Qu - Restaurants Reinvented - Jim Taylor
[00:00:00] Jen Kern: Hello everyone and welcome to Restaurants Reinvented. This is Jen Kern, your hostess and this is our fourth episode of our labor series. And today, on the show, I have Jim Taylor, who's the founder and CEO of Benchmark Sixty and he's also created something called The restaurant money guide. I was introduced to Jim through a mutual friends on LinkedIn.
[00:00:47] And, what Jim is doing in the restaurant space is really quite interesting, especially as relates to calculating labor costs. And, so I want to go ahead and welcome Jim to the show. Hello, Jim!
[00:00:59] Jim Taylor: Hi Jennifer, thanks for having me.
[00:01:07] Jen Kern: So, this is exciting! I think you're the first person I've had on the pod from Canada!
[00:01:14] Jim Taylor: The first one from north of the border. Sounds good. That's awesome.
[00:01:17] Jen Kern: Yeah, fantastic. And, so getting down to business here Jim, I'm really curious about your model, which you've developed, which really is a much different perspective on how profitability is typically calculated in the restaurant industry, which right now, honestly, it's a very simple calculation of sales, like revenue on the day, divided by cost of goods and labor costs. And I believe that you've got a very different way of approaching this and just to give you a little street cred here for the audience, you spent 15 years as a general manager and a regional manager working for a chain called Cactus club cafe, which is a multiunit location, over 30 locations I believe they have. So you've, you've been in the restaurant industry, you've been an operator owner you understand all the challenges that we're facing today when it comes to talking about labor.
[00:02:10] Jim Taylor: Yeah, for sure. And what happens when wages go up and, you know, all of that kind of stuff. So, definitely been in the mix for a long time and yeah, over 20 years in, in operations altogether.
[00:02:22] Jen Kern: Great.
[00:02:22] Jim Taylor: Yeah.
[00:02:22] Jen Kern: Tell me how you came up with this new model and explain exactly what it is.
[00:02:26] Jim Taylor: Well, originally, completely by accident, to be honest.
[00:02:30] Jen Kern: Love it. Yeah.
[00:02:33] Jim Taylor: You know, for people who are listening, who are in, in the US they may not be aware of this, but if there's anyone in Canada, they'll probably be able to relate in. It was probably six or seven years ago. All of a sudden, all of the wages across Canada started skyrocket from a minimum wage perspectives. And, there's no tip credit in Canada, it's just minimum wage is minimum wage. So, you know, if a server or a bartender makes minimum wage, they make the same as everybody else, whether they're making gratuity or not. And, so we were seeing anywhere, when I was still in, in a corporate ops position, we were seeing anywhere from a 30 to 50% increase in wages over about a two year span.
[00:03:09] And, I mean, imagine you're a restaurant operator, you see 30 to 50% increase in hourly wages coming. I mean, that's pretty scary, right? And, so we, we figured we needed to do something different and we needed to look at this in a way that we'd never done before, because all we'd ever done was raise prices when wages went up.
[00:03:29] Right? I mean, which is what most restaurant operators do they go, "Okay, I got a 25 cent increase in wages coming. I'll just raise my menu price 2- 3%." And it's a wash.
[00:03:37] Jen Kern: Now, is it, I got to ask, is this be, is this the equivalent of our minimum wage here in the United States? Is that what you're talking about and was it like a government mandated, type of thing?
[00:03:45] Jim Taylor: It was a government mandated wage increase and it was happening across the country. And for example, the region that I was in at the time, we were at $10 an hour as a minimum wage, and we were given 18 months notice that it was going to incrementally go to $15 an hour, over 18 months. So, I mean, 50% increase in wages.
[00:04:04] Jen Kern: Yeah.
[00:04:04] So, anyways, we, we went down a rabbit hole on and did a big case study on just what the, what the way the restaurant industry had always done it was, and if it worked and if it didn't and you know, we looked at things like, what percentage of the time, or how often does a restaurant manager even hit their target for labor cost percentage?
[00:04:24] Jim Taylor: And we found it was, it was like less than 10%. So, that was one of the first things we looked at, which told us that there's, you know, it's almost luck of the draw if you hit the target or not. Right? And so then we started looking at things like, you know, how much does turnover cost us and what creates turnover and how much of our labor cost is made up by those expenses.
[00:04:43] And really what ended up happening is we kind of started looking at labor from a manufacturing perspective instead of a service perspective, which is what the restaurant industry had always, or at least in our experience had always done. And, you know, when we started looking at it from a manufacturing standpoint, it was really more about output, right? It was more about how much work does it take to get the job done. Because you know, restaurants are so service driven, but if you're building a product at the same time, right, every day. So, we started to measure it based on, on output and actually how productive the business was and found that there were some things. You know, things like average customer spend, how much you have to pay people, how well promotions work or don't work. That really took a lot of the control out of the manager's hands. Then, all of a sudden we realized this manager has no control over what the labor percentage is. So as soon as we were able to have a metric that would give us a, an indicator on what the level of output was or how productive the business was, it became way easier to control and way easier to predict.
[00:05:45]
[00:05:45] Jen Kern: So, the 10%, explain that to me. Like, when you say 10% was about the average, it, what does that entail?
[00:05:52] Jim Taylor: So it was 10% of the shifts that we analyzed. So we looked at, the company I was working for at the time had 30 locations across the country in different markets, and so we looked at two years worth of shifts, both front of house and back of house. And analyzed how many of those individual shifts did the labor cost come in on or under budget.
[00:06:18] And it was less than 10% of the time. Which told us either the managers didn't know what they doing, but hopefully we trained them well enough or there was other factors that were out of their control that were, you know, making it really, really difficult to, to achieve their target.
[00:06:36] Jen Kern: So, and the cost of that labor, it was strictly salaries, correct?
[00:06:41] Jim Taylor: No, hourly wages.
[00:06:43] Jen Kern: I'm sorry, that's what I meant.
[00:06:44] Jim Taylor: Just hourly.
[00:06:44] Jen Kern: It's, it's, It's Just their pay. That's all in there, okay. typically, what I understand, owners and operators look at taking that cost and then putting an equation together where they're dividing that by sales.
[00:07:00] Right? what is your preferred approach?
[00:07:05] Jim Taylor: Okay. So, one of the biggest, sort of aha moments that we had through this whole process, and I talk about this all the time with people, is let's pretend that you are running your own little restaurant. Okay. And, I mean, it could be any size of restaurant really doesn't matter. Could be quick service, could be full service. Yeah. Just pretend that you're, you're owning and running a little restaurant. So, I tell you that we know you're only going to serve 30 customers today, from open to close, right? If you're the manager or the owner of that restaurant, you're probably gonna think, you know, "I can serve them myself. I might not even need someone to cook the food. I could probably, you know, 30 customers over 12 hours. Really. Isn't very many." If I told you, "Tomorrow, you're going to serve 200 customers." You'd probably think about that in a different way. You'd say, "Okay, I need a little bit of help on, you know, from a, to get customer sat or, you know, processed. I need someone to help cook some food and maybe someone to help take payment and I'll kind of, you know, be involved but not run the whole thing myself."
[00:08:02] If I told you, "You're going to serve 500 customers," you'd probably all of a sudden go, "Okay, I need a whole team of people. I need a kitchen team. I need a service team I need, and I'm going to manage the team." Right? You'd probably look at it differently, but what if I told you that we already know that 450 of those 500 customers are only going to order water.
[00:08:21] They're not going to spend any money. You still need to provide good service for them, right? They still have to have a good experience or they won't come back. You still have to make sure your staff have a good experience, meaning that they're not over, you know, too stressed out and working too hard. And you know, that kind of thing.
[00:08:37] So, what we sort of found by thinking about it that way is that for one, you really don't have any control over what the people are going to order and therefore what your total sales are really going to look like. And, looking at labor from a different way actually helps you support the customer experience a little bit better, and it support employee experience better, right? And so removing things like, "How much does your customer spend?" Removing things like, "How much do I have to pay this person to come to work?" And just focusing on that relationship between," How many customers am I going to serve?" And, "How many staff do I need to serve them?" All of a sudden removes some of the stress, removes some of the, you know, the anxiety that's caused by trying to hit that labor target. And it focuses on more around people and experience and then we can measure that.
[00:09:24] Jen Kern: So if I were running a restaurant, like you said, a small, small restaurant, let's say I have five locations, something like that. And I want to adopt a more people first mindset where I'm not just considering or looking at people as commodities. You know, I want to actually have this people first mindset that we're talking about. How are you going I structure my, my business and my P&L?
[00:09:50] Jim Taylor: Yeah. Well, it's all about, at the end of the day, you know, I, I, another thing I sort of say to people all the time when we're talking about this is that labor cost, as a percentage, is a result. It's not a strategy. So, by the time you see the result it's already happened, it's too late. And, you know, you can have a good guess on what your sales would be and what you think your percentage of labor costs is going to be.
[00:10:12] But it's at the end of the day, you're still, it's still going to be a result. So, you know what I would suggest people do or how we spend time with people on this is that when we take it from the, like I said, the customer count and staffing level side of things, you can create a ratio there.
[00:10:30] And, that ratio is essentially a score on, on how many customers you're serving per staff member. Right? So what I, how I would tell them to start to implement that or use that information is that let's say minimum wage goes up, and this is how we saved this exact strategies, how we saved, I'm sorry, spent $2 million more in one year on front of house wages alone and our labor percentage didn't go up. And, all we did was we said, "Okay, let's say an a restaurant, for example, serves four customers for every one staff hour worked. Okay? What would happen if we could get that to five customers or even four and a half? All of a sudden, if you then translate it into dollars, your labor cost is going to go down as a percentage because you use the same number of work, but your output went up."
[00:11:21] Jen Kern: Right.
[00:11:22] Jim Taylor: Does that make sense?
[00:11:24] Jen Kern: It does. And, you know, something that really kind of perked my ears up when, when we were talking before the show is that, you know, there's the people that were working in the restaurants there, they, it's a very stressful job, right? It's a very stressful job, and we know that there are mental health issues and that we need to be very cognizant of that. things that you talked about adding to the stress level is folks working that think they're going to be let go, because there's not enough customers or there's not enough business that day. I mean, there's so many unpredictable variables. The weather, you know, the news, national events, you know, you, it's just very hard to predict how much business you're going to do from day to day.
[00:12:09] Right? So, I mean, there's a, there's a couple of topics in there and questions that I wanted to ask you, but, do you think restaurants can get to a more predictable model when it comes to running their business and calculating profitability?
[00:12:24] Jim Taylor: One of the things, and I was this, I was guilty of this when I was still in operations too, is that I believe, in my personal opinion, that our industry is terrified of data and the information. You know, and we have conversations with people all the time about this. It's, you know, we're, essentially the business that I run as a data coaching service that helps restaurant operators understand how to use information to their advantage.
[00:12:46] But the place that I would start is just, is understanding that it's, it's not that complicated and there really are pieces of information that can make things, make understanding how to be more profitable and more people first, actually quite easy. But that, you know, to your comment about the, you know, the mental health challenges and those kinds of things, when we were doing this case study, and we've done a bunch more work on this since, it's very clear that labor cost as a percentage, as a measurement, in restaurants is the number one cause for stress and anxiety, in the industry, for staff, for management and for customers.
[00:13:26] 90% of, I would almost go, it goes as far as to say at least 90% of, of the decisions that get made by a manager or a chef in a restaurant in one way or another are connected to labor costs, almost always. And if they're trying to hit a target or make the bonus or those kinds of things, you know, sometimes they make decisions, not even intentionally, but they're, they make decisions that actually hurt that experience.
[00:13:50] Jen Kern: Yeah. So, I mean, you have what I think you're calling like in an employee productivity score, as part of the equation. Can you explain how that that works as well?
[00:14:04] Jim Taylor: Well, it's the same score that we use that can actually measure customer experience to a degree. It can measure employee experience, definitely. And it can help us manage and predict labor costs. So, like I said, it's based around that ratio or that relationship between the number of customers that you're serving and the number of staff you have to serve them.
[00:14:25] And what we do is, is we go through, uh, a process that we call concept clarity, which helps us really determine what the optimal of output is for any restaurant, quick service, full service. And we, we've done this with, you know, very busy, quick serve chicken restaurant. We've done this with 500 seats steakhouse. It really, the same metric will apply in all of them. But once we identify that optimal score, it's not like a profit number where you're just trying to drive as much profit as you can. It's once we identify the number where you want to see the business land. It's just hit that number every day.
[00:15:03] And we can predict really, really accurately what will happen. Because if the number gets too high, essentially, what that means is that your staff are working too hard. The output level is too high. And if you think about that in terms of experience, it probably means you're either short-staffed or the staff have too big of a section or too much to do. Which in turn is likely going to create a negative experience for them and there's a very good chance it's going to hurt service.
[00:15:28] Jen Kern: So have you actually implemented this model now that you're in a, not in-house to speak, working at the restaurant, but, but doing consulting?
[00:15:37] Have you helped restaurants implement this model in a way where they have seen their employees benefit? Happier, less stressed out, retention? And what does that look like?
[00:15:51] Jim Taylor: Absolutely. We have almost every one of the, the restaurant groups or restaurant owners that we work with and use this strategy with. Typically they started with some sort of strategy around, you know, annual survey or something like that, where they're, you know, they're checking in with their people, right, they're getting feedback in a survey monkey or something like that once a year. And they tasked their management with, "Make sure you ask your staff how they're doing." And, you know, have the one-on-one conversations and stuff like that. But we're able to see direct correlation, like I said, between productivity score, like how hard they're working. And yeah, we, with all of the groups that we work with, we then start to track what their turnover looks like. And over the course of a year or six months, we can start to see that number improve in almost every case. We had a, I was having a really interesting conversation with a director of operations and a GM at the same time, a couple of weeks ago.
[00:16:43] I don't think I mentioned this to you in our other conversation. We were looking at this score as it pertains to their, one their restaurants, every day of the week. So we looked at it Monday, Tuesday, Wednesday, Thursday, Friday, Saturday, Sunday and every day of the week, with the exception of Friday, was right on target. They were hitting that optimal output score that we had determined was really good for their business. going to make sure they were profitable. The employee experience was good and the customer experience was protected. And then there was Friday and Friday had a really high output score, re, the productivity was through the roof and their labor cost was two, two and a half points under what the rest of the week was.
[00:17:23] Okay? And the, the director of operations pointed that day out and he said, "Wow, that sounds, that looks awesome. You know, the, the store was super productive. That's so good. And look how profitable we were." And the GM, you know, we were on a Zoom call and you know, you could see his face and he had, it was deer in the headlights. He starts shaking his head and he goes, "No, no no we, we can never do that again." And, I sort of stopped and said, "Okay, well, tell us what happened on Friday." And he said, "We had three staff members call in sick that day. I had to work my full GM shift during the day. And then I had to stay and bartend the whole night as the GM."
[00:17:59] So he worked a 16 hour day or something like that. And, he said, and two staff members quit because of how bad it went. So he said, you know, "We need to make sure that we never are that productive again, because it was awful." Right? So it was almost using that productive productivity seems like a positive word, right. But if it's too high, it actually can be, it can be a detriment. And, so right away, the director of ops said, "Okay, great, let's get back down to the number we want to see and make sense."
[00:18:27] Jen Kern: And how did they do that? What do you do about people calling in sick and people quitting? I mean...
[00:18:31] Jim Taylor: Yeah. It's time right now. I mean, it's, it's definitely a challenge with everything that's going on in the world, right? I mean, where, where I live in BC, they, the government just implemented a, every employee gets five paid sick days a year. So, you know, that people are calling in sick more than they used to, which there's nothing wrong with, right? I mean, people need to take care of themselves. But, you know, what we encourage is to actually use that productivity score, that's going to guide your team how many customers they can actually handle, right, front of house or back of house. And so, you know, what I actually, as crazy as it might sound, what we actually encourage our other restaurant groups that we work with to do is if that happens, shrink the restaurant for the day.
[00:19:11] Jen Kern: Turn away customers?
[00:19:12] Jim Taylor: If need be yeah, turn away customers, or, you know, close a section or, you know, limit the menu or whatever it might be in order to protect the overall experience. Because, you know, losing a couple thousand dollars in sales in a day, to an owner of a small business, sounds really obviously like a big deal, but losing people makes it even harder and losing customers makes it even worse.
[00:19:37] Jen Kern: I love that. I think you're onto something here. Because, you're talking about protecting the people before the urge to drive the revenue and the Because, this is such a hard equation to, reverse, right? I mean, this is straight up, like what we consider common business sense.
[00:20:22] But if we think about, I mean, just, just what you're talking about, like, you need to protect the people at the expense of the business, you know, and they, the two go really, really hand in hand. And, actually, as a marketer myself, I'm thinking if you have to turn away business or close the section and people are like, "What? I wanted to come here and eat," or "The reservations are there online," making a reservation and sold out, you're going to actually generate demand because people are going to be like, "Wow! That place is so popular and in demand, that I can't get in today." And that's going to me, as a consumer, that's going to make me want to go there even more another day.
[00:21:01] Jim Taylor: Yeah, absolutely. If you compare it to other industries. I mean, in your business or in mine, or, you know, most other service businesses, you know, growth is obviously good and being busy is what everybody wants. But if, if a business like, you know, take my business, for example, if, and hopefully this happens, you know, several times throughout our careers, but if there's too much business, you know, as an individual operator or as a marketing company or whatever you, you would actually say, "I can't take you right now. I can't take on another client. I can't take on another project, because I don't have the capacity."
[00:21:37] Jen Kern: Yeah.
[00:21:37] Jim Taylor: Because I know that I won't get any sleep or I know that I'll give a bad experience to my client. And, you know, it's interesting because in, again, in my, experience, in my opinion, the restaurant industry doesn't really look at it that way.
[00:21:51] So this gives us a way to measure, you know, like I said, what the threshold is on, what the business is capable of and, you know, what they can responsibly take on, without affecting the experience of the people that work there, the management and the customers.
[00:22:09] Jen Kern: Yeah. So it's, this is all about too, like developing new communication styles, developing new ways of talking to your guests. Right? You know, I see the lines at the drive-throughs up the street here, you know, they're all around the block and whatnot. But, what if we empowered our managers and our employees and the people that in there, unable to fulfill the demand with the ability to say, "Hey, you know, we're at capacity right now. I'm so sorry that we can't serve you this delicious food we want to serve you right now, but our teams are maxed out and we need to protect our employees."
[00:22:47] Jim Taylor: Right. Well, I mean, there's, there's so many opinions and statistics on what it costs to replace an employee. Right, and, you know, I, I truly believe that a lot of the labor shortage that we're facing in our industry. You know, it's not just in the US it's in Canada, it's in the UK. It's, you know, in Europe, a lot of the reason that we're facing that labor shortage is yes, there's the, you know, the, the great resignation as they call it that's happening and people are going to other industries, but there is, there is also a turnover issue happening.
[00:23:22] that is, you know, a lot of it is because, you know, people might just come and work at one restaurant and not feel that they're being taken care of and protected. And those types of things, not just from a wage standpoint and they might just go and work at another restaurant. You know, there are still people applying to work in restaurants, but it's a lot of people who are less experienced and are newer to the industry and it's people leaving one restaurant to go find a better somewhere else.
[00:23:46] Jen Kern: Yeah. I mean, this is what this series is absolutely bringing to light like this whole talk about great resignation, like you said, or the wage war or the war for talent or the labor crisis. That's that, really what it's about. It's about how we treat our people. It's about the culture. It's about everything that's going on inside and outside and, and monitor mano person to person.
[00:24:11] We talked last week with Donald Burns about self care, like as leaders, if we're not taking care of ourselves, what are we demonstrating to the people that work for us? We're, we're not, you know, we're not showing up well and we're not treating them well. And then they're not treating other people well, like the guests.
[00:24:26] Jim Taylor: Exactly.
[00:24:28] Yeah.
[00:24:29] And, and, you know, I think the, I mean, I'm biased obviously, because I believe that this is a strategy that can help to change the restaurant industry. But you know, one of the biggest learnings for me when I was still in operations was, you know, we were paying $15 an hour minimum to every employee who worked in those businesses.
[00:24:45] And we were, you know, once we actually got our heads wrapped around a new way to look at things, and this is happening with, with every group that we work with, they're, they're paying more and they're more profitable. And so, I actually, I've had some very interesting conversations happen with lots of people about this because, you know, I do believe that we should pay people in restaurants more.
[00:25:08] I'm not a wage lobbyist. But, the reason I believe that is because the only thing we have to do is look at that metric and that model differently. Increase the output of the business a little bit, which actually isn't hard to do, and you can negate the rise in any wage, or if you don't raise your wages, you can negate the rise of the cost of beef or oil, or, you know, the inflation issues that were happening that are happening right now.
[00:25:33] So it's, I mean, it kind of all goes the same way. Right? But...
[00:25:37] Jen Kern: Yeah.
[00:25:37] I think what's really hard about this is it's not a single thread issue, right? I mean, like anything worth achieving, right? It's, it's difficult and that, this is why we started the series because you need so many different and perspectives and approaches. But, really when you look across the board, it's very simple. It's like, we need to change how we're treating our people and how we're viewing people, again, not as commodities. Right? And so what you're talking about makes total sense. It's like, "Yeah, we're not against raising wages, we're not against that at all, but then, what's your culture like, at your restaurant?"
[00:26:15] I mean, we were talking last week about like, how often do you walk into particularly a fast, casual, or quick service where the people working there look absolutely miserable. Right? And it's really hard for them to put a smile on their face. It's really hard for them to be hospitable, you know, to, to use all of the hospitality tenants that we talk about.
[00:26:38] It, it's difficult because of all the things we're talking about, either their pay what's going on at home, you know, the lack of management, the lack of culture, the lack of caring, you know, and, and, and I looked at that website that for Cactus club, where you used to work, the Cactus club cafe.
[00:26:54] Jim Taylor: Yeah.
[00:26:55] Jen Kern: And when I got to that website, I was like, "Wait a minute. Is this the right website?" Because it wasn't all food.
[00:27:01] It wasn't all the food right there, which 99% of the websites you go to, for any restaurant. The first thing you see is their delicious food. You have to click a hundred times to find any of the people. Cactus club I you must have done something right. And, it was all about the people, again, it was a reorientation for me. I was like, "Wait a minute, why are there people?" And all the content too, it's about the people and working there.
[00:27:25] Jim Taylor: Yeah.
[00:27:27] Jen Kern: that's yet another thing, you know, flipping the model, you know, upside down.
[00:27:33] Jim Taylor: Yeah. And I was, I was just like almost every restaurant operator for a long time where I thought, you know, that we have to pay as little as possible and we have to have people on split shifts and you know, the clock-in shift right. Where you close, open. You know, work really hard and, you know, as a manager, I would, you know, just do the same things that every, so many other ones, other managers do, you know, send the bartender home and pour drinks myself so I can hit my labor target or, you know, the sous chef would send someone home and do their prep for them so that they could keep that percentage down.
[00:28:05] And it, you know, that's why I say that so many of those decisions impact the stress level in the environment. Because every time one of those decisions gets made, it affects somebody, from a stress, anxiety, mental health, all of those, you know, those things. So, one of the biggest lessons that I learned through the government's raising wages dramatically across Canada was that $15, $16, $17, there's a way to make it work. We just have to learn as an industry to look at it a little bit differently.
[00:28:36] You know, and I talk to lots of restaurant groups in, in the U S that, you know, they're used to paying 2, 3, 4 or $5 an hour. And when I say 15, they, you know, the response initially is "We, we'd go out of business. You can't afford to pay that," but you can.
[00:28:49] Jen Kern: Right. Yes, you can. What do you think about salary? Like, paying an actual salary because there's, there's a lot of conversation that's starting about how do we make this a career? It's not going to be for everyone because I think that mean age is 16 to 24 for people coming into the restaurant industry. So it's not going to be for everyone, but is there a use case for salaried employees in restaurants and what is, what is it?
[00:29:19] Jim Taylor: in my opinion, and you know, we're currently working on a couple of projects like this with some of the restaurant groups who work with, but, I personally believe that some sort of hybrid is the way to go. You know, we're seeing daily wage become more and more popular all the time. You know, for while was sort of a thing, and pre-pandemic I saw it happening a little bit in, in kitchens where they would pay a daily salary. You know, because I think the risk with going to full salary is that we're still in the same position we were in before. It's just worked 12 hour days and know, the overtime thing doesn't get, it doesn't become part of the discussion. But the daily wage, for front of house and back of house, I'm seeing happen a lot more.
[00:29:58] Because it's more, you know, you're going to get some guaranteed pay. It's not come in and work for two hours over lunch and go home and, you know, make 20 bucks or whatever. So I think it has a place. It's just about trying to find the right, you know, the right level and how to make it a part of the big whole package.
[00:30:14]? But we're, we have quite a few projects actually happening right now that are involving that daily wage.
[00:30:20] Jen Kern: Interesting. So not a weekly or an annual, but a daily wage.
[00:30:23] And are there specific hours assigned to that?
[00:30:27] Jim Taylor: Yeah. In most cases, it's, uh,based on them working eight hours. So it's a full shift. And you know, one of the reasons that I like it is that it, forces the operator or the owner of the, of the business to find ways to justify paying guaranteed amount to somebody,? So if I say, "Okay, I'm going to pay you, I don't know, a hundred dollars a day or whatever the number might be, but I only need you to serve customers for four or five hours. You know, maybe I don't want to pay you 20 or $25 an hour, but I can have you serve customers for four or five hours, and then I could train you to do something else."? And, and by doing that, we're actually seeing that productivity of the whole business improves. Because it's not just pay someone to come in for three hours to serve customers over lunch and then pay another person to come in and do something else.
[00:31:11] Now we're paying one post We're rewarding one person better. We're improving their overall experience and the component overall of improving the output and productivity of the business.
[00:31:21] Jen Kern:. And so, really looking at more diverse functions within one role. So instead of this person being the cashier, that person being the, the kitchen, you know, chef or the line person you're saying like, "You're going to get to do a lot of different things", which, which I think is attractive.? I don't want to just come in and do one or two functions, but I'm going to do the one or two functions I know how to do. And then I'm going to learn how to do some different functions then may, I'm going to have to do some functions, you know, cleaning, mopping. My kids used to have to do that where they worked, they came home horrified when they were 16. "Oh my God, we had to clean the women's bathroom."
[00:31:55] Oh, well. Made me happy, you know, but, you know, you're going to do some, learn some new things about maybe running a business. "We're going to put you through a training class and teach you about that, about the business and how we're running a profitable business. And then we're gonna, you're going to serve customers for part of the time."
[00:32:14] But to me, that's, that's interesting, right? That's, that's a more interesting job.
[00:32:20] Jim Taylor: Well, I was having a conversation the other day with an operator of a full service restaurant that has a big team. There were about 300 seats. And so it's a, I mean they have a hundred staff kind of thing.? And that the approach that they used to take was that cross training was a reward for top performing people.
[00:32:36]? "If you perform well in your first task, we'll give you a raise and train you on something else."? And that's, I mean, I could relate to that, that, you know, we did a lot of that when I was in operation still and see it happen all the time. The discussion then kind of went to what, if it was mandatory that everyone was cross-trained and we just paid everybody more.
[00:32:58] And, and what we found happened with that was that people actually had more variety at work. They enjoyed the job more. They understood and it actually helped to improve the retention of the staff because they knew "Not am I going to learn something new, but it was, I'm always learning something new," which, you know, for the most part, you know, I think people generally enjoy.
[00:33:22] And like I said, we, you know, we were measuring the output of the business and we saw it constantly going up because they were always teaching people, new things. You know, the, the cross-training thing and they were able to pay everybody more without seeing an increase in their labor cost as a percentage, by doing that without
[00:33:40] Jen Kern: I I love that, that's awesome. That's a great solution,? I also just love the, I'm stuck on this daily salary thing because I'm thinking, gosh, that really forces restaurants to put a hard line in the sand. We're gonna pay a daily salary, You're going to work a scheduled predictable number of hours.
[00:33:58]? And then the employee removes that stress, like you're saying of like overtime, getting cut early. I know, you know, there's, it's just so much more predictable and it forces the restaurant and the owners to really be accountable.? And you know, it goes back to that saying no, sometimes, you know, sometimes the best strategy is being willing to say no. If you're never willing to say no, I've seen a lot of businesses suffer.
[00:34:27]. Being all things to all people, Have you heard about, there's a friend, a Chick-fil-A franchisee who implemented a three-day workweek.
[00:34:37] Jim Taylor: Yeah.
[00:34:37] Jen Kern: Have you heard about that? Yeah?
[00:34:39] Jim Taylor: Yeah.
[00:34:39] Jen Kern: What do you think of that?
[00:34:40] Jim Taylor: Several of them did, if I'm, if I'm not mistaken, and it's, they were the first ones that I heard about doing a three-day workweek. You know, we've done lots of work around the four day work week. And also, actually unlimited vacation time is another interesting one that we could talk about, you know, for, for a long period of time. But the, the three and four day workweek. you know, I think as long as it doesn't impact people's income in a negative way, I think it can be incredibly beneficial. Um, I'm, uh, personally, I'm a, I'm a believer in the four day work week. For, for our industry. I think it, I think it can really help people from a recovery standpoint, because they, you know, in, in so many restaurants and like you said, the people in the, in the drive-through that just looked burnt out or, or a full service restaurant, that's open til 2:00 AM kind of thing.
[00:35:25] I mean, it's exhausting.
[00:35:27] Jen Kern: Yeah.you know, I've seen quite a few examples of people, you know, they work a closing shift on what would be there Friday and it takes them their full Saturday just to recover from their Friday. And then they have, they kind of view it like, "Well, I only get one day to kind of get anything done or and family. And then I'm right back to it again." And, uh, we did a, case study with a group on, on flex days. This was specifically for management, but we did a sort of set things up with their team where they, every manager was working 4/10, 4/10-hour shifts, which they already were working anyway.? So we switched it to just now, now we're telling you, you're working four times instead of telling you you're working eight and you're working 10.
[00:36:10] And then on their flex day, which was their, again, their air quote Fridays, they were required to be in the business for three hours of that time. So from noon to three or something like that, this was in a full service restaurant. And they're required to be on the floor, serving customers for three hours.
[00:36:28] Jim Taylor: The rest of that day, they can do whatever they wanted. If they had work to catch up on, they can do that. If they wanted to meet some friends on the patio, they could do that. If they wanted to hit the road and leave for a long weekend, they could do that too. And it removed the stress and discussion and whatnot around. "Are you getting your work done?" Because they were given a full half day paid, to just do what they need to do. And, you know, the interesting thing was that we found in almost every location that we did this with, another restaurant group in Canada, the top performing people and their best people actually got better, because they planned out really well.
[00:37:06] They said, "Okay, one Friday a I'm going to just spend the whole six hours and get a project done or going to get ahead on this or create some training material or whatever that might be. And the other three Fridays, I'm going to take advantage of the time that I have and work on, you know, staying well-balanced and mental health and all those other things." You know?
[00:37:23] So that was a really interesting one. And, and same thing with the, the unlimited vacation concept. You know, when we, when we've seen not rolled out in, in restaurant groups, and this would apply to non restaurants too, but, it was almost always viewed initially as a,an HR benefit.? It's, it's part of your compensation package and that's how it was viewed initially.
[00:37:43] But, what again, what was noticed after starting to look at it and studying what was happening was it actually was more of a performance management tool than it was a benefit. Because again, the top performing people, fo, we found that they took an extra 10% of time off, they took their time offing only increased by 10%, but they actually became more productive because they knew "I need to make sure that my bed is made before I take time off."
[00:38:10] And the bottom performing people either got better because they knew they needed to be organized or they, they, we saw some of those people will take up to 30% more vacation time without actually getting anything extra completed.
[00:38:23] Jen Kern: Wow!
[00:38:23] Jim Taylor: So it became a really interesting sort of almost peer management tool where the team would kind of hold themselves accountable.
[00:38:30] Jen Kern: So, was unlimited vacation for everyone or just for managers?
[00:38:34] Jim Taylor: That was a, that was a management thing. And anyone who was on salary in that organization had an unlimited vacation
[00:38:39] Jen Kern: Yeah.
[00:38:40] Wow. This one's been tried, right? I mean, this and everyone flexible, you know, unlimited vacation came to market, what 5, 5, 8 years ago ish. And, I, haven't seen a lot of really successful case studies with it, but, that mean we need to throw it all out,?
[00:38:57] Jim Taylor: No.
[00:38:57] Jen Kern: I think it's really how you administer it. Like you're saying how you, how you're it and putting incentives around it and accountability really. 'Cause it just the initial blush it's like, "What unlimited vacation, no way!"
[00:39:10] Jim Taylor: Yeah.
[00:39:11] Jen Kern: know? Really unpack it.
[00:39:13] Jim Taylor: And the four-day work week thing. What I found was really interesting, meeting the automatic pushback, I think, from any executive that or CFO or anyone like that, that I've ever spoken to about it is that one of the initial put pieces of pushback, as they say, "Well, it's going to cost more. We're going to need more people." You know? And that, that case study we did on the four, flex day, it actually, the business, again, from a productivity perspective, actually, it got better. And so we didn't, in any of the cases we looked at, they didn't need more people. They didn't spend more money and they were able to actually improve the output and. productivity in business.
[00:39:48] Jen Kern: So interesting. So interesting, Jim, what, well, I, I've really enjoyed this conversation. There's one of, one of the things you mentioned that I'd like to just delve into a little bit is this of things.
[00:39:59] And mentioned earlier in the conversation that restaurants are terrified of the data, because let's just face it, like in business ourselves or a POS company.
[00:40:10]? So we're collecting data from all over the place. And that's where I believe, inherently, the challenge is, is that there are So many, these restaurants have so many technology systems now. Some of them are old, some are new and they've all added, you know, things during the pandemic and there's data literally everywhere.
[00:40:26] And so the big, you know, the big trend now we just, we just put out one of our, we do a survey every year to have operators, over 20 locations, asking what their biggest, you know, investment areas are for technology and what their priorities are. And for this year, very close to top of the list behind of course, you know, online ordering and the digital experience is investing in a CDP, CRM or some sort of data lake that's going to aggregate and unify all the data.? So they can look at the data in one place. So, you talked about the data analysis and I'm curious how you would recommend operators doing the data analysis in a more simplified manner.
[00:41:12] Jim Taylor: Well, you're right. I mean, so many, I mean the, the really smart restaurant groups are taking this stuff very seriously. I mean, I was working with a group the other day that actually just hired a chief information officer, which I had never seen in a restaurant before. You know, there's lots that we're seeing now that have someone who's sort of, you know, head of business analytics or, you know, those types of things, which is definitely new to the restaurant industry, but how we personally, how I personally approach that and, and how, what I would encourage restaurant operators to think about is you don't have to attack it all right away. There's like you said, coming in through POS and QR codes and you know, all of these third-party delivery and all that stuff, there is so much information. And, if you think about it that way, it can be kind of intimidating. The way we approach it, there's only four pieces of data that we encourage operators to really understand right away.
[00:42:04] And, that's customer count, average wage, average customer spend, or I call customer spend customer behavior, actually, because it's more what they're doing than what we're doing. And how many hours your staff are working. Those are the four pieces of, of data that we, we work with operators to really understand because those are the leverage points for everything.
[00:42:26] Those are what create revenue. Those are what create labor costs. Those are what create, you know, efficiencies in your kitchen. Those are what direct or dictate where your marketing team is going to work on, you know, all of those things, they come from those four pieces of information. So there's, yeah, there's a million ways you can look at it, but, you know, I would encourage operators to start with some core points that they maybe haven't looked at before and get really, really clear on what those things are doing.
[00:42:53] Jen Kern: So, just to repeat that four pieces of data, customer count, total number of, of customers, average wage that you're paying the employees
[00:43:02] Jim Taylor: Yeah.
[00:43:02] Jen Kern: Average spend, so what your customers are spending.
[00:43:06] and Then total hours worked for your people. Okay. Cool. Well, good. Well, is there anything else that you'd like to share before we wrap here, Jim, and we'll, we'll let people, you know, hear how they can get to, to contact you and that type of thing, but, but any last parting words of advice for, for the listeners?
[00:43:26] Well, I think, you know, at the end of the day, this, I've really enjoyed our conversation and, you know, I could talk about this stuff all day, but I think that, you know, I just hope that anyone who's listening to this or, or our industry in general is starting to view the overall experience in a different way for people in the restaurants, customers, management, and just what the longevity of our industry looks like if we can do that. I think it'll, you know, eventually be, be an even better place than it always has been. So I'm happy to have been on, been able to come on the show and talk with you about it.
[00:43:58] Jen Kern: Yeah.
[00:43:58] Yeah. Wow. Super appreciated. I mean, a lot of times when, when we talk about experience, we're almost always talking about the guest experience changed that lens in our industry and our company, which is, this is not just about the guest experience. What precedes the guest experience is of people working at your company.
[00:44:19] Jim Taylor: Yeah.
[00:44:19] Jen Kern: Right? experience is good, then the guest experience is much more probable it'll be good. So, that's where we need to focus, I believe. And so we'll keep having these conversations and, having brilliant folks like you on the show. And for folks that want to reach out to you, what's the best way to get in touch.
[00:44:38] Well, we're on all the regular channels,? You know, Instagram, Facebook, all that kind of stuff. But, for personally, or for the business, [email protected] is my email address, I mean, that's the easy one. I'm on LinkedIn, quite a bit, Jim Taylor and real.
[00:44:53] Jen Kern: Awesome! Well, you have a great day up there in Vancouver!
[00:44:56] Jim Taylor: Thank you.
[00:44:57] Jen Kern: Really appreciate everything you're doing to help restaurants reinvent themselves.
[00:45:01] Jim Taylor: Well, thanks so much.