Good Examples of Cutting Operation Costs

Julie Jargon at The Wall Street Journal reported that restaurants are facing two threats --- “sharply rising food prices and looming changes in the healthy-care law that will mandate expanded employee coverage.” Restaurants are already in the business of low profit margins. If food costs and labor costs go up, profits will definitely suffer. To help restaurant owners cut operation costs, Julie Jargon listed some good examples in the case of Chili’s Restaurants.

Tactics Used in the Kitchen
  • Replace the skillet and the smoker with a new combination oven, which can smoke ribs and cook bacon three times faster.
  • Introduce the conveyor-belt-like oven that was used in fast-food restaurants in the kitchen. Cooks no longer need to turn over burgers or quesadillas to cook both sides.
  • Prep cooks wash and chop vegetables in the morning while line cooks only need to focus on cooking.
 HR Tactics Used in the Front of the House
  • Eliminate bussers so that the restaurants do not need to provide wage and health insurance to this group --- under the new law that will take effect in 2014, “employers with 50 or more full-time workers would have to provide affordable health insurance to those who work more than 30 hours per week.”
  • Waiters work in pairs in zones --- they no longer share tips with bussers and have an incentive to turn over tables faster.
What are the results of these changes? Even though the traffic at Chili’s fell 7.1% and the same store sales dropped 4.9% in the quarter, Brinker’s (Chili’s mother company) earnings more than doubled, partially because of the cost-cutting efforts. What other threads is the restaurant industry facing? What are tactics or strategies that a restaurant can take in responding to those threads?

References:
Jargon, J. (2011, January 28). Chili’s feels heat to pare costs: Restaurant chain looks for savings in kitchens ahead of expected change from health overhaul. The Wall Street Journal, B8. Online access via: http://on.wsj.com/e21sHk
Picture was downloaded from: http://okceats.net/restaurants/chilis

Popular posts from this blog

2017 hotel trends: Some indications from AHLA 2016 Lodging Survey

Convenience over Class: Serving Vino in Cans (by Kristen Rinck)

Put a Stop to Booking Abandonment (by Karen Valeria Sandoval)