be required by the lending agency for the owner(s) of the business. It is important to check on your state’s requirements and to speak with your bank on what they might require.

ProTip: When deciding on calling an agency determine what is a priority for you; a low cost, a close location, or superior service. Knowing this before you start the process can help streamline your choice.

How Insurance Cost is Determined

One of the first steps when starting to look into your insurance options is to call an agency and speak with an agent. They will then proceed to ask you a series of questions or have you fill out a questionnaire about your business. Your answers to these questions are what determine the cost of the policies you are trying to acquire.

They then take these answers to an underwriter who uses them to determine your risk of exposure. Your risk of exposure is an event or state of being that can subject you to loss because of some hazard or contingency. The risk of exposure for a business often ranks the prevalence of a risk according to their probability of it occurring multiplied by the amount of money that could be lost because of the occurrence. There are different types of potential loss for each industry but for the restaurant and bar business they look at similar factors. Some of the factors the insurance companies look at include:

  • Class of business- Different classes of business have different exposure to problems such as crime, a liquor liability suit, and workers compensation.
  • Hours of operation- establishments with longer hours are at a greater risk for loss because the longer you are open the more opportunities for something to go wrong.
  • Clientele and location- Both the character of your clientele and the safety of your location can affect the exposure risk.
  • Entertainment- Any form of entertainment automatically increases the chance of loss. Establishments bring in entertainment to attract a larger crowd than they would have otherwise, which increases both sales and risk.
  • Promotions-Promotions are also meant to bring in more patrons than normal. People tend to eat and drink more during promotions which can increase the risk of exposure such as customers being overserved or damaging the building.
  • Years in operation-The failure rate for bars and restaurants can be relatively high so the longer the establishment has been in operation, the more experience the owner(s) are likely to have and the better the quote could be.
  • Owners experience in business-The more experience the better. Experienced owners are usually more responsible and know how to train their employees to minimize risk.
  • Security-Security personnel are important to have, especially in a busy bar environment.
  • Alcohol server training- it is important that bar and restaurant employees are educated on how to responsibly serve alcohol and recognize those that are intoxicated. Many companies offer a discount to restauranteurs who have their employees utilize those programs.
  • Adult entertainment-These establishments run a much higher risk of exposure than many others, fights and damage being some of the more prevalent risks.

Underwriters take all these factors and then evaluate the exposure factor each presents and then rate your businesses risk accordingly. All of these factors come with their own set of issues that will be factored into your final quote, which is how much you will need to pay to carry your policies.

Pro Tip: A big name agency might be able to offer discounts but a local agency could have the benefit of being more familiar with the laws in your state. If they are close it might be more convenient to reach them if something should happen.

Types of Insurance

General Liability- This is a type of umbrella policy, this is also the most common insurance. It covers lawsuits from non-employees that sue over injuries and some property damage.

Property Insurance- reimburses you for property loss related to fire, burglary, and some types of storms that may not be covered by your general liability insurance. Includes: building, furniture, tap systems, and glassware but may not cover floods or earthquakes.

Liquor Liability- many states require this with your liquor license and some variables may change from state to state. This protects against a liability claim as a consequence of someone getting drunk to the extent that injuries or property damages are the result.

Workers Compensation Insurance- This insurance covers medical expenses and lawsuits from employees injured on the job. This is also usually required by state law.

Automobile policy- If your business uses any type of vehicle as transportation you are going to want this policy. This covers the vehicle the same way any other car insurance would but can cover items such as food trucks, and catering vans.

Umbrella Insurance-This insurance pays for lawsuits that exceed the limits of small insurance policies. You can’t have an umbrella policy without a general liability policy. An Umbrella policy is based on what you have to lose.

Life Insurance- This is not required by law but some lenders may require it in case something should happen to the store owner their family will not be left trying to pay off any debts that may have been incurred.

Loss of Business-This insurance can cover loss of sales through a specific cause. Something like a power outage that causes a business to lose its inventory would be covered. Some of the income can be recouped but a lot of times with the cost of premiums owners can break even so you should speak to your agent about whether this plan would be beneficial for your business or not.

ProTip: Cameras are a great way to prove or fight an insurance claim. If you can afford it try to install them in your business. It is hard to dispute evidence that has been filmed. They are also great for helping to spot employee theft.

When it comes to selecting policies, after you get the ones required by the state and your lending agency, you are the one that knows your business and financial situation the best. An agency can work to guide you with different instances they have come across but ultimately it is your decision if you want any extra insurance.

When asked if there was one piece of advice he could give to customers Scuilli said that owners should take a hard look at their business and determine where their greatest risk of exposure is and be sure to cover those areas. The second was to know what you can handle financially speaking. It doesn’t make sense to sign up for insurance that you won’t be able to afford to pay on.

While selecting insurance isn’t one of the sexier aspects to being a business owner it is vitally important. Insurance can protect you and your business from a myriad of problems. Insurance may seem like a lot of money for little to no return, but it is always better to be prepared when it comes to your business.

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