SHA506: Foodservice Management: Marketing, Service, and … · School of Hotel Administration, Cornell University ... Menu and Business Philosophy ... Foodservice Management: Marketing,

SHA506: Foodservice Management: Marketing, Service, and HR Systems School of Hotel Administration, Cornell University

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Hello, I'm professor Mutkoski, and I want to welcome you to Food Service Management, Marketing Service and HR Systems. You are taking this course either because you are currently in food service management, or you are planning to be. Food service management is one of the most demanding and complex careers one can choose, but also one that can be very rewarding, for both personal satisfaction, and from a monetary standpoint. Conducting market research within the food service industry is a very important task that needs to be addressed before you begin cooking your first meal. Spending the time to learn about your target market, and to analyze its related demographics, will help you identify your restaurant's potential and define your overall market strategy. The information you acquire from your market research influences your human resources system as well; from your analysis, you will have gained insight into your workforce pool, so as to better structure your recruitment and training programs. This course, and the ones that follow, are designed to look at the complex food service operations with a very systematic approach. Understanding why things happen is essential to improving a system, or operation. As managers, you will spend a good deal of your time analyzing your operation. Figuring out why something is happening is critical to improving the situation; once you know why, you can apply certain remedies, use various tools and management techniques, which will make operating a food service business much more profitable and enjoyable. I hope you thoroughly enjoy this course, and it helps you conquer some of the major issues and challenges facing the food service industry today, and in the future.

The Story of the La La La French Restaurant

This French Bistro restaurant concept was developed by an entrepreneur who had opened and operated three units in France. A large hotel company was looking for a restaurant concept they could use throughout their chain. A team was sent to France to study the La La La French



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restaurant. The hotel chain purchased the development rights and decided to open the pilot restaurant in Chicago.

Menu and Business Philosophy

The concept was an upscale French Bistro with authentic décor and a menu that consisted of dishes such as Cassoulet, Magret de Canard, Choucroute Garni, and other classic French dishes. The same menu was used at both lunch and dinner because this was the way it was done in France. The entrepreneur would say: The concept must be kept pure; they will learn how to eat the French way! The wine list was made up of rather obscure wines from less-known regions in France. Even in the three units operating in France, the customers didn't really know the wines on the list.

The Location of the La La La

At the time, a prime area for restaurants was in the Rush Street section of Chicago. The hotel being built was only a few blocks from restaurant row. As with typical hotel design, the restaurant was located on the second floor so there wasn't good street visibility. The furnishings and place settings—even the bar—were all shipped from France at great expense to be sure the restaurant would be the same as its French counterparts.

La La La Opens for Business

Very little market research on the concept was done because the concept was such a smash hit in France in all three locations. The hotel and restaurant opened up in early summer. The pro-forma projection done on the restaurant indicated that the restaurant should average approximately 125 covers for lunch and 200 or more covers for dinner.

Worry: Reason #1

Very quickly, the manager noticed that not all was going well at the La La La restaurant. He saw many things that were troubling in the first months of operation.

A guest in the hotel wearing shorts came in and asked the maitre d' if his casual attire is appropriate and if he could get a "croque monsieur."

After conversing more, it is evident that the customer didn't have a correct impression of the restaurant from the name.



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Worry: Reason #2

Chicago summers are humid, with temperatures in the 90s. On a hot day, a group of business women who work in the nearby bank came in for lunch. After looking at the menu, they got up to leave.

When the manager asked the women why they were leaving, one of them said they would need to take a nap afterwards if they ordered that food!

Worry: Reason #3

Throughout the summer, the restaurant averaged six covers at lunch and only 100 for dinner. The manager often heard people say that they needed only a salad and a beverage for lunch in the summer months.

The restaurant manager suggested that the lunch menu be changed and some market research be done, but suggestion that met with a resistance from his superiors who had studied the concept in France.

Worry: Reason #4

All of the waiters noticed a great deal of reluctance and hesitation from customers in ordering wine. Wine sales were very low—an unusual problem for a French restaurant to have.

The wine list was made up of wines from lesser-known areas of France, such as Bergerac and the Jura. A waiter suggested that the patrons would be more comfortable ordering wines they are familiar with. The managers' request to change the wine list was turned down.

Worry: Reason #5

The restaurant manager did some asking around town. He asked people what they thought of the La La La French Restaurant? The respondents often replied: What's a La La La French Restaurant? And where is it?

These responses indicated immediately that the name of the restaurant was not communicating anything, and that the location did not create any public awareness that the restaurant existed at all.

When the manager explained the concept, people said it sounded interesting, but the food sounded a bit rich, a bit too heavy.



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Epilogue

For some reason beyond the manager's comprehension, the owners and top management refused to make any changes in the concept; they also refused to invest in marketing the restaurant to promote their vision of it. For six more long months, the restaurant continued to attract very few customers. After less than a year in operation, the restaurant was closed. The space was converted to banquet facilities.

La La La ultimately failed for a combination of reasons even though this successful European concept could have been adapted to this new locality. But because of a lack of market research on customer reaction to the name, local reaction to the menu, the location "half a block from success," and top management's inflexibility to adapt to market factors, the restaurant could not draw enough customers. The manager and staff had a challenge they could not overcome.

What Would You Have Done?

Put yourself in the position of the La La La manager, and set the clock back to the first month of operation. Things are not going well, but you convince the corporate office to let you spend some money and conduct some market research that hopefully will provide the information you need to turn the operation around.

You decide to focus on the local market first, as this has the greatest potential, and you are aware of a few dozen restaurants only blocks away drawing large numbers of local customers nightly. First you need to define your questions:

What information would you consider essential to obtain? How would you obtain that information? What specific sources would you go to? If you were to conduct a phone survey or focus group (with the proper demographic

audience), what questions would you ask?

What information would you consider essential to obtain?

Information about the local area: demographics, neighborhood composition, type of businesses in the area. Information about competing restaurants in the area. How would you obtain that information? What specific sources would you go to?

Government sources such as census data and municipal studies. Marketing sources such as postal-code analyses and demographic surveys. Public sources for competitors' data such as the phone book, Web sites, local media (like

newspaper ads and reviews, for example), and restaurant guides.



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If you were to conduct a phone survey or focus group (with the proper demographic audience), what questions would you ask?

Food and cuisine preferences. How often people eat at a French restaurant. People's food preferences for lunch vs. dinner; winter vs. summer. Average amount spent for a dinner for two at an upscale, casual restaurant. Reactions to the restaurant's name.

The Marketing System

Objectives of the Marketing System

Identify the customer or demand Identify the products and services the customer wants Identify threats and exploit opportunities Identify and sustain a competitive position in the marketplace Increase demand

Questions for Market Research

Questions that could be addressed by market research:

1. Why hasn't our advertising increased our customer counts? 2. Why are the hardcore users of our product not returning as frequently as they used to? 3. Lately there appears to be some confusion in the customer's mind concerning the image

of the operation. Why is this happening? 4. Why have we lost market share for our dinner business? 5. Will our target market accept a price increase or should we cut portion size instead? 6. If we opened for lunch, which segment of the market should we focus our advertising

on?

Finding answers to these questions can help management fine tune an operation to better meet the needs of an existing market, answer difficult questions regarding customer behavior, or capture a new market segment.



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More about Market Research

According to Chase Econometrics, a leading firm that studies consumers and the foodservice industry, there are several key factors that drive the growth of the restaurant industry.

They are:

Level of personal disposable income Demographics Travel and vehicle use Working women

If these are the key factors driving the foodservice industry, then market research efforts should focus on getting as much of this information as possible for the area a foodservice operation wishes to capture market share in.

Essential Demographic Data

What are the essential things demographics can tell you about your market?

Population – Size and makeup of the population gives us information on the demand and volume potential.

Ethnic makeup – Gives us some indication of food preferences. Geographic distribution and densities – Tell us whether the customers can be reached

and are close enough to come within reasonable distance to the restaurant. Age makeup – The concept, food, atmosphere, and service style need to have a

different focus, depending on the age segment the restaurant wishes to attract. Personal disposable income – Tells us how much money the local population has to

spend for restaurant meals. Education levels – Give us an indication of the level of sophistication our target market

can expect and whether or not they're open to new ideas and creative foods. Occupation type – Gives us an indication of target customers' value considerations. Household make-up – Singles, families, and couples all have slightly different needs and

expectations when dining. Workforce make-up – If a high percentage of women are working, time becomes the

most precious commodity. Type and cost of housing – Urban dwellers in small apartments probably eat out more

than homeowners; rent or mortgage payments affect disposable income. Changing nature or shifts in the above characteristics – If demographic information is

showing a shift or trend in a market area/neighborhood, the restaurant concept should be developed or repositioned to focus in the direction the trend indicates.



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The Three Main Factors in Demographic Analysis

The demographic information in the previous list is available through many sources with limited effort and at reasonable cost. With this information in hand, you can begin to determine what a viable concept would be for a given market area. Three basic pieces of information can be gleaned from the demographic analysis by looking at three of the major demographic factors:

Income level Population size Geographic distribution

Let's look at how important this information can be.

Income and Demographic Analysis

Income level We know from various consumer studies that the higher the income level, the more money will be spent on food away from home. A National Restaurant study showed that households with incomes of $50,000 or higher spent 50% of their food expenditures at restaurants, and that those households account for 70% of the total personal expenditures for food away from home. Market areas with significant numbers of high disposable income families offer more possibilities for restaurants than areas with low income families with very limited disposable income.

Population size and Demographic Analysis

Population size The size of the population, and more specifically, the size of the target market segment(s) are important to the viability of any concept. If we have 100,000 people in the market area, but only 2,000 of them have incomes above $30,000, we are not going to have a viable market for an upscale, high-priced, fine dining restaurant. There may be potential for other types of restaurants to be successful. To be successful, you must match your concept to the market.

Geographic Distribution and Demographic Analysis

Geographic distribution A restaurant located where 70% of the population lives or works within a two-mile radius has a better chance of getting frequency from repeat guests than if the majority of the population was located within a ten-mile radius of the restaurant.



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How the Outback Steakhouse Uses Demographics

Restaurant companies with many units operating in different geographic areas know exactly what their concept requires in the way of demographic makeup. For example, the Outback Steakhouse has a "suburban growth formula" of 50/50/5. This means that for Outback to locate a restaurant in a particular area, it must have a population base of a minimum of 50,000 people with an average income of $50,000 per household, and the geographic distribution of the 50,000 people must be within a five-mile radius.

Outback's formula, no doubt, changed as they moved into urban areas where real estate costs were higher but population density and income levels were also higher.

Beyond Demographics

There are other issues—psychographic issues—beyond the traditional description of demographics, that marketing research attempts to find information about. What else drives the consumer to purchase? Lifestyle issues are harder to quantify than demographics, but are very useful. This research attempts to identify consumer needs, motives, behaviors, and attitudes.

Market Segmentation

Market research often leads to segmentation of the market. It is possible to divide the market in several ways: market segmentation and occasion segmentation.

Market segmentation is simply dividing the market into sub markets based on various demographic, geographic, or psychographic factors. For example, focusing on a population segment with the following characteristics—age, 35 to 55 years, income of over $50,000, college grads, professional occupations—gives you a very specific group to appeal to.

When segmenting the market and selecting a segment, the target market should be large enough to sustain the operation and generate the desired profit. It should not be totally satisfied by existing foodservice operations and it should be stable or showing some potential to grow over time.

Occasion Segmentation

Occasion segmentation is dividing the market according to the reasons customers go out to eat. For example, families going out for a meal would be one occasion segment with very different needs than a group of business people going out for lunch. This is a valuable way to look at the market because it focuses the operation to better meet the expectations of the guests during different dining occasions.



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There are three basic classes of occasion segmentation:

Business or social obligations Family meals Special night out

The following preference ratings show how different aspects of service rank in importance to these three groups, and any other expectations that are special to them.

Business & Social Occasion Segmentation

Preference rankings:

Basic Expectations

Appeals to business men and women * They seat you quickly Looks neat and clean Efficient service Food served right away after it is cooked You can count on the same quality every time Warm, friendly servers Attentive service Quick service Food attractively served, displayed*

Other Expectations

Less casual atmosphere: more sophisticated, classy Great appetizers Expensive Wide selection of liquor, beer, and wine.

* Ranked higher in this profile than in the total sample of occasions

Family Meals Occasion Segmentation


Basic Expectations

Quick service*



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Efficient servers Casual atmosphere* Looks neat and clean They seat you quickly Food served right away after it is cooked You can count on the same quality every time Warm, friendly servers Has items kids like* Attentive servers

Other Expectations

Good amenities for children


A Special Night Out Occasion Segmentation


Basic Expectations

Efficient service Looks neat and clean Servers are knowledgeable* Warm, friendly servers Attentive service* Food is served right away after it is cooked You can count on the same quality every time Appeals to businessmen and women* Great entrees* Really fresh ingredients*

Other expectations

Less casual Sophisticated, classy atmosphere Lots of privacy Beautiful place Décor made of real materials Good music Expensive



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Good selection of liquor, beer, and wine Great appetizers Exotic or unusual things on the menu Skilled chef in the kitchen Everything made from scratch Good choice of daily specials Great side dishes Great desserts Great freebies Large varied menu


How to Capture Demographic & Occasion Segmentation Data

Capturing demographic and occasion segmentation information about your current guests can be accomplished in a number of ways. The questionnaire included next can be administered quickly and will provide useful market information. This should be administered for each meal period, as there can be a significant difference for different parts of the day. The information from this form will assist with identifying where the customer comes from; it provides information on the frequency of visits and the occasion for the visit, as well as demographic information.

Market Segmentation Customer Survey

1. Are you a guest of the hotel?

_Yes _No

2. Where were you just prior to coming to the restaurant?

_At my place of business _Shopping _At a meeting _inside the hotel _in the area of the hotel _Visiting with friends _At my home _Other, please specify________



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3. What prompted you to eat at this restaurant on this particular occasion?

_Meet with clients or associates for business purposes _Meet with friends or acquaintances for social purposes _Celebrate a special occasion _Other; please specify ___________

4. How often have you patronized the restaurant during this meal period in the last month?

_Never, this is my first visit _One to two times previously _Three to four times previously _More than four times previously

5. Please tell us:

How many adults __ and children (12 and under) _____ are dining in your party? What is your occupation____ What is your age___ What is your sex_____

Market Research and Demographics Changes

Market research isn't something that is done once and then forgotten about; rather it is an ongoing process to keep abreast of the changes occurring in the market. Here are just a few examples of the changing demographic and lifestyle factors market research has identified as affecting consumer behavior and the food and beverage industry.

Maturing baby boomers Generations X and Y and their use of technology Rising number of senior citizens Increase in single households Smaller household size (reduced birth rate) More women in the workforce Increase in the number of dual-income households Better educated, more discriminating consumer Convenience is paramount

Analysis of the Competition

Once the customer base is thoroughly understood, it necessary to study the competitors in the marketplace. It is easier to identify and understand the competitors than it is to gather



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information on the consumer base. The phone book and newspaper and magazine ads, as well as restaurant guidebooks and Web sites, can provide a good overview of the foodservice operations already in the marketplace. Because of this, many entrepreneurs make the mistake of focusing more on the competition than they focus on their customers. This is surely a recipe for failure.

What is marketing information and how do you find it?

Market information comes from many different sources. Some of the data comes from studies done by governments to keep track of their populations for both tax and political purposes. Census track data is generally available at very little cost, and can provide a wealth of statistics on a population. You can find some of the information in newspapers, magazines, online, and at your local library.

Census track data gives you volumes of information, and sometimes it would be nice to get it distilled down to just the essential information you need for only the market area or neighborhood you're interested in. Sometimes municipalities or city planning or zoning commissions will conduct a study that can provide this more specific site information.

A number of years ago, I was conducting some seminars for Hilton International out of their Vista International Hotel in New York City. The food and beverage department in that hotel would run theme weekends featuring foods from Bavaria, Italy, Greece, etc. Since these were one-time events, the advertising budget was minimal and small ads placed in The New York Times didn't yield many customers for the money spent.

While talking about market information sources, which they were using to attempt to first identify and then reach the intended markets for these special themes, I asked if they had looked for any city planning studies. They said there weren't any. I made a few phone calls and found out that the New York City Planning Commission had recently spent half a million dollars on a neighborhood study of Manhattan. A copy of the entire study, which included complete demographic information and maps of each neighborhood, was at the reference desk at the New York Public Library. I called the reference librarian, and for a copying fee of $35, and a $15 fee for a messenger service to deliver it, I had in my possession a tool which would allow the Hilton to pinpoint precisely which neighborhoods would be interested in any ethnic theme the food and beverage department decided to feature. The neighborhood information gave the Hilton the sources of local papers, bus lines, and train stations to advertise in to reach the interested market. Now their limited advertising funds could be put to best use by focusing in on a well-defined market with an interest in the offerings.



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What are sources of market data?

If you're willing to spend a few hundred dollars on market research, there are market research firms everywhere who take the government census track data and put it into a more user-friendly format. In addition they use proprietary computer-based programs to develop buying power indexes and show a postal code or neighborhoods potential for certain types of food services.

Over ten years ago, I was conducting a seminar in Sydney, Australia, with a group of food and beverage managers. When I spoke about using demographic data for analyzing market potential, the majority of the audience said that the information just wasn't available in Australia. I made a little wager with the group that indeed it was. During our luncheon break, I picked up the phone book, found a market research firm called "Apasco" in North Sydney, gave them a call, and explained how I had some disbelievers in the audience. They faxed me a five-page analysis of five different postal codes in Australia, each with very different potential for restaurants. When I brought those back to the group, several of the participants mentioned that they had planned to open restaurants in at least one of those five postal codes, and that they had never seen this data before. The data included buying power information, market share penetration of current restaurants in the area. When you're going to spend $500,000 to $1 million or more to build a restaurant, doesn't it make sense to spend a few hundred dollars on good market information? You bet it does.

What are some other sources of market data?

Studying the competitors by looking in the phone book, looking at ads in newspapers, and listening to radio ads is a start, but walking the neighborhood and seeing the competitive environment firsthand is worth the effort. You want to get a sense of the surroundings. Is this a stable environment or is it an area which is in transition? And, if so, which way is it heading? Most restaurants are long-term investments, and they require three to five years before the capital invested can be recouped. Investing in a neighborhood that's going the wrong way is something that you really want to avoid. Another source of competitive information would be food and beverage suppliers. They can provide good insights into what's happening in a particular area or neighborhood. After all, they supply the raw materials, and thus have a good sense of the volume of business currently being done and what the trend line looks like.

What are sources of internal data?

Our POS systems and credit card companies are probably our best source of this type of data. Internal data is information which we already capture in-house. Our guest history records from our reservations system and credit card or house charge accounts can help determine our best customers, how often they return, on what occasions do they dine with us, what they like to eat and drink, and how much they routinely spend with us. Using this information to better



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serve the guests and build stronger loyalty is what is called customer relationship marketing today. We can also administer customer surveys and run focus groups to get more detailed information about our customers. Successful managers spend a good portion of their time interacting with their guests, and thus getting to know what is important to them. This informal information gathering is also very useful.

What market research does your company do before developing a new restaurant?

Philip Kendall

It's really, I guess, it's kind of three elements. It's external: sort of research, what's going on in the area. It's internal: what do we do best? You know, what do we do best at this particular—knowing that here's the staff, here's the amount of energy and time that we can put to this, here's what we expect this hotel or restaurant to... how we expect it to perform given its marketplace. And then the other element would be: What concept have we got that we would love to put in there?

Doug Martinides

We use a fact-based, trend-driven approach to all of our development. It's part of our core approach to how we create the solutions that help our business. From a trend standpoint we focus on a three-pronged approach to create our product differentiation, our market segmentation, and ultimately what the overall product strategy is. Two of those three prongs are external, the third is internal. I'll talk about the external first.

Externally... And as a point of explanation, all of our development is done by using a team approach of at least a culinarian and a marketer working together, if not a larger team depending on the project. The marketer on that team looks at the consumer trends externally: what's happening from a consumer behavior standpoint—psychographics, demographics—and also what the geographic nuances may be, and I guess and additionally what the differences are by channel or by operating division. So, what are the trends specific to a business in industry versus colleges and universities, for instance.

Externally, the other part is looking at competition. We define our competition as any point of service that sells a food and beverage that a customer could go to in lieu of one of our locations. The culinary team looks at that side of the business. We start... when we look at white tablecloth to look at where the emerging trends are and where the high-end creativity is occurring; we look at QSR for where mainstream is and how that's affecting, you know,



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broadline consumer preferences; and then we look at fast-casual, in turn...we take both of those, you know, outside influences and blend those with internal research. It's understanding the research that our locations are getting from their consumers. It's understanding what our operating divisions are getting from their clients. And it's understanding what challenges or opportunities our frontline managers see in their location. Where are the impediments to improving sales, satisfaction, and/or profitability? It may be speed of service, it may be recipe, it may be equipment, it may be skill training, or customer service training, or whatever else. All three of those then merge to create the framework of our development strategy.

What specific resources do you find most useful when gathering market information?

Philip Kendall

One, we have the advantage of having a couple chefs that are excellent culinarians, two or three other guys that are good idea people. We don't just limit it to the food and beverage page, right? You know, there's a couple of different people that float around this hallway here that are: Hey, what do you think about this? Here is what we are talking about for Times Square. But...so the creative process, I think, is... you know, follows right behind: Who is this customer? or, What is this customer getting in this area? and, What can we do to expand that?

So, lots of time spent on that creative just kind of kicking around, you know? When I say a lot of time, I mean, we don't, you know, there's no: Let's take a week and come up with a concept. It's, you know, we may all come together and everybody...send something out, or we'll talk in a meeting before and say: You know, we really need to talk about Times Square. Here's what we know about Times Square: small space, going to be very transient guests, probably not going to have much lunch business because they're staying in Times Square and as transient guests, they're out on the street during the day.

So, if you've got the elements of what is going on there, okay, then we all come back together and we say: Hey, what do you want to do with this place? And you know that you want to address an interesting breakfast, and you want to address dinner.

If I could expand on this: we didn't want to do something that was traditional for breakfast, and we didn't want to do something that was obvious for dinner. So we come up with this idea that is all about choice, and we called the concept "puzzle." We were going to create a menu that was pretty approachable, okay, pretty Americana in it's fashion, but that you could have anything on that menu, okay, any portion that made sense. So you could build your breakfast, and you could build your dinner off of these different menu items. So, how do you write a menu, Steve and Richard, that is going to allow us to have very different-tasting items, but using a similar mise en place? Beef, chicken, pork, fish, maybe, OK, and how are you going to blend that?



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And so that process continues to roll on to the point where you actually go: Hey, let's go cook this stuff. And, not only, Let's go cook this stuff, but, Mark and Howard, if it's all about "puzzle," then it's got to fit onto something. So let's go find some china and the right vehicles to put it so that it looks like a puzzle when it gets to your table.

And so we found... so we go out, and we say: We like the idea. We think the idea can make some money. Steve's going to work on the actual plates, as far as what we're going to cook. Howard, Mark, you guys need to find some plates that we can put this on, and I'll work on a presentation for the ownership.

So, that's kind of how it comes together. Because I think you have to test it, I think you really do. I mean, you know, any concept that you're working on, you've got to cook, and cook, and cook, and play with, and cook because if it is right the first time, I guarantee you didn't put enough effort into it. You did not put enough effort into it. And if you like what you see the first time, even if you like the way it tastes, you know, then you're cheating yourself, too. You need to go through several versions of that.And then, then you present it to somebody. Present it to somebody, and not only just: Hey, I want you to try this and eat this. Why'd we do this? What do we think that we can get out of this?, and, Here's a financial proforma that we believe the restaurant can do.

Doug Martinides

OK, so as far as specific sources for our market research information, we have three primary sources.

One, because of our size and purchasing power and our relationships with our manufacturers, we look to our manufacturers for a lot of the trend information and research that they've done. A lot of it's proprietary to them, a lot of it is for-purchase research that they've bought. We ask them when they use that to give us their interpretation or analysis of that, and we take a category management approach. So if we're developing a new sandwich concept, we'll work with Armour Swift-Eckrich, we'll work with Kraft and their Louis Rich division and their Kraft cheese division, we'll work with bread companies, to understand what are the current trends in all the different components that make up the menu item within that food concept. We use a... We take that and we analyze it and we blend it to come up with a prescriptive element to our strategy as opposed to descriptive. So we're trying to prescribe and predict what the future and where that category or that concept is going, as opposed to being descriptive, which is where it's come from or where it's at today, given the way we approach our business.

The second area is really what I'll call for-pay research—whether it's our own custom research, or it's research from Technomic. I happen to like Technomic a lot, and some of their publications, like Menu Clips and Menu Trends, are a good source of information and a good



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way to summarize a lot of activity that's happening in the industry. Mintel is also another one that's an online for-pay market research source that we found to be very good.

The third area is really subscriptions: it's trade magazines and publications, both in print and electronically. I personally subscribe to, I think, fifteen different email newsletters, daily newsletters, and it's from a broad spectrum, both from an email and from a hard copy print standpoint. I have magazine subscriptions from the hotel industry, from catering, form the QSR industry, from convenience stores, from grocery stores—it's really a broad perspective. And by looking at all three of those, you start to see what I call bubbles of trends or ideas emerge, and really validate and reinforce each other and then help us figure out where we want to provide the strategy, where we want to drive the strategy in the direction of our development as a result of it.

What is the Concept?

The development of the foodservice concept is based on market research and an analysis of the target markets for which an operation wishes to focus.

The concept should be developed to attract a well-defined group or groups of people. The concept embodies the total impression the market will receive from experiencing

the operation.

For example, if we're targeting young singles we will need to develop an operation with the appropriate image, atmosphere, menu mix, pricing, portion sizes, beverages, music, labor force, and service style. The image is also shaped through marketing activities such as advertising, press releases, reviews, word of mouth, and promotional activities.

Looks are important, but not all...

The National Restaurant Association reported that restaurant operators are paying more attention to design, décor, and atmosphere. The report also indicates that two-thirds of the restaurateurs surveyed are using professional designers and three-fourths are using architects to create the design. In addition the majority of operators surveyed indicated that they had remodeled their dining areas within the past four years.

In the customer's judgment, however, the physical setting is generally third in importance after food and service. How much importance the customer places on the physical setting will depend on the dining occasion. In general, customers going to a family-style restaurant will



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place less importance on the physical settings compared to a customer going out for an upscale, fine dining, social or business occasion.

Components of a Concept

As restaurateurs make sizeable investments to create particular dining environments, it is important to align all the elements of a concept (see below) together into an integrated unit. But if the parts don't fit together, the concept is not clear, and it usually results in customer confusion.

Name Logo Image Physical facilities Space Exterior appearance Interior design Atmosphere Décor Mood Smell Lighting Furniture Service-ware Menu Price range Portion size Food presentations Beverage offerings Music Labor force Service style Attitude of staff Reputation of the chef Personality of owner or manager Appearance and attire of staff

Case Studies

Explore how a concept is developed and implemented by looking at two case studies: the Four Seasons restaurant in New York, and the team efforts at Hyatt to develop its food and beverage



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concepts. As you read the particulars of each case, think about how each decision that was taken supports the operation's concept.

The Four Seasons

The Four Seasons Restaurant opened in 1959 and has survived and prospered in spite of many business cycles. It has been able to do this partly because of its timeless design and the willingness of the ownership to continue making the necessary adjustments to keep the concept thriving. Let's look at some of the concept elements and how they are tailored to the market.

The name, The Four Seasons Restaurant, establishes the image that this restaurant adapts to the seasonal changes that take place in the Northeast. The logo carries that theme with four trees all in different stages of bloom. The logo appears discreetly at the entrance to the restaurant at 99 East 53rd Street; it is also printed on the menu and on all the marketing materials.

The market focus for the Poolroom is top executives and high-end travelers; the average check for dinner is over $100. The market focus for the Grillroom is middle-level executives on their way up; the average dinner check is approximately $70. There is an extensive selection of fine wines.

The interior design, by architect Philip Johnson, is a classic example of timeless, understated elegance. The interior space is large, has very high ceilings (20 ft.) and consists of natural imported wood walls from floor to ceiling. Unique copper window treatments give the appearance of motion and change the mood of the restaurant from day to night. In the main dining room, called the Poolroom, the large center pool is a focal point and it adds just the correct amount of motion and noise to provide both a soothing feeling and privacy for conversations.

A large Picasso hanging in the entryway adds a romantic spike as does the two suspended Bronze sculptures by Richard Lippold. Original artwork is displayed on the walls, but the elegance of the space is not marred by clutter. Each room contains plants and trees with the appropriate foliage for the particular season.

The first service encounter occurs just inside the door, as the professionally attired coat checkers greet the arriving guests. The service staff wears business attire and the staffing levels are high with waiter teams, as well as a captain, for each station in addition to a Maitre d'. Service is professional and transparent, and does not intrude on the clientele's dining experience. Ownership is present and on the floor during each meal period.



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The restaurant operates on a reservation system and has an extremely high number of regular clients; this makes it difficult, at times, for newcomers to get in, thus creating some appearance of exclusivity; which is certainly part of the image. Great care is taken to develop a strong relationship with the regular clients. The clientele further define the restaurant and its image as the place to be.

The integration of logo, menu, décor, service-style, and standards all create a consistent message to the Four Seasons' target market of a high-end, exclusive, dining occasion.

Hyatt Hotels - NoMI Restaurant & Lounge

The careful integration of elements into a concept is very important in a hotel setting. George Vizer, VP of food and beverage for Hyatt Hotels, in a special report in Restaurant and Institutions magazine said, "developing a concept requires a great deal of research into the local market. You have to have enough foresight so that, as the market or surroundings change, you have taken that into consideration." "Otherwise," he adds, "constantly changing concepts creates a great deal of inconsistency and is very costly."

Vizer offers the NoMI restaurant in the Park Hyatt in Chicago as a case study in how to develop a concept for a hotel. Based on market studies of dining public in that market segment and the fact that the hotel, with room rates in the $400 to $500 range, would attract a certain clientele, Hyatt determined that the restaurant's menu should be very sophisticated but very straightforward, with food that is not complicated.

Hyatt hired acclaimed restaurant architect Tony Chi to design the space. They also searched for a chef who could thrive in that environment. The culinary background of the newly hired chef, Sandro Gamba, was predominantly French. In addition, they thought Asian flavors and overtones would add more interest. To complement Gamba's talents, Hyatt transferred several culinary staffers from its property in Thailand. The result, says Vizer, "is a concept with staying power."

The development of a concept takes a team effort. In this case, even an experienced and successful company like Hyatt brought in outside talent in the form of a well-known architect, to produce the design; they then sought out a chef with the particular talents and background that fit the concept they were developing.

Developing a concept is a big investment of time and money. If the concept isn't clear, if it isn't correct, and if it isn't kept current, the market will go elsewhere. Restaurant companies like Victoria Station, Howard Johnson's, and Trader Vic's were once very successful concepts, but their inability to change as the consumer interest in their concept faded is what caused their demise.



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Describe the concept development process you use.

Phil Kendall

When we look at what the property is, it also is: How is the property designed? And this property, actually, is kind of high design, so it's a good looking property. So we kind to had to kind of make this thing work. And again, the dishes that we came up with were great, and you know, I mean, I think when you present something, that you have the responsibility to do it completely. So, we had graphics that we had designed, internal in-house graphics that we designed, to make it look like, Hey, this is what the "puzzle" menu would look like. You know? And I think that's what it is. And I can't overdo the fact that, you know, five food and beverage geeks sitting around talking about a concept is a wonderful way to get things started, but until you take that out and get some input from some non-food-and-beverage people, and really listen to that, that's about a concept.

Drew Nieporent

You know, I've always been aware of the Boca Resort because, I think, about ten years ago, I remember reading in Nation's Restaurant News where they hired Nick Nicholas, the restaurateur from Chicago, to put his concept here—Nick's Fish Market—and also, they had hired Louis Gauttier, the great French chef from L'Oasis, in la Napoule, to also come as a consultant to one of the restaurants. So, from a distance, I always had an idea that it would be fun to do a restaurant in Florida. Then, Michael Blinney, who was responsible for bringing those other gentlemen to this resort, contacted us through Victor Tiffany, Cornell graduate, who had some contacts here at the resort. And they started discussions as to the Myriad Restaurant Group, with all of our different interesting concepts, maybe doing something at the resort.

When you come here and you see the grand nature of the design and the architecture, the first thing that comes to mind is Tuscany, because you have this sort of Moorish architectural details all over the resort, and in our own group of restaurants, we don't... we didn't presently have an Italian-style restaurant. And Tuscany is very wonderful, evocative, rustic feeling... a lot of sun, which, of course Florida is known for, a lot of wonderful fresh products and fish. And so we started developing the concept for a Tuscan restaurant at the Boca Resort.



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Doug Martinides

Concept development... I mean, development is what we do. And I thought, as I read this question, rather than trying to answer it with a specific example or to limit it just to a outlet, that I take this more from a "macro" standpoint. And I want to talk about the process because this is a process we use, whether we're developing a promotion or we're developing a brand-new destination, or we're refreshing an existing concept, or whatever... whatever development we have. And although I'm going to talk about this sequentially, in our world, I guess the real world, it's all done in parallel. The basic starting point, as I've mentioned before, is starting with research: looking externally and internally to what the current situation is. So what we do in parallel is what we call "destination planning" and evaluation of a current...or "situation assessment." I'll talk about destination planning first, and then I'll talk about the situation assessment.

In destination planning, we really start off by asking five key questions:

What is the role or purpose for whatever it is that we're developing? Where does it fit, but really, what's the role? And that's a hard part, if we start with the end in mind. What are we trying to accomplish?

Who is the target audience? Is this something we're developing specifically for business and industry, or college and universities, or are we developing something that has to have application across multiple operating divisions, (which has a degree of difficulty to it)?

Once we've answered those two questions, then we talk about how we want to differentiate this from other alternatives that are in the marketplace, either that we offer—so we avoid confusion as to what to select—or as a way to differentiate ourselves from other competitive sources.

The next piece is really: What's the benefit? And we answer the benefit from a variety of different perspectives. What's the benefit to the consumer? What's in it for them? What's the benefit for the operator? What's the benefit for our client? And what's the benefit for the division? And then we ask the question, because that's all customer-focused. The way we work is that we do the development for the operating divisions: they're our clients or our business partners, if you will.

The last question that we ask is really: What's in it for us? And "us" is, what's in it for ARAMARK Corporation and what's in it for my department in general? What do we hope to gain out of it? Is it learning, is it experience, is it enhancing a competency or developing a new competency? Getting into an area that we may have an interest in but not the kind of experience that we



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want. And, really, in that what's-in-it-for-me question—what's in it for us? It's really what do we expect from this in the long term? What's the long-term benefit of it, as opposed to just getting it done?

Putnam Gibson Our conceptualization begins with filling a need in a market, then comes the excellent location. Houston's are designed to fit a location and its community, although we may do a few things, menu wise, regionally, it's really about our high quality of food and service that allows us to be competitive with the concept.

What are some of the constraints or opportunities you consider when developing a concept?

Drew Nieporent

When you have these water views, the most important thing it to try to concentrate on making sure that you design, you know, and keep the integrity of all the windows and the water views. I think we've been very successful so far: the restaurant was designed by David Rockwell, who we've had many collaborations with, specifically 1994, we worked on Nova with David Rockwell, and that's a spectacular design. Rockwell's very good at sort of taking your ideas and generating a very good synergy and collaboration. You have to slap his hand a lot because, you know, designers want to design and innovate. But, if you look, the space is very well appointed: it's got nice elements, but overall it's very simple, and we wanted that. And I think we finally accomplished something which you generally don't see in too many restaurants, which is no real bad tables. The other thing is I don't like side stations, so we tend to work with these guerdons, which you can really place around the dining room—they don't have to be in a central space.

The problem that we had was that the kitchen, which is over my shoulder, is limited in terms of its length and overall space for the number of seats that we had. Originally we had more backup space, prep space, and that was compromised a little bit. But overall, I think I'm very pleased with the whole idea. What we start out and what we now have been operating for a couple of months, pretty much our ideas and our visions have been actualized. Doug Martinides

We then move into...or concurrently we're working on a situation assessment, which really takes a lot of the research that we've done and puts it in play, because it helps to define the scope and the strategy of what we're developing. It's: What's the current market environment for this x that we're developing? What's happening from a competitive standpoint that we could differentiate ourselves from, that give us some uniqueness at the same time that's maybe something that the consumer can relate to? What are the customers' wants and needs? How is



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what we're developing going to address their wants and needs? And that's really on a consumer standpoint. You know, whether it be convenience, or whether it be health and nutrition, or whether it be more ethnic and authentic flavors, or styles of service, or whatever. From that really comes certain hypotheses that says, What is it that we want to test? And we may come up with, through some, really, what I call constructive discourse, you know, two or three different ways to tackle it. And rather than arbitrarily picking one in a vacuum, it's, Well, let's go test them all. And let's see what happens. That testing is a key piece of this because we work with field development sites. Rather than developing in a vacuum and developing and producing and shipping if you will, we'd much rather develop with our locations, real time, so that we have a case study, we get a financial measure, we get some fine-tuning that's necessary, and when we then introduce this or roll this out, in fact, we can go out with a proven commodity, as opposed to just a hypothesis if you will.

After we've tested this, we then adjust, and we develop; once we develop, then we train, and the training approach we take is to train the trainer to train. We train the operating division's trainers, who then deploy this into their locations as appropriate. The actual development process, then, of what we develop, kind of starts next.

Putnam Gibson

A good example would be our Palm Beach Grill location. There is a real absence in the market for a casual, spontaneous, dining experience we could offer. It's a premier location with limited square footage so we had the opportunity to take a highly sophisticated yet casual approach to an area that was primarily fine dining and reservation oriented on the Island of Palm Beach. The result is a dinner only restaurant with fast, friendly service, a menu that features an emphasis on the fresh, local seafood, while still respecting the local flair with a loaded hotdog we grill in a contemporary Florida design.

How do you incorporate menu design into your planning?

Drew Nieporent

Chef Kevin Garcia came to us through Jon George VonderEicht who was the chef at Prime, in Las Vegas, which was a heavy, high-volume restaurant. We don't expect to do that much high volume, but we need a chef who has resiliency and can put up with, sometimes, the logistical problems that you have with a small kitchen and a large number of seats. And, of course, being in the resort, the club members here are very demanding, so you need somebody who can go with the flow a little bit and be a little bit more flexible in terms of, you know, substitutions of dishes and, you know, food cooked maybe past the degree of doneness that most chefs want to let it go out of the kitchen for.



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Well, you know, Florida is not without several Italian restaurants, but Tuscany tends to bring into a little bit more of a definition as to simple grilled food, not too elaborate presentations. All the pastas that we have on the menu are fresh pasta. Obviously, we have a lot of antipasto-type items, whether it is marinated artichokes and mushrooms, to various types of grains and beans and thing like that. We serve a beautiful Florentine steak, which is about this thick, and for...you know...it looks like a good portion just, you know, for guys like myself. The basic food of Tuscany should be simple, where the products are more important than the preparation. So the menu...you know, obviously pastas and first courses, and then a lot of fish on the menu. I want to do a lobster on the wood-burning stove. We have a wood-burning oven for pizzas if we like, or for "al forno" dishes, baked dishes, but I want to do, you know, whole fish and big lobsters.

Doug Martinides

I like to start with what I call the primary strategies. What's the menu? We start with the menu strategy because we're in the food business and everything should start with the food or start with the menu. So we define the menu strategy. From the menu strategy, that then drives the pricing, and that hopefully reinforces and supports the brand positioning that we've tested through these hypotheses. Once those are finalized and agreed to by the group, we then go into secondary strategies. And that's really your marketing strategies: how do we want to then develop the marketing communication, the promotion, the merchandising, and the customer service elements, all the development, all the different pieces, that ultimately help meet the objectives of driving traffic or participation, on one hand, or driving contribution per transaction, on the other? We don't use check average here, because I can show you how to drive check average and hurt your bottom line; it's more, how do we improve the contribution per transaction with the customer? Putnam Gibson

First, you have to be flexible in regards to the development of the restaurant's identity in order to go after the need of the market. Often times during the process, your original idea is no longer working and that flexibility is important.

Second, have a clear understanding of your financial parameters and expectations. That really goes into depth before construction is even started.

Third, an effective management team has to have a clear understanding of the vision with the ability to translate that vision into high quality operations day-to-day.



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What are some of the steps or challenges you face in operationalizing the concept?

Drew Nieporent

You have a problem in Florida that it's not really a labor pool, it's a labor puddle. So you have to really work with the type of people that you have and do some training, and especially in a young restaurant, you never... to get the staff up to a high level of efficiency means constant vigilance, constant training, and so that's going to be our big mission, I think, is to bring people up to speed with kind of the level of service that we want to... that we want to be able to achieve.

When you have a multi-unit group like we have, you can't possibly be in each place at the same time, so you have to empower the people that you trust—the management—to carry forth, you know, the daily regimen. So my style tends to be pretty much laissez faire now. Which is not meaning I'm not interested, but hands off to the point of allowing your staff to really control it on a day-to-day basis.

However, if you come in and there are glaring problems, whether it's... for me, the hardest thing is the logistics of the restaurant: making sure people don't wait and making sure the food that comes to the people is either properly served cold or properly served hot. I think my biggest lesson at the Cornell Hotel School was to serve it hot or serve it cold.

And, I always try to simplify the job, whether it's for a cook or for a waiter, because if the job tasks are simpler, they'll be able to perform their duties, I would hope, more efficiently. The more you give to somebody—and they might not be capable of handling as much responsibility as you give them—I think the guest suffers. What I want is the guest to get the full benefit of a server's, you know, time and talent, and that the food come from the kitchen to the dining room as fast as possible to assure that it is hot or cold, as the case may be.

Doug Martinides

That development is done, starting with the end in mind. Who's the user of it? And typically, that development is done in three phases. It's developed first for the frontline employee. That's very tactical: how do you build a sandwich, how do you set up your station, how do you smile and greet the customer and get the customer through the facility quickly?

The next level is for the manager of the location, which helps the manager understand what the objectives and what the strategy of the concept are, and what the standards are, and what the expectations are, so that they can coach and facilitator and manage their workforce.

And then the third level is, really, just a strategy that we use with senior management—district manager and above—so that as they're working with their locations and with their clients, they



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can talk about strategy and what's the right solution for the situation, as opposed to an arbitrary decision: well let's put it in because I like it. And know what impact is it going to have on your business. So, this is what we do—I can talk about this for days, but in fact, as a summary, I think that captures it.

The Marketing System

The product value equation can be defined as follows:

Product Value = Product Quality x Product Quantity

As managers, we look at this equation in relation to our food cost.

The service value equation can be defined as:

Service Value = Service Quality x Service Quantity

As managers, we look at this as labor cost.

Customer's Value Perception

We can also apply similar formulas to describe our physical surroundings and other items such as our overhead costs, and how they collectively impact the customer experience. The customer perspective looks at the sum of the parts of the dining experience.

Customer perspective can be defined as:

Product + Service + Atmosphere + Convenience + Price = Value

Product and Customer Value

Consumers are certainly brand conscious when shopping for clothes, autos, and everyday household items. It follows that you can increase customer perception of quality by using branded products in foodservice settings. Featuring brands such as Starbuck's coffee, 100% certified Black Angus beef, Plume de Veau veal, and Absolut vodka reinforces management's dedication to quality in the minds of many consumers.



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Using branded products is not the only way to enhance customer value perception. You can also upgrade the product quality and state so on the menu; for example, by advertising that you use only USDA Prime-grade beef and sushi-grade tuna. Featuring organic or specialty items can also have a positive impact on customer value perception, especially if your target market finds those choices important. Finally, product presentation—the attractiveness of the finished product on the plate—also plays a significant role.

Portion Size and Customer Value

Serving larger portions will influence the customer's perception of value. It's important to note that while many customers enjoy generously sized entrees, they also appreciate larger servings of the other courses as well. Increasing the portion size of a tuna steak, for example, from 8 oz. to 10 oz. shouldn't go unnoticed, but putting an extra two ounces of French fries in every serving might have a similar impact.

Providing a complementary item such as a small starter during the meal, or a small sweet or cordial at the end of the meal can have a strong impact on the guests' overall value perception. Little things mean a lot when it comes to customer giveaways.

Recognition and Customer Value

Endeavor to improve customer recognition by encouraging your staff to learn the names of repeat guests. Staff should address guests by name at the host stand and again at the table. Simple touches like these increase the customer value perception of the dining experience.

Service Speed and Customer Value

Time is the restaurant manager's most precious commodity. Service time and pacing, from the time customers are greeted to the time they pay the bill, may increase or decrease value perception, depending on the dining occasion and target market. Fast and efficient service adds value to many target markets, while a slower pace is appropriate for others.

Increasing service speed also allows you to serve more customers at the same table during an evening, adding revenue opportunity for you as a manager and for your servers in the form of larger tips.

Service Type and Customer Value

The customer perception of value will be influenced by the service type: this can be viewed in a continuum from vending (no employee interaction), self-service cafeteria, quick service (fast food), buffet service, American plate service, through French or Russian tableside service.



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Service Style and Customer Value

In casual restaurants, something as simple as increasing the number of times the service staff comes back to the table for follow-up service, and increasing the number of staff per shift, can improve customer value perception. In a more formal, upscale, full-service restaurant, the service level can be upgraded from three- to five-step service by using the front-waiter, back-waiter system or by adding service positions such as station captains, a maitre d', or a sommelier.

Employee training programs also have a strong impact on employee performance, and standardizing many employee-customer interactions enhances customers' perceived value of the dining experience. Other suggestions to improve customer perceived value are to reduce the number of tables per station to improve server-customer ratio; to increase the use of technology to improve service speed and accuracy; and to implement a reservation system that takes your customers' patterns and needs into account and reduces waiting time.

Atmosphere and Customer Value

Upgrading your glassware, china, silver, linens, ambience, and décor can certainly influence the perceived value of a restaurant. These high-visibility items play an important role in influencing a customer's impressions of quality. Upgrading the exterior of your facility can also improve customer value perception. Adding appropriate entertainment or low-volume background music can also positively influence your customer's dining experience.

Comfort, Location, and Customer Value

Increasing space allocation for each table, as well as upgrading to more spacious and comfortable chairs, are further steps a manager can take to improve customer value perception. Depending on your target market, you may also improve convenience by offering other services such as valet parking or a drive-up window for take out.

Price and Customer Value

The customers ultimately decide whether the products and services they receive are worth what they paid for them. The challenge is to identify the upper range of acceptable pricing and to continuously monitor and test this limit. For example, in New York City, full-service restaurants typically sell a hamburger for between $9.00 and $10.00; however, customers at the The Twenty One Club are willing to pay $21.00. In all cases, price drives revenues, and impacts customer value perception enormously.



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In your company, what strategies are used to influence customer value perception?

Phil Kendall

I think that those five elements have to be there or there's no value, and one of them is value for price paid, but I think all those other elements contribute to it: which is product, which is service, which is cleanliness, which is comfortability of the space, the decor, which is hospitality. I think those things all contribute to this value for price paid. And then when you step back from that a little bit, what is the other thing? Well, hey, is it portion size? Well, sometimes it is portion size and sometimes it isn't.

I think portion is important. And, I think that it's one of the easiest things for you to govern because you know what it looks like.

It's about trying to connect you to the brand. It's trying to connect you to the tradition of the brand, or in maybe the W's case, since the tradition is very young, what is the future of this brand, and we are part of something that's very new and very different and evolving. And I think that's helpful because I think a lot of people will come off that.

When we do 14 days of training in new-builds. And the first two days is really all about this hospitality sort of... what do we think this brand should be about? What do we consider hospitality? So, that's one of the things that I think is important. I think that everybody needs to do continuous training, and we have just put together a banquet program. So we've created a eight-hour "re-introduction into banquet hospitality/service training."

Now, if I pulled banquet waiters from some of our bigger properties and said: Hey, you know what? We're going to retrain you. They'd throw rocks at me. But, if you break this out and say, Hey, over the course of the year, there's eight hours of retraining that we're going to go through, and here's why: Not because you're wrong, and not because you're rude, and not because you don't know better what you do than I... ever possibly could, but just to reinforce some of the points that we're finding out that our guests are saying are missing, or our guests think are lacking, or our guests think are incredibly important as far as hospitality goes in the banquet arena."

Eight hours over the course of the year is not... doesn't sound like a lot, but that's an incredibly expensive...but I think it is important, and we think it's important enough to do it.



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Alex von Bidder

It's very important that you are directly involved with your customer on a daily basis—every one of you. No matter what your position is, if you are in customer service—whether you're the general manager, or the room service manager, or a hall porter—you have to see your customer every day, and you have to talk to your customer every day, and you have to ask questions every day. So, obviously, when I see the same person come in four times, I want to know who that person is. Now I know the name and I know the phone number, so if I don't want to approach him directly, I call and find out what company he is. I find out the correct spelling of his name, his title, and I drop him a note offering him a charge privilege. It's most often the best thing to do it personally. It's very easy. You walk up, say, "Hello. I'm Alex von Bidder. I run this place. I see you've been in here four times [or whatever how many times] and if there's anything I can do, here's my card and my direct phone line. Please give it to your secretary." You know what happens? He goes back, he really can't be bothered at this time, I mean, maybe he was happy somebody said hello to him, but it doesn't mean that much. But, the card gets filed away, and the next time he wants to go to the restaurant, he remembers. He remembers, Oh, I met somebody. He doesn't remember the name or the phone number or anything, but he has the card and he will dial that number, and that number is my special line, and that special line gets answered only by me, by my name, and he reaches me directly—no secretary, no reservationist, nobody... not the guy who vacuums. And whatever that customer wants, I will try to give it to him, because he went through the effort of calling me.

The special customers... when... there are patterns of customer visits. The patterns are pretty regular. Somebody always comes for lunch on Wednesdays, and the first Wednesday they're not there, you should notice. You should notice because you are at the front desk or because you look at your computer printout. If you do your homework, you know that Mr. Leiberman wasn't there on Wednesday. And the next Wednesday runs around and he's not there either. What are you going to do about it? The average restaurant manager—or most restaurant managers—they don't notice. The good restaurant managers notice. And the very good ones, they pick up the telephone, and call up and say, "Is Mr. Leiberman out of town?" And they say, "Why? Why are you asking?" "Well, we noticed he wasn't in on his usual lunch day and we wondered if there was anything wrong, or we offended him, or is he perhaps ill." All of a sudden, again, the secretary is on your side and says, "Gee, they really cared that Mr. Leiberman wasn't there." And she will usually tell you what happened: "Oh, the last time he was there he felt he didn't get the proper service." Well, again, you have an opening. You have an opening to write him a letter, call him up personally... make good.

I wanted to send Christmas presents—personal Christmas presents—to everybody who spends more than $50,000 a year with me. The list was too long. Too many customers. We narrowed it down. I think the cut off was $75,000 a year. You're looking at a hell of a customer. So without a computer, without the house account, I wouldn't know that because American Express doesn't tell you. American Express tells you your total volume, but...yeah, they tell you the zip code. Big



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deal. I don't care what zip code a person has, I want to know who he is. I want to know what business he runs, so that I know where I can fit in because he might have a need for other services, not just my dinner. He might need to do parties, he might need to do outside caterings, he might have a daughter that needs to get married, a son that needs a bar mitzvah. You want to plug into that because all it takes you is a customer base of maybe 2,000 people to fill a restaurant of our caliber. That's all it takes—2,000 good customers. Now think about it. It's nothing. But those 2,000 have to be very select, and you have to take care of them.

I like to... I'd like to facilitate all kinds of things for those best customers. They know they can call me when they want a reservation in Paris. They know they can call me when they can't get on Swiss Air. They can call me when they have a problem with the limo company. Just like the concierge service. Just like a hotel that...that wants to...I'm sure when you go to the Ritz, or to any good hotel, the concierge who has been there 25 years, he knows exactly where you like to go and shop. Or he knows that you want to go to a show. He knows what theaters you like, and he has to...he has the connections to get you whatever you want in services. And that's what I am doing with my special customers, not just me but all our people. We have a list of recommendations for every city. You want to go to Venice for the summer, we give you a list of contacts, we say: Go see Guido at whatever. And Guido knows that when a Four Seasons customer comes, more likely than not he'll come back.

Richard Wyckoff

There really are two key ways that we influence value perception within ARAMARK refreshment services. The first is to have, really, proper brand positioning, and the second would be to create and execute specific or relevant points of differentiation. So let me talk about each one of those. In terms of properly positioning the brand: in order to create value the client needs to understand what the brand stands for. So it's got to be clear, consistent, and layered in terms of the communication strategy. But, in essence, what does this brand represent? And for us, in refreshment services, we differentiate ourselves from the competition by saying that we provide service in a class by itself. And our key value proposition is that we drive employee productivity by providing a complete break-time experience. For coffee, vending, and other break-room supplies, we can enhance a client's employee satisfaction. And we know that when client's employees are satisfied, their morale is better, they're more loyal, and ultimately more productive. And the productivity is really the pay-off on the investment.

The second piece is in creating specific value proposition points of differentiation and the ability to execute against those. I've identified five different points of differentiation that are relevant in our market segment.

Everyone wants to be able to offer exclusives, and within ARAMARK Refreshment Services, we offer proprietary brands as well as popular brands that the consumer recognizes. So the ability to have proprietary brands gives us something that no one else has. An example would be



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Aquamark, which is our proprietary water-filtration unit. And it has unique attributes, in terms of its ability to remove bacteria and lead and so forth from water. And water quality and safety is a big issue. But you can only get it from ARAMARK. So having proprietary offerings is a key component of our differentiation.

The second one would be having unique service capabilities. And one that I would site as a reference would be our national accounts capability. As a national service provider with over eighty market centers throughout North America, we can go to large clients and offer them a consistent, uniform program for all of their offices and all of their break-room needs. And offering the national accounts capability is something that no one else in our market segment can offer. So it's a unique service capability.

A third relevant point of differentiation for us would be a branded service. A service...everyone says: Your quality is good, our quality is good, what's the price? But we like to peel that onion back a little bit and say: Well, let's talk about service and our service brand. And in our service brand, we have an offering called Service Stars, which is a certified program that is a 15-module education series that trains our frontline service providers on how to conduct business with clients. The payoff for the client is consistent quality and quick problem resolution. So only ARAMARK has Service Stars certified employees. And that's a unique point for us.

The fourth piece, in terms of points of differentiation, is our ability to offer exclusive promotions. In the vending channel, it's always popular, through our packaged goods suppliers, to offer programs that promote products at certain times of the year. We've hooked up with different suppliers to offer exclusive promotions tied in to movie releases, such as The Grinch, with Jim Carrey, or the most recent movie, which was Spiderman. And these are exclusive promotions from Refreshment Services and only offered in the vending channel distribution through ARAMARK.

The fifth is that we leverage technology. And in a highly fragmented market with a lot of players out there offering similar programs and services, the ability to invest in technology and to leverage technology is unique, and we use that as a point of differentiation. The pay-off for our clients is that we can offer a cashless environment, which is the trend in terms of using debit cards and credit cards. We have wireless technology so that when we service the machine, we can find out what the sell-through is by the SKU level, and then merchandise the equipment to be more consistent with how a retail grocery store or convenience store would merchandise their shelves. The payoff, again, for the client is that we have the products that they want when they want them. And those are our points of differentiation.

Putnam Gibson

We really feel that at the end of a meal the guest looks at the bottom of the check and decides whether it was a good or bad value based on that number. Houston's strategy has always been



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to exceed the guest's expectations in every part of the dining experience. This includes having the best quality ingredients, fresh ingredients, a sophisticated service style that is always evolving and we challenge it to get better, and modern building design which includes the right lighting, music, we are constantly re-designing our restaurants or adding or changing the existing floor plan to help meet the value perception.

The Story of the Barge

The Barge restaurant was located in a resort area. This area has a strong peak summer season in July and August, and shoulder seasons of April-May-June and September-October-November. The Barge restaurant was constructed from an actual barge that was lifted out of the water and set on a sandy piece of real estate at the mouth of an inlet. From that scenic location, customers could see the boats going back and forth on the bay and entering several of the nearby marinas. When the Barge opened in the 1970s, there were very few waterfront restaurants as competitors.

Location of the Barge

The Barge was the only restaurant both on a main road and directly on the bay. The view was spectacular and the owner capitalized on it by installing large picture windows throughout the Barges' interior. The décor was very basic, made up of fishnets, lobster and crab traps, ship steering wheels and other commercial fishing gear. The menu consisted of the freshest local fish and shellfish available: bluefish, flounder, weakfish, blowfish, striped bass, soft-shell crabs, local steamer and hard-shell clams, oysters, as well as Peconic Bay scallops. The fish dishes were offered broiled or deep-fried. Local lobster were featured and large sizes (5 lbs and up) were a specialty of the Barge.

Menu and Business Philosophy of the Barge

The owner had a real dedication to the quality and freshness of the products he served. He purchased fish daily from local fisherman, and he insisted that his kitchen staff change the frying oil every day as well. The Barge's prices were at least 20% higher than other restaurants in the area but its waterfront location and fresh product kept the volume increasing for nearly 20 years, until it was operating at capacity from 1985 to 1990, serving an average of almost 700 covers per day during the peak season (see chart).

To accommodate as many customers as possible on a given night, the owner worked on turning tables by focusing on selling only appetizers and main course items. He limited dessert to pie or



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ice cream so that people didn't linger in their seats. He also limited the wine list to approximately ten wines to speed decision-making and service. In addition, the owner raised prices for several seasons in a row.

The Barge Staff

Because of the high volume and higher prices, gratuities earned at the Barge were significantly more than at other area restaurants. The staff at the Barge was very stable for the first 20 years of operation, with wait staff positions being handed down from parent to child. The kitchen staff was as stable as the front-of-the-house staff, with the same chef and sous chef in residence since the restaurant opened. The fact that the Barge did more volume in eight months than most restaurants did in 12 made it a great place to work, and the staff had the benefit of four months off each year. People wanted to work at the Barge; this gave the operation an almost a built-in supply of new labor with some degree of pre-training. The owner smiled as he thought to himself, "Why would anyone want to work anywhere else?"

Business Levels (1970–2000)

But in the early 1990s things started to change. From 1986 to 1990, the volume of business seemed to hit a plateau. The area enjoyed more summer traffic than ever, but the people coming out from NYC seemed to be looking for something more than just freshly cooked and simply prepared fish and shellfish, served in a converted barge with a wonderful view. Cover counts had dropped slowly from 700 per day to under 600 in one season.

The Staff Speaks Up

Employees began to voice concern during staff meetings. Betty, one of the veteran wait staff reported to the owner that she was getting more requests for things like ceviche, tuna carpaccio, calamari, grilled ahi tuna, lobster fra diavolo, grilled whole fish, and sauces she never



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heard of. Dave the bartender had requests for local and imported wines that were not represented on the limited wine list. Tilly the hostess began hearing comments from customers that the seats were not comfortable and that the tables were too small. Other customers were overheard saying they didn't appreciate being rushed from their table. The staff noted that the old-timers were still coming in, but that the people complaining and first-time customers didn't come back.

The Owner's Reaction

The owner thought the sales decline was simply because of increased competition. A new restaurant called the Seafood Barge had opened up next door and was getting some share of their business because they were new. "Those people will be back because we have the freshest fish in town and nobody changes their frying oil on a daily basis," was his response to the staff's concerns. "Besides," he said, "they're charging more money for their menu items, and people are not going to pay more for the same product."

The Seafood Barge Opens

The Seafood Barge had opened up within view of the Barge restaurant. It was also located in a Marina and had views of the boats and bay. The interior of the Seafood Barge was more upscale and the seating more spacious. The menu was more diverse and included specialties such as steamed Maine mussels, a sushi sampler, whole grilled stripped bass, seared rare ahi tuna, swordfish piccatta, and several seafood pasta dishes. Their bar was stocked with super premium spirits and they offered an extensive wine list, featuring the local vineyards. Desserts included seasonally fresh, local grown items such as strawberries, fresh peach tart, and more upscale items like crème brulee. By the end of the first season, the Seafood Barge had established itself as a new and innovative restaurant in the marketplace, and received a three chef hat rating from an influential reviewer for a regional paper.

Name Litigation

There was some litigation between the two owners' over the use of similar names. The court ruled as follows: Since the Seafood Barge had originally operated as a seafood market for 30-plus years before they opened a restaurant, they had established the right to use the name. The Barge could continue to use its name because it had been operating as a restaurant for 20 years. The owner of the Barge decided to distinguish his restaurant as the older of the two by renaming the restaurant the Old Barge.

Staffing Troubles

At the start of the second season for the Seafood Barge, several of the staff from the Old Barge had jumped ship and went to work either at the Seafood Barge or at one of several other new



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restaurants recently opened in the area. Long-time employees like the sous chef and several prep cooks decided it was time to do something different with their lives. Several of the top servers also departed to work at the new operations. The owner of the Old Barge continued to focus on buying the freshest fish available and advertising this in the local papers. He did implement some cost savings by changing the oil in the fryers less frequently than before. He reduced staff each year to compensate for the continued decline in volume.

Staff Reductions

By June of 2002 (see staffing schedule), his staff was less than half of what it had been a few years before as the restaurant volume had declined to less than one third the volume of its peak years. For the first time ever, he was experiencing difficulty filling several of the positions that remained vacant at the start of the season.

Staffing Schedule for the Barge Restaurant



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What are the signs of the growth phase, and how do you respond to it?

After the trauma of birth, or the introduction stage of the restaurant, things should start to settle down and fall into place. Volume grows, but since the work force is slightly more seasoned, now the operation runs more smoothly. To facilitate this, management refines the systems, documents standard operating procedures, and has written standards to guide the operation as it grows. To accomplish this, managers need to step back from trying to do everything themselves, to do more planning and also to do more delegating. Managers' focus is on refinement of the operation, menu and service, and on gaining higher levels of market share by being more competitive with other restaurants through pricing and more focused advertising. There remains a high level of excitement as business grows and the increases in efficiency and volume bring costs and profits in line with expectations. As volume grows, new staff are added, and the orientation and training programs get refined even further.

What are the signs of the maturity phase, and how do you respond to it?

The maturity stage is characterized by stability or stabalization of volume and profit levels. The operation is no longer growing, and when this happens, employees can start to lose interest and standards can begin to slip. Regular repeat guest are the mainstay of the business, but new customers are not coming in. Managers must be very vigilant during this stage to keep the operation from slipping into a decline. If they begin to see their standards slipping or their physical surroundings showing signs of wear, they need to take corrective action quickly. Managers with restaurants in the mature phase need to reinstitute their standards, and refresh the restaurant's concept. In addition to maintaining their market share of repeat customers, they need to introduce new ideas and menu items to once again broaden their customer base. This may require reductions in price and increases in advertising expenditures.

What are the signs of the decline phase, and how do you respond to it?

The decline stage is evidenced by declining sales and cover counts, loss of our best employees, and further decline in standards. Managers need to take a good look in the mirror if they see these signs in their restaurant. Operators have two choices at this stage. First is get whatever they can out of the operation before shutting it down, or second, renovate, reinstitute standards, and reinvigorate the operation. This requires new dedication, and enough capital to do the complete makeover. It basically requires a rebirth and introduction of a new restaurant. And then the life cycle begins again.



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What is your operation's life cycle? How often do you have to make adjustments to keep your operation in the growth stage?

Phil Kendall

I'd say... I can't answer that exactly. I will tell you that earlier I spoke to the fact that you have the responsibility to constantly be evolving your product, and I think if you are, you extend that life cycle. But what you have today may be something very different than what you had 24 months ago. Even if you've kept, you know, it consistent, and I think the evolution definitely has to be in the food product, for me, and also, you know, again, that service element, because you're going to be turning things over. I'm sure there's some stats out there that say: Hey, you know what? If you can get five years out of a concept, you're way ahead of the curve. And I think that also varies from city to city to city. I think New York is incredibly fickle. And I think that things are, you know... have probably an 18-month life cycle here.

But, counter that, hey, I think one of my favorite places in the world to eat is the Gramercy Tavern. And I think Gramercy Tavern today is what Gramercy Tavern was, but the menu is constantly evolving.

I'd say the life cycle has accelerated. I'd say the window is getting smaller all the time.

Doug Martinides

Do our food and beverage operations have a life cycle? Yes. And we look for that life cycle... we try to manage within a three-to-five year life cycle. And we're really focused on three years.

We avoid the decline phase of the life cycle of any one of our concepts by taking another three-pronged approach to development. Our development looks at fast-track promotions, which are limited-time offers. We use that to test a lot of our hypotheses, test a lot of trends, and add a lot of excitement and vitality to our operations.

Second is what we call anchor-station refresh. Every ARAMARK location has nine core menu categories that we offer, either as stand-alone stations, combined stations, or with some degree of regularity that requires us to put a degree of effort against the development. That's pizza-deli-grille, that's ethnic entrees, salads and desserts, it's soups, U.S. regional comfort foods, and breakfast bakery as a category, which addresses both traditional breakfast and a.m. day part.



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With these nine anchor stations or menu categories, we take three a year, and we do what I call deconstruct and reinvent. From an analogy standpoint, we take the concept and we dump all the contents on the table and we evaluate it—really from a 360 perspective: from a menu, from an ingredient, from a packaging, from an equipment standpoint, from all the different elements. We then identify what areas in particular we need to do something different with, and we then do the development or start the development against that.

The beauty of that is then within every three years, we've turned over our food course. Each of the nine stations, or the number of stations that have those menu categories in it, has been totally brought up to... on trend, up-to-speed with the latest innovation from all the different perspectives. So by doing that, we always have new news there, at least in a third of our operations. In between those three-year cycles, then, we use the fast-track promotions to either further develop areas in refresh that we didn't anticipate to catch on as quickly as we did because we're developing for a three-year window. We use it during the middle cycle, just for the fun and the vitality and the change. We use it the last part of the cycle, starting just about a year before refresh kicks over for the same concept in the third year: to start testing hypotheses and identifying ideas that we think may make sense as core or everyday menu items. We test them promotionally and see what the feedback is from the customer.

Robert Wilkinson

For Houston's this question is not something we consider at length. We don't gear our business in terms of opening, growth, maturity and decline. We view it in terms of being...achieving what we want to achieve over a very long period of time and have not necessarily seen declines in terms of the ideas changing or that something has grown wearisome in the marketplace and therefore declines. We don't really look at what's the average length of a restaurant's lifecycle for Houston's. One of the reasons we don't view it that way is because we try to address day in and day out, through commitment to standards, that believe that success can be a time-transcending idea if done with a commitment, and that is what we aspire to do.

How do you avoid the decline phase? What warning signs do you look for?

Phil Kendall

Well, I think, you know, anybody that isn't watching cover count on a nightly, weekly basis is probably, you know, allowing themselves to set up for disappointment. Because when... you know, you can trend these things pretty quickly and you know, again, the simplest POS system can tell you what you're selling and when you're selling it and what the volume of your business is and what part of the day it is. And is it now seven-to-eleven, or is it all of a sudden seven-thirty-to-nine-thirty? And if it is, hey, what can you do? And is it because there's six new places that opened, and that certainly happens to you. And if that's the case, are you in touch with your customers? I mean, have you... are you now going to go ahead and put in a comment card



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situation, where, you know—where you'd like to get a name and a number so that you can? Well, I want you back.

Doug Martinides

We avoid the decline phase of the life cycle of any one of our concepts by taking another three-pronged approach to development. Our development looks at fast-track promotions, which are limited-time offers. We use that to test a lot of our hypotheses, test a lot of trends, and add a lot of excitement and vitality to our operations.

Second is what we call anchor-station refresh. Every ARAMARK location has nine core menu categories that we offer, either as stand-alone stations, combined stations, or with some degree of regularity that requires us to put a degree of effort against the development. That's pizza-deli-grill, that's ethnic entrees, salads and desserts, it's soups, U.S. regional comfort foods, and breakfast bakery as a category, which addresses both traditional breakfast and a.m. day part. With these nine anchor stations or menu categories, we take three a year, and we do what I call deconstruct and reinvent. From an analogy standpoint, we take the concept and we dump all the contents on the table and we evaluate it—really from a 360 perspective: from a menu, from an ingredient, from a packaging, from an equipment standpoint, from all the different elements.

We then identify what areas in particular we need to do something different with, and we then do the development or start the development against that. The beauty of that is then within every three years, we've turned over our food course. Each of the nine stations, or the number of stations that have those menu categories in it, has been totally brought up to...on trend, up-to-speed with the latest innovation from all the different perspectives. So by doing that, we always have new news there, at least in a third of our operations. In between those three-year cycles, then, we use the fast-track promotions to either further develop areas in refresh that we didn't anticipate to catch on as quickly as we did because we're developing for a three-year window. We use it during the middle cycle, just for the fun and the vitality and the change. We use it the last part of the cycle, starting just about a year before refresh kicks over for the same concept in the third year: to start testing hypotheses and identifying ideas that we think may make sense as core or everyday menu items. We test them promotionally and see what the feedback is from the customer.

Robert Wilkinson

We don't see or view the world in terms of restaurant life cycles per se. We may have some sites that we make changes to, or there may be leases we don't renew, but in terms of engaging in the business, in terms of a life cycle, that's not how we approach it. We tend to try to pay attention to the business along the way and aspire to time transcending ideals that protect us from a traditional life cycle.



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What specific changes do you implement?

Doug Martinides

The third area of development is... are really new destinations, and they're niche-focused solutions for us that fill in the portfolios. We evaluate the portfolio; we then identify where are the niches or where are the gaps, based on changes in trends? I'll give you a good example. If we were to have talked five, six years ago, we may have introduced wraps as a fast-track promotion, launched it. It was hot at the time, and novel and unique, if you will—encourage our operators to run it for three weeks at maximum, and get it out, take it off the menu. In a lot of locations, what we would have probably found out is that our customers would have said: Hey, we liked those, where did they go? That's a signal that says we need to refresh that, we need to refresh the deli, and we need to include wraps as part of that deli. So we do a little bit more development against that, and then over time—it's more of an evolution than a revolution, if you will... so over time, we may find the number of ham-and-Swiss-on-ryes start to decline as we sell more and more wraps. That then becomes a trigger that says we need a new sandwich concept that's all wraps. That's a new destination. And that's really showing you the three all together.

How do you monitor your restaurant's life cycle, and what is the pace of change? How do you know when to close?

Doug Martinides

When we're looking at a large multi-concept food court, or multi-concept foodservice operation, when do we decide to close a current concept or station? You know, without being too blue about it, it's when the customers stop going there and stop spending the money. Probably more importantly, it's when, after best efforts of menu engineering and customer focus groups, and intercept surveys and discussions, and all the tweaking and modifying and fine-tuning that we can do, we find that we can't improve the sales and/or profitability or traffic at that location. That's a good signal to say it's no longer a viable concept, and we should just close it down and introduce a new destination or a new niche-focus concept that gives us new life or vitality for that food court. I would also tell you that, proactively, it's a good discipline to always look at your bottom performer no matter how well it's doing, and take that out and replace it. Because, again, in our environment, we have such high frequency of customer visitations that there needs to be new news, and it's a great way to drive participation and drive satisfaction and drive word of mouth by having something new there. As opposed to it being radical surgery, you know, it may be cosmetic: you change the signage, use the existing equipment package, change the menu so that your cost of entry and the timing for conversion is shorter. I think that's a very healthy approach to menu management and concept-mix management.



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Closing an operation, typically, that's really an anomaly in our business. But here's when it happens: it really happens when there's shifts in the population. On a college campus you may find, based on their master planning, that the growth of the campus is moving away from what used to be a central location. Or, competition may have come into the environment that surrounded that location because we were attracting so many customers and we found that it was just no longer a viable business option. I think that same thing holds true within our business and industry segment, because when we look at business environments going from single corporate towers or single corporate buildings to campus environments, populations move in and move out. So there is a time to close the business. Some of it should be proactive, some of it's very reactive, to changes in a market environment.

Robert Wilkinson

I would say you avoid the decline phase moment by moment. It's by managing the business in a very organic means in addressing the details that hopefully you avoid a decline phase, that you are alert, you're consistent in your operations, you deliver what a customer expects, and the decline can be avoided.

Consumer Research Results

The 2001 Yankelovich MONITOR, an annual study on consumer attitudes and values, reported that perceived quality of service in full-service restaurants has decreased for three years in a row. Only 27% of those surveyed described the quality of service they received in full-service restaurants as very good to excellent. Yankelovich indicates that today's consumers are also showing much less tolerance for poor service.

More Consumer Research Results

Barbara Caplan, a partner at Yankelovich Partners, stated, "We have to move beyond the basics and look for opportunities to give diners a feeling of comfort, that this is where they want to be. It's conveying a genuine sense of caring that customers have a good experience in your restaurant. It's creating a real connection for customers with the staff and the restaurant itself—a reassurance that everyone is aware of them and their needs." (quoted from Briefings May/June 2002)



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Why Is Service So Important?

Guests consume the food in a restaurant, but they are intimately affected by the surroundings, and the china, glass, and silver their food and drink are served on. They experience the service, and often make the decision to return or not based on the level of service they receive. Their mood and enjoyment are enhanced or detracted from by the interactions that take place with the service staff.

Functions of the Service System

The service system establishes the standard of service appropriate for the type of restaurant and the clientele being served. It conveys the service culture of the organization to both the employees and the guests. It provides ways of measuring the performance of the service staff and it monitors the guest service experience at each stage of the guest's interaction with the organization.

Service System Objectives

The service system exists to:

Satisfy the needs and wants of the clientele as efficiently as possible. Offer the products and services the operation has defined as appropriate for the target

market being served. Enhance the dining experience through the added value service provides. Accommodate and respond to the expectations of the guests.

Service System Goals

Given the critical role that service plays within the restaurant experience, what should the goals of the service system be?

One of the first goals is to provide the appropriate level of technical or procedural service required by the customer. This means having the correct measure of promptness, service procedures, skill level of the server, incremental flow of courses, and service steps matched to your service style.

Secondly, the service system should provide the appropriate level of convivial service. This involves conveying the proper attitude, body language, and tone of voice, establishing a rapport, showing empathy and respect for the guest, being pleasant, and providing assistance.

The final service system goal is to provide a recovery procedure when customers are not happy with some aspect of their dining experience.



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Customer Expectations of Service

You can see here that the service encounter is critical and cannot be left to chance. Through proper selection and training of employees, the service experience should be well defined and orchestrated. Employees must be trained to read the customer signals and adapt the service to the customer's expectations.

All customers expect courtesy and hospitality, yet there is variability among customers in terms of differing service expectations. Some customers may prefer unobtrusive (transparent) service, while others expect more interaction with the server. Your staff needs to be trained to work effectively with both types.

In marketing terms, the service mix consists of three stages: joining, intensive, and detachment. Most restaurants focus mainly on the intensive stage, while the guest is actually at the table. While service at this stage is very important and can provide a way of differentiating one restaurant from another, there are other opportunities to distinguish a restaurant's service culture.

The joining stage, which covers any interactions with guests prior to their being seated, provides an opportunity to make guests feel welcome. First impressions are lasting ones! When guests finish their meal and are ready to leave, they often find themselves abandoned by the staff. Don't let this happen to your guests—they should feel well served from the time they enter until the time they leave your establishement.

Joining Stage

Reservation policy

1. The restaurant does not accept reservations. 2. The restaurant accepts reservations.

A restaurant that does not take reservations and, instead, places customers into inventory or on a waiting list for a table clearly does not provide the same level of service as a restaurant that does. Guests may feel slighted by a no-reservation policy—it implies that their time is not valuable.



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How the reservation call is answered

1. A person answers within three rings. 2. A person answers within ten rings. 3. The phone system automatically places the caller on hold in a waiting queue with an

undefined wait. 4. An answering machine requests that you leave your name and phone number.

Restaurants that answer their phones promptly provide a higher level of service.

Restaurants that keep people waiting or use an answering machine send a signal that they are ill prepared to serve.

Who answers the reservation phone?

1. A trained reservationist or a member of the management team. 2. The person cleaning the carpet in the dining room. 3. A prep cook in the kitchen. 4. Anyone who is near the phone.

Restaurants who have trained reservationists or specific members of the management team taking reservations are providing a higher level of service and professionalism.

When an untrained staff member answers the phone, the caller loses confidence in the operation.

How is the reservation phone answered?

1. Hello this is (person's name). Thank you for calling the (name of) restaurant. How may I assist you?

2. This is the (name of) restaurant. 3. Hello. 4. Yes.

Image and hospitality are confirmed with the first, more professional reply. This sets the tone for the service level guests can expect when they dine in the restaurant.

Is the correct information obtained when the reservation is taken?

1. The name of the host, the number in the party, any special requirements or special occasion requests, the caller's phone number.

2. The name and number in the party and the caller's phone number.



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3. The name and number in the party. 4. The number in the party.

The more complete the information obtained when the reservation is taken, the higher the probability that the service level will meet the expectations of the party.

Incomplete information leaves management and servers in a position where it is more difficult to meet guest expectations.

Entrance to the restaurant

1. A doorman is present to greet the guest and open the door. 2. No doorman is present, but the doorway is clearly marked and well lighted. 3. The exterior area near the entrance has a sign. 4. The entrance is not easily identified.

The personal greeting and service provided by a doorman distinguishes a restaurant and sets a higher standard of service.

Poorly marked and lighted entrances detract from the service image of an operation.

Coatroom and attendant (cool climates)

1. A properly attired individual who greets the guest and offers assistance with checking coats is stationed inside the entrance and operates a secure coatroom.

2. No attendant is available, but an area for guests to hang their own coats is provided. 3. No provision for guest coats has been made.

Front desk or reception

1. A properly attired individual smiles and greets the guest (by name if the person is a repeat customer). The person is familiar with the reservations for the current time frame and already knows were this guest will be seated and if there were any special requests made when the reservation was taken. The guests are escorted to their table promptly.

2. The individual at the front desk greets all guests the same way by wishing them a good evening and inquiring whether they have a reservation.

3. No real reception area is evident, and as a result, the guests stack up inside the doorway waiting for someone to come by and receive them.



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Lounge or waiting area

This is a designated area the guests can use while waiting for others in their party to arrive or for a table to become available.

1. The lounge or waiting area is comfortable and there are service personnel monitoring the area to provide the guest with beverages and appetizers.

2. There is a waiting area, but no service is provided in that area. 3. There is no waiting area.

The Intensive Stage

Type of service

1. French service 2. Russian service 3. American service

French service is the most complex and requires a higher skill level. When done correctly, it provides a very high level of service. Russian service is less complex than French service, and requires less skill. American service is the simplest form of service.

Training and skill level of the servers

1. Servers who have gone through extensive training and developed their skills as a server will generally provide a higher level of service.

2. Servers who go through minimal training and have not fully developed their service skills will provide a lower level of service.

3. Newly hired staff with no training and no experience will generally provide a low level of service.

Server-to-guest ratio

1. A restaurant with a maitre d', station captains, and front and back waiters should produce a very high level of service.

2. A restaurant with a host or dining room manager and front and back waiters may provide very good service, but at a lower level than above.

3. A restaurant with a host and single waiters will provide service at a level lower than the examples in 1 or 2.

4. A self-service restaurant will provide the lowest level of service of these four examples.



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Server-to-cover ratio

1. A restaurant with a maximum server station of three tables will generally provide a higher level of service.

2. A restaurant with a maximum server station of five tables will generally provide slightly lower level of service than a restaurant with smaller station sizes.

3. A restaurant with a maximum server station of eight tables will generally provide lower levels of service than a restaurant with smaller station sizes.

Check turnaround time

Once the guests have finished eating and have requested the check, the speed with which the check is delivered is an important service in the eyes of the customer.

1. Restaurants that have the system in place to present the check and complete the payment processing in the shortest possible time are providing a high level of service.

2. Restaurants that are slow to print out checks or process payments are providing a lower level of service.

Detachment Phase

Departure from table and dining room

1. Servers thank the guests and assist in their departure from the table; hosts or managers also thank departing guest for dining at the restaurant.

2. Servers pleasantly say good-bye to guests as they leave the table. 3. Guests depart without acknowledgment from any restaurant personnel.

Departure from the restaurant

1. Guests are again greeted by the doorman, thanked for dining at the restaurant, and asked if they need any assistance with transportation.

2. Guests depart without any assistance or recognition.

Follow up after departure

1. Guests receive direct mail or email informing them of upcoming events or special menus that will be featured in the near future.

2. Guests receive no form of communication from the restaurant as a follow-up to their visit.



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Follow up on complaints

1. The manager or owner calls the guest the next day to apologize and to determine whether the complaint was satisfactorily resolved in the mind of the guest.

2. The manager sends a form letter to the guest. 3. No further communication with the guest is planned.

Follow up when a regular guest does not come in as normal

1. The manager or owner calls the person's office or home to inquire after the guest's health, voicing concern over the guest's failure to appear for his or her "regular" meal.

2. If regulars do not come in after several weeks, a direct mail item is sent to them. 3. There is no tracking of guests, so this would not be noticed.

How do you manage reservation requests during an evening?

It is our job now, to make sure that from that very first phone call—where you actually decide to make that reservation—to the time that you leave, that the expectation that you have is either modified or is met.

What does that mean? A lot of theory. You're a businessman or businesswoman; you have to take somebody—a client or a prospective employee—out to lunch. Or you have something to celebrate. You just graduated from Cornell and you want to celebrate in a good restaurant. And you've heard of the Four Seasons, so you pick up the telephone and you try to make a reservation.

The minute you pick up that telephone, you have made a decision to spend $100 a person with me. And, depending how that telephone gets answered, you're going to spend those $100 willingly or you decide to go somewhere else.

The more successful you get, the more complicated business gets I want to assure you. All right, you want that table for two on Saturday night at 8 o'clock—tomorrow night. And you're all set to go with your business partner and there's no room. You can approach that two ways from the restaurant's point of view. You can say, "We're fully booked, I'm sorry. Goodbye." Or you can say, "I'm very sorry, we are fully booked tomorrow. Could I put you on a waiting list? Can I have your name? Could I have your phone number and I'll call you back if somebody cancels." That gives me another opening for another sales pitch later on in case I still have that table.



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What are the steps a front desk person should take to perform well in this important and often stressful position?

Front desk is a very scary thing for most people. There is usually somebody in a tuxedo who is in charge and he is going to decide over your fate. He is going to decide where you are going to sit. He is going to decide whether you have a reservation or you don't have a reservation. That person has to be very welcoming. That person has to convey, again, to the customer the feeling that they want you there, so if they know you of course they should greet you by name, but let's assume they don't know you and you are Joe Blow. You walk up to the desk and you say, "Hello. My name is Joe Blow and I have a reservation for two at 8 o'clock." What I teach our people is the first thing to say is, "Good evening, Mr. Joe Blow, nice to see you. Yes." (Always yes—not "let me check" or "what was that name" or "what time is your reservation") First thing is, "Yes, Mr. Blow. Let me check your reservation."

In order to be organized at a front desk, you have to do your homework. The person that runs the front desk at a busy restaurant has at least an hour of preparation time ahead for each seating period. What I mean by preparation time is I expect that person to know all the names of people who come in. Now, not necessarily put the face together with the names, but know and read through the names, know the size of the tables, know exactly the special requests.

People have all kinds of special requests when they come into a restaurant, particularly when they spend a lot of money. Where do they want to sit? Do they want to sit facing? Do they want to sit by the window? Do they want to sit by the pool? They don't want to sit by the pool? Do they want to sit by the wall? Do they want no-smoking section? Smoking section? There's a hell of a lot to remember.

It can get very hectic around the front desk. Sometimes you have 10 to 20 people in front of you when you have a busy restaurant and every one of these people thinks, or wants to think, or should think, that they are special. It is very hard to keep your reservations straight and at the same time make believe that you want to see every one of those people.

What are the strategies a restaurant must implement to fulfill "the purpose" behind almost all dinner occasions?

Every dinner has a purpose: a celebration, an occasion, sometimes the purpose is as simple as they are hungry. But, more often than not in our operation—luxury operation—there is a reason. There is a reason why people come and spend a lot of money on dining. And every table has a different reason. The more you know about that reason, the better you can fulfill whatever the purpose of that meal is.

If I know that somebody is interviewing somebody over dinner, over breakfast, over lunch, I know I leave the table alone. The fewer interruptions, the better for that customer, the better



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they can conduct their meeting. Maybe the person gets hired, and there's another reason to celebrate and come back. If I do not know that reason, or if I ignore that reason, and I think I am the star of that evening, and I want to chat with them, I mess up their meeting, I make it un-enjoyable for them, they will not fulfill the purpose of that meeting, then they won't come back. They will never tell me that but they won't come back. And our purpose is to make sure they come back.

Every meal should be a special occasion. Every meal at your restaurant should be a special occasion. Celebrations, very important to know what the celebration is. I'll give you a good example. Two weeks ago, a man called me and said he's a friend but also a very good customer, he says, "I'm coming over for dinner Saturday night and I'd like to propose to my fiancée." That is one of the most delicate situations, I can assure you. Because no matter what happens, it always happens at your restaurant. If she says "No" it happened at the Four Seasons and the Four Seasons is out.

Well, I like to look at things positively, I like to think if she says "Yes" and it's an opportunity to sell a wedding. OK, now I know the purpose, he is coming over with his intended, and I have to work out what I'm going to do. How will I make him comfortable and her comfortable? "Her" is more important in this case—she has to say "yes." She is not going to say "yes" because of me, but she will say "yes" because the surroundings are right and it is all very romantic. If she has a bad meal it puts a little damper on.

OK, they come in and they sit down and you have to orchestrate it because he is totally preoccupied with proposing to her. You have to make sure that table is right. What should the table be? Should it be side-by-side? Should it be facing? Should it be the center of attraction? Should it be somewhere in the corner? You have to make those decisions because he is not going to make them for you. All you know is you are going to sit them down and either it is going to work or it is not going to work. He is not going to make a fuss that evening over the table. So you pick the table, you sit them down, you give them a good meal, you hope everything goes right. A lot of times he will give you the ring. A great responsibility. You have—depending on your customer—you have a quarter carat, one carat, two carat diamond or a gold band in your pocket. And it's not like that's the only thing you have to worry about that night. But for that customer, it is the only thing you have on your mind for him. And you better make sure your timing is correct. You better make sure you know what the customer wants you to do with that ring, if you should give it to him, if you should present it to her, whatever.

People are very funny, people are very personal about their special occasions and you have to ask those questions. I'm using this example because it is one of the most complex and they just put it on your shoulders and if you don't know how to deal with it, you're going to be in trouble.



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How do you best handle the check? How do you wrap up a dining experience with a positive note?

Now comes the check. The check is usually the low point of the evening. So you have to handle it with a lot of delicacy. Again, the more information you have about the customer, the better for you.

In our restaurant, we like to have house accounts—lots of house accounts. At the moment we carry about 3,000 house accounts. What does a house account mean? House account means that the guest doesn't necessarily have to see the check, which is a great thing for the restaurant because he gets a monthly bill, or a bill the week after the meal, so that the actual meal experience is a very positive one without that low at the end of the meal.

So, I encourage you to open house accounts wherever you can because it also gives the customer a reason to come back, to use it, to show off. Let's face it, a lot of our business is show off, it's show business. If you can walk into a restaurant and they know you by name and you can just sign the check, or you don't get a check, that's an incredible statement no matter where in the world, because it almost means that it is a private club and everybody wants to belong to a private club. The better the private club, the better the person, and it sort of grows from there.

More often than not, people don't have a house account so they bring out their plastic card—there is very little cash going around these days—so the plastic has to be processed very fast.

The customer pays the bill. The customer gets up. I am always amazed how many times I can walk out of a restaurant at 10 o'clock or 11 o'clock at night and there is nobody to say "goodnight." There is nobody to say "thank you for the tip" that I just left. I just left 20%. 20% of $750 is a lot of money. The captain is eating somewhere. The waiter is on a break and the other one is making a phone call—nobody there.

Somebody has to be there. Somebody has to be right near that table to hold the chairs, say "thank you, Mr. Blow. Come back soon." Somebody has to be at the checkroom—not reading a newspaper. Somebody has to be outside opening that door—doesn't matter whether it is midnight, 1 o'clock in the morning or 10. Open the door, get a cab, get them home. That's when the dining experience ends.



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Describe the elements of your service system which you feel differentiate your restaurant from the competitors.

Richard Wyckoff

The cornerstone of our service approach is a program that we call Service Stars. And, Service Stars started as a program, developed in the field, as a way to improve the skill sets of our service providers in providing better client relationships, improving our account retention, and building our base business of selling more to our existing accounts. And as we began to look at what was the needs in the marketplace to service those customers, and our capabilities in terms of our route sales and service professionals—ultimately our route drivers—we realized our that culture was more of an operations-driven culture versus a service culture. Service Stars became the tool for transforming us from an operations-driven company to a service-driven company. It comprises 15 modules of training that, every other week, we bring the market center, general management, and frontline service providers together and do a training seminar on various aspects of communications, problem handling, active listening, negotiating, problem resolution, etc. And then after the 15 modules are completed, those service professionals take a test and then become certified as a Service Star certified professional. But it doesn't end there. We add more modules, we add more role-plays, and so it becomes part of the everyday culture within the operating environment.

Beyond the training, we also have metrics, because we want to be able to measure the results of the investment that we're making. And those metrics are specific to each route and they look at account retention, and base business as the two primary drivers. And then we have rewards that are tied to the metrics, so that those individuals that meet or exceed the objectives are given various rewards that are tied to the performance of their results. So it's training, it's certification, it's metrics, and it's rewards—all driven around client satisfaction and delivering world-class service, or as we call it "service in a class by itself."

The ah-ha for us was that we have 200-plus sales people and we spend a lot of time and money invested in training the sales people. And then we realized we have many, many more operations—now we call customer service people—who touch 46,000 clients throughout the day, and how do we get a little bit more out of those clients, harvesting more up from the base business? And by providing the tools and techniques, we've been able to go after it.

When we talk about a service, we are very specific in terms of what we expect our frontline service providers to do. So that, as part of their duty of going in and detailing a break room or a client location in general, there are specific items on a checklist that we have them perform. An



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example would be that they need to clean and wash the machine—the exterior and the base of the machine—every time: it's part of the service offering. That they take the glass bowls that the client has today and replace them with fresh glass bowls from our office so that they have constantly, new glass bowls for the burners. In fact, we have a 10-point checklist that they go through and it's our assurance of quality. In fact, we have it on a post-it and when we leave the point of service, we put the post-it up on the point of service with the check marks saying: We have detailed your operation and performed these ten functions as part of our standardized service offering because that's what you should expect from a service provider like ARAMARK. We do this and we're communicating it to you so that you're aware of it, but it's just part of why you're doing business with us.

In order to communicate what we do for Service Stars, our uniformed route service personnel have pins on their shirt that show that they've achieved the certification. There are brochures of literature that we provide to the client articulating what the expectations should be. And what we're saying to the client is: Promises kept. We deliver. Assurance of quality. Hassle free. These are emotional things that a client looks to us, because their primary job is not managing the break room and they want someone who will provide a hassle-free, seamless, behind-the-scenes service. And we want to be able to show them, through Service Stars, that we can perform in that level.

Well, Service Stars has been able to help us to reduce our route sales and service turnover from 65% to 15% in the last 18 months. We've invested 750,000 training hours in 1500 sessions, and we've given out more than $60,000 in frontline service awards. And what we've found is that by providing the tools and the support to get the job done, the pay-off is that our employees are seeing themselves as being more successful, and more important to us achieving our objectives. And feeling more a part of the team and more a part of that service culture has made them more loyal to us and more engaged and much more productive.

And that's credibility on our part to say we're willing to make the investment in your being successful.

We're going to give you the metrics to measure your result, and we're going to reward you and hold you accountable and celebrate the success. And we've had people who've been service reps for years, who have refused to be promoted because they didn't feel comfortable going into management, having gone through Service Stars and saying, you know, now I feel like I can be more managerial. And we had an example in our Baltimore/Washington operation of a person who said, you know, I want to be promoted, and is doing a great job in the new position as an operations manager because they've improved their own skill set, and now they feel more comfortable being able to achieve the objectives and the new responsibilities.



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Phil Kendall

I think...I think if there's a single element that probably helps us here and that is, in our interviewing process, when we're trying to interview and hire the right people—albeit I already said that I think that person is getting more and more difficult to find and certainly needs more training. But we hire everybody and we have, you know, a Sheraton Cares program, or we have a Westin Hospitality program, or we have a W program that is all about, okay, this introduction into being a service person that you've got to go through.

Jeff Bell

In a recent article about Houston's restaurant, the reviewer described our service in a few words. "It's classy, friendly, and fast." Of course, there is much more involved in delivering great service, but if I had to sum it up in a few words, I would say the way we differentiate ourselves from our competitors has much to do with our commitment level to great service, to thorough training, and to our approach to teamwork. For over 20 years, Houston's has always been able to attract great people. Site selection, a commitment to timeless restaurant designs, the materials we use to construct our restaurants, the art, the high operating standards, the "from scratch" kitchen, and professional management all have a positive effect on the people we attract and retain. People derive a tremendous sense of pride being associated with Houston's. There is a real winning spirit people get when they see what we are all about. This affords us the luxury of attracting and retaining some of the best people in the business.

Once we hire someone, they know they are in for one of the most rigorous training programs in the industry. Our servers go through an 8-day training program, and must be certified by our service managers and general managers, before they are allowed to wait on our guests. Our training does not stop there. Their peers must review all new hires, weekly, for an additional two months. Servers are evaluated each month in categories ranging from friendliness, to technical proficiency, to ensure the highest levels of performance. This commitment to training gives our people a tremendous sense of pride and confidence, which in turn allows them to perform at their best.

A simple, but very important factor to delivering what we consider to be great service, lays in our commitment to servers having 3-table stations. We believe servers will give more attentive service to a smaller station and therefore will make better tips. Our commitment to this very simple idea even shows up on the drawing boards as we design our restaurants. We spend a great deal of time talking about how to enhance the delivery of fast and friendly service.

Finally, teamwork is at the foundation of Houston's service. It ensures that service and efficiency are at their best. High-energy from our staff is the driving force behind teamwork. This sense of urgency creates an atmosphere in which the guest clearly perceives that their



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needs are of the utmost importance and will be met. Our servers understand that every guest is their responsibility. They count on each other to deliver a memorable dining experience.

Why do some operations take reservations and some don't?

It is a matter of how they look at capacity utilization and what the demand is for their seats.

On one hand the operation, taking reservations, considers their seats as inventory and they hold those seats for guests who have made a reservation. In the "no reservation" system, customers are put into inventory and drawn out as seats become available. If your demand is greater than your seating capacity and you know the customer will be willing to wait, there may be no need to take reservations to achieve the desired level of volume. If on the other hand, you are not likely to reach full capacity from walk-in guests, then taking reservations helps maximize volume.

Restaurants at the high end of the price and service level almost always take reservations and are often booked many days or weeks in advance. These restaurants usually plan on having a set number of covers per night and do not plan to turn tables quickly due to the nature of the dining experience. They may do a special "pre-theater" dinner in the early part of the evening to add additional volume, while still managing their table availability for the main seating. The Four Seasons restaurant is an example of this type of restaurant.

More casual restaurants like the Outback Steakhouse, Houston's, and the Cheesecake Factory, are able to turn tables in about an hour. Because they offer good value and consistently good food, people are generally willing to wait to get a table in these operations. As a result, these operations do not currently accept reservations. Rather, they put people's names on a list as they enter the restaurant and tell the people the approximate wait time. Some of these operations use mobile communicating devices which light up or buzz when the table is ready.

What are the advantages and disadvantages?

The advantages of a good reservation system are many. It helps smooth out the peaks and valleys in the demand curve by staggering arrivals. This makes it easier to provide consistent service and food quality because the dining room and kitchen are operating on a managed basis and are not being "slammed" all at once.

It can also help with staffing as, once a certain level of reservation has been achieved, additional staff can be added to the schedule. It facilitates handling a large number of covers in



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a smooth fashion, by shifting the consumer demand slightly while still providing a table with a minimum of waiting time.

A reservation is an added service which can differentiate a restaurant. On certain occasions, and at certain price points, customers are simply not willing to wait an hour for a table. They may be willing to dine an hour earlier or an hour later, but they do not want to wait once they come to the restaurant.

A good reservation system provides a wealth of information on the restaurant's customer base; Who they are, what preferences they have, how they can be reached, and what occasions they dine at the restaurant. With reservations, it is possible to accommodate parties of unusual size because the operation has advance notice and can re-arrange seating.

What are the opportunities and risks?

Customer no-shows are a real problem, as they can result in the loss of sales, unless there are walk-in guests who can fill a table when a reservation doesn't show. Taking a phone number and a credit card deposit can reduce this risk, however.

In a high volume operation where tables normally turn over in forty-five minutes to an hour, customer lack of promptness of arrival could cause a back-up in the system and result in fewer covers being served than if no reservations were taken.

Informing guests of a time limit for which a table will be held can reduce some of this risk, provided walk-in guests are available to fill the table after the grace period has passed.

What are some of the reservation systems available?

In this course, you are introduced to a fully-functional, yet basic, manual reservation system. This system can be adapted to any dining room layout and to the service times which are standards for your operation.

Most suppliers of restaurant POS systems have a reservation module which is either included, or can be added to your system. These can often be modified to meet the needs of your operation. There are also companies specializing in software designed to be used both for reservations, and for customer relationship marketing. One such company is Guest Bridges Reservation Source, based in Houston, Texas.

Lastly, there are companies operating on the Internet which provide reservation services and charge a fee to the restaurant. One such company is OpenTable.com. They have just recently reported that they surpassed the one million reservation mark. They also report that 26% of the



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Internet reservations made are booked between the hours of 10pm and 9am, when most restaurants do not take reservations by phone.

How do you monitor the guest experience?

This starts with a phone call. Alex von Bidder of The Four Seasons will occasionally pick up the phone and monitor how the reservationists take the reservations. It is the ultimate in quality control. Getting complete and correct information helps set the stage for an appropriate dining experience. The appropriate information needs to be communicated to the dining room for this to occur. Once the guest is in the restaurant, the service experience should be monitored by everyone on the staff, but in particular, personnel assigned to the station and table the guests occupy. Management needs to present to observe and interact with the guests to get a true picture of the guests' actual experience. Listening to your customers is the best way to get information. If you know your customers, they will tell you when they've had a good or bad experience.

How do you choose which one to use and how do you go about it?

Comment cards are used in many restaurants, but they are not always helpful, as most customers do not fill them out and by the time you get the information, it is often too late to act on it. Most people who have had a bad experience simply do not go back. That is why developing a monitoring system, which gives an opportunity for recovery before the guest completes the dining experience, is really essential. Customer surveys by mail, email, or phone, and/or professionally run focus groups can provide some good information on the customers' perception of food and service. These measures are generally used when a major change is being planned and customer input is needed before a new direction is taken. The key to surveys is to keep them brief and focused. It is also important to demonstrate that something is actually going to be done with the information gathered or the customer will feel like they've wasted their time.

What do you do when, for some reason or another, a customer complains?

When you get a complaint, it is an opportunity to make a friend. Now that sounds very strange. Most of us, when we hear that we goofed or we didn't succeed, we shrink and we say, "Oh my



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God, they're going to attack me again. What did I do this time?" Instead, there's a different way of approaching that situation.

If you have the courage to come to me and say that I screwed up yesterday, what I can do is have the courage to face you and say, "Well, tell me how and I'm sorry." Before you say anything else, you're sorry, because you didn't live up to that customer's expectations, whatever those expectations were. You didn't live up to it, and the customer spent the money. The least you can do is say "I'm sorry" and then you listen and you have to be very sincere and you have to listen to the complaint.

Now, many times you do not get that complaint personally, so you have to make sure you establish a system whereby you know of every single customer complaint, no matter how silly it is, you want to know because you have that opportunity to make a friend.

Do you have a system to handle customer complaints?

Now, the system we have is that everybody must, every captain is responsible in his station to report everything that happens that is negative. It is his responsibility to report it to the front desk, and the front desk person has a complaint book and it gets logged. And the complaint gets logged if no one else is around to take care of it. Most of the time, the maitre d' is in the dining room or one of us is in the dining room and we handle it right there and then. But if nobody is there it gets reported, it gets logged.

First thing I see every morning is the complaint book. And I'm always suspicious when I see no complaints. Served 700 perfect meals, right? Sure. I want to know what went wrong. What I do is I pick up the telephone and I call the guest...first thing in the morning. It's not very easy to do, I must tell you, sometimes. The nature of the complaint is logged, somebody got...whatever...got the wrong table, got the wrong food, got the wrong wine, something was wrong with the service, service was slow, service was fast, there is a thousand different complaints that you might find.

But you pick up the phone and you say, "Hello, this is Alex von Bidder. I'm the manager at Four Seasons and I heard you didn't enjoy your dinner last night." They drop dead on the other side of the phone. And when they come back to, they say, "Well, actually, you know, it wasn't so bad...I just felt that you should know that in a restaurant of your caliber that I really should have gotten the Evian water." And I say, "You are absolutely right, and thank you very much for taking the time to let us know. And next time you decide to come to The Four Seasons, won't you please call me personally?"

And again, I give them my phone number, and you're in business.



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How do you handle more serious customer complaints?

Now, the other side of the coin is when you have a serious complaint. A serious complaint, to me, is bad service or bad food. And that serious complaint you have to investigate further. You cannot just do away with apologizing for it. You also must internally find out why it happened, how it happened, and who was responsible, and hold the person responsible for it. Accountability is very important in every industry, and in our industry, more often than not, the people are not held accountable for what they...for their mistakes, or their not caring. And if they know they can get away with sloppy service or not cooking properly, they will do it. And every day will get a little worse. So you must hold them accountable for it.

So, what we'll do is, we pull the check, we analyze it, we know exactly who served, again, the miracle of computers, you know the waiter number, the captain number, you know where the person was seated because we have a proper reservation book. You know the time, you know how the check was paid, you know what was eaten because it is nicely itemized, you know what was drunk.

So, you call the crew together...all of them. You call the captain, the two waiters, the busboy, and or if necessary, the chef. Usually I don't like to mix them up. I take them separately. And you ask, "What happened?" And, if they did their job, it's already recorded in the log. If it's not recorded, you already have the edge: "Why didn't you report it? I could have done something about it." Well, maybe he didn't report it because he was scared. But he is going to report it next time because he is going to be even more scared.

But, if whatever went wrong, you analyze it, you can discuss it. Most of the time it's not serious enough to warrant any kind of disciplinary action, but the fact that you called the meeting, that you took the time, you got everybody together, that you are interested in what happened to table 65 last night at 8 o'clock with Mr. Miller is enough to keep the people on their toes. It's enough that you show that you care. You must care what happens to your customers.

How do you deal with your staff when a complaint arises?

I make it a habit of documenting every meeting that I have, in detail, in my own handwriting and I just put it in the personnel file of the people that I talk to.

Now this is very different from a disciplinary action, it's just a note that I talked to him and that there was a customer complaint. The second time or the third time it happens, you know that it wasn't an isolated incident, and you have the data to back it up. You can say to your waiter, "Francois, look, this is your third customer complaint of the same nature. This the third time somebody says you didn't pay attention. Maybe the first customer was too demanding, maybe the second one didn't like you, but the third...what is your explanation?"



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I find that when you approach complaints that way with your employees, they will either comply with what you are asking them to do, or they will leave you. Either way is good for you.

Describe the elements of your HR system that help maintain your operating standards.

Tangee Gibson

Our system basically focuses on four critical areas, the systems that we develop. The first being that we want to recruit the best people. The second area is that we want to enhance the capabilities of our employees and of our managers. That is OD and training. We then want to retain the best people, and that also ties into our ability to develop and train our employees and make sure that they have the right tools and systems to do their jobs. And then finally we want to create a world-class work environment. And that really ties into making sure that we have a safe work environment for employees, as well as making sure that we embrace and understand the importance of diversity within our organization.

The HR function, from my perspective and from my team's perspective: we are there to provide the systems and the tools. The managers are the ones who are responsible for executing those systems and tools that we put in place. So, from a staffing standpoint, we actually identify the sources that we can use in looking for candidates, but it's actually the staffing manager who partners with the operational manager in making sure that the tools and the resources are executed upon in bringing in candidates and employees into ARAMARK. And we have those tools in place: we're constantly looking at new ways to attract candidates to ARAMARK, and it's really incumbent upon the managers' holding themselves accountable for using those tools, with the assistance of the staffing organization.

Jeff Bell

For starters, our human resource system begins with an extensive recruiting process. Once a recruiter has identified a potential candidate several steps must be accomplished before the candidate is extended an offer. A resume must show progression of job sophistication. The candidate must have demonstrated leadership positions. The candidate must answer a series of behavioral based interview questions that indicate he or she will be successful in our environment. The candidate must go through a through background check and take a series of tests to ensure intellectual rigor. The candidate spends a day or two in our restaurant in a realistic job preview to make sure of cultural fit. Once a candidate moves through these steps,



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he or she must meet with one of our executives for a final interview. If the candidate successfully moves through all these steps he or she is given an offer.

Additionally, Houston's is dedicated to training our managers in the best possible environment. We have five restaurants around the country designated as training stores. Here managers must complete a 22-week training program that covers all aspects of the business. Managers-in-training must demonstrate a through understanding of a particular function prior to moving on to their next task. Weekly communication with our human resource department, and bi-monthly on-site visits by me, insures that the training stays on task. Once the training is completed, managers attend a workshop in Napa Valley to discuss operating standards in more depth.

Furthermore, like our manager training program, all of our training materials for staff members are available on-line through a company intranet. A paperless human resource system ensures materials being updated and available at all times. Each restaurant is trained on how to use these materials.

Finally, Houston's is committed to continuous education at all levels of the organization. Our managers are encouraged to become students of the business—we call it "restauranteauring." This includes visiting other Houston's, attending local cooking classes, traveling to Napa for company workshops, benchmarking food and service at some of America's greatest restaurants, studying fine arts and architecture, or visiting local farms and purveyors. These experiences help mold and inspire the precise execution of each guest's experience. Like the human resource process is dedicated to management, the local level managers are encouraged to model the same processes for their staff recruiting and development efforts. We look for our managers to show us the way when developing their own staff. Challenging work assignments, such as staff recruiting and development, create better managers.

How has the changing makeup of the workforce affected your staffing?

Tangee Gibson

The changing makeup of the workforce hasn't necessarily impacted our ability to go out and staff. I would say if there's one factor that impacts our ability to do effective staffing, it's the economy. That's an important factor. We are a labor-intensive organization, and when times are good it's difficult to get individuals or to attract them to our organization in some of the hourly positions. In terms of looking at the candidates that we want to attract, what's key is that we put the right profiles together to help the managers as they are identifying and selecting individuals to come into our organization, as well as making sure that people are held accountable around understanding the importance of getting employees in, but also retaining employees. So the makeup of the workforce is not what we would consider to be a critical factor, because if we have the right profiles in place in selecting individuals...having the right



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selection tools in place, that is a tool that's going to assist folks as they're going out and interviewing candidates—potential candidates—for opportunities.

Jeff Bell

In the late 90's with unemployment hovering below 4% there was a tremendous amount of staffing pressure placed on the service industry. Today, employment pressures have swung in the other direction. Because Houston's is dedicated to world-class sites, professional management, excellent environments, and a commitment to high standards, we are fortunate not to be effected by the changing workforce. We believe a select amount of men and women will always be attracted to quality, no matter what the workforce offers. Houston's offers this quality environment.

How do your training and employee benefits programs affect your ability to attract and maintain staff?

Tangee Gibson

We strongly rely on our divisional benefits department. It's their role to make sure that we're competitive in terms of the benefit packages that we offer both hourly and salary employees. Obviously that's going to be something that's going to help us in attracting individuals to ARAMARK. So, from that standpoint, the role of my function in working out in the field—with the operation personnel who actually make the selection decisions—is to make sure that we are kept apprised of any issues that we may have in terms of not being competitive in the benefit offerings that we provide.

Okay, in terms of the training, it's extremely important. Important in terms of attracting individuals to the organization: I think what's key is that potential candidates want to know what resources, what information, what tools will they have to ensure that they're successful in their job. And it's the job of the organization and development and training department to partner with my HR function in making sure that we are on top of new and current trends within this industry. It's also important that we're partnering with the operational personnel in terms of making sure that we are instituting the right operational types of training, and in terms of ... once we get people on board, the two major programs that we have in place are on-boarding programs for, not only frontline managers, but for employees as well. And we really believe that that's the key to retaining employees: is when they come on board, to make sure that they have an opportunity to attend those on-boarding trainings that's going to give them the basics of, not only understanding what our company is about, but to understand what's expected of them in their new role in working for ARAMARK.



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Jeff Bell

Again, our management and hourly training programs are considered to be one of the most rigorous in the industry. People are attracted to Houston's because of this reputation. Our people know, once they have completed training, they will be as or better prepared than anyone else in the industry. They also know that every one of our people will be treated with dignity and respect. In return, we expect the highest standards of honesty, commitment, and professionalism. Every job, regardless of what it is, must be done, and must be done to it's best potential. Throughout their careers, our managers and employees know, they will learn a genuine sense of hospitality, professional attitude, and strong technical proficiency. We believe hard work and the pursuit of knowledge will enhance our ability and well being

I like to look at benefits in a non-traditional sense. World-class sites, using only the finest ingredients for our recipes, professional management, graciously serving our communities, a quest for continuous improvement, the excitement that comes with working in a high volume restaurant, working along side dedicated colleagues, and training that is second to none—I consider these to be true benefits. Sure, our people have exceptional compensation packages, some of the highest in the industry, we offer medical, dental, 401K's—but these things do not matter unless the individual feels like they belong to something very special.

How far in advance are your hourly employees given a work schedule (weekly, monthly, yearly)?

Jeff Bell

This varies restaurant to restaurant, however, most of our restaurants have permanent schedules for the kitchen, bar, and front door. Our servers have set schedules that will only fluctuate if their performance warrants. We allow our people to trade shifts with one another as long as they do not abuse the privilege. Many of our people are in school, so we go out of our way to accommodate their school schedules.

The Case for Advanced Scheduling

In order to schedule accurately, you need to look at demand for each meal period. There are obvious fluctuations of business demand for each day of the week, and weekly or monthly fluctuations throughout the year. Every good manager knows what their peak periods of business are; they know the slow and busy days of the week and they know the month-to-month fluctuation of their business cycle. It is not very difficult to predict that certain holidays



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or local events are going to cause spikes in their demand, just as managers know that other predicable events draw people out. They also understand how seasonal fluctuations in weather cause drops or increases in demand.

If you can forecast such volume shifts of your business, why can’t you schedule your staff on a longer-term basis than week to week?

Customer Traffic Forecast by Meal

If the operation were open for three meals, the peaks and valleys in the graph might represent a typical demand pattern.

Customer Traffic Forecast by Day

To continue the analysis, we need to plot the demand for the dinner meal period on a daily basis to account for any variability.

This demand chart shows steady business Sunday through Thursday and peaks in demand on Friday and Saturday.



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Customer Travel Forecast by Month and Region

After considering the information from the first two charts, we look at seasonal effects to determine how much month-to-month variability the business may experience, which impact the normal demand during the forecasted week. For example, if the restaurant is in a summer resort area, it may have a much different weekday business during the height of the summer when people are on vacation. On the other hand, a restaurant located in the city may find a significant drop in volume during the summer months when business people are away on vacation.



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The demand might look quite different for these two restaurants. This variability in demand would exist consistently from year to year and should be built into the staffing models. Staff vacations can also be accommodated more easily when these shifts in volume are forecast in advance.

More in the Case for Advance Scheduling

Labor will continue to be a major issue in food and beverage operations, but as these charts show, demand for services often follows predictable patterns. Foodservice operators can use this information to facilitate advanced scheduling. Treating your workforce as professionals by using longer-term schedules can result in better employee retention and higher job satisfaction, lessening the labor issues so common and problematic in the food industry.



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Developing a Staffing Schedule: Step 1

Forecast Weekly Sales

600 covers x $30 average check = $18,000


Identify Labor Needs Based on Daily Demand Forecasts



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Note: In order to complete this step, you must apply certain work production standards, such as:

A server will serve up to x number of covers per shift A cook can prepare x number of meals per shift

These numbers must be developed for your specific operation based on your own production and service standards.

After determining the number of people needed to cover each shift in the dining room and kitchen, apply the appropriate wage rate (hourly or salaried) and calculate the labor cost. In this example, the costs total as follows:

NOTE: In the U.S., the federal minimum wage is over $5 per hour; however, tip credits of up to 50% can be applied to reduce the paid wage. This restaurant has chosen to pay a premium to get better servers.



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Congratulations on completing this course. You've explored a lot of information, important topics in foodservice management systems, specifically marketing and human resource systems. I hope it has provided you with new insights and knowledge to better address some of the challenges facing foodservice managers today. You should now have some additional tools with which to conduct market research and to analyze your findings so that you can better define your market strategy. Leveraging the components of the staffing and scheduling subsystems will create a more productive and enjoyable work environment for everyone. Thank you for taking this course. I hope you enjoyed it and that you will join me again in the foodservice management courses covering the remaining operational systems.

Documents

SHA506: Foodservice Management: Marketing, Service, and … · School of Hotel Administration, Cornell University ... Menu and Business Philosophy ... Foodservice Management: Marketing,