The Ten-Minute Manager’s Guide to . . . Outsourcing
Cooking great food and serving it well are a foodservice operation’s most important jobs. For everything else, there’s outsourcing.
By Lisa Bertagnoli, Contributing Editor -- Restaurants & Institutions, 4/1/2007
Cooking great food and serving it well are a foodservice operation’s most important jobs. For everything else, there’s outsourcing.
Outsourcing "is something every restaurant should consider," depending on the operation’s size and the capabilities of the staff, says Isidore Kharasch, president of Hospitality Works, a Deerfield, Ill.-based consulting firm.
While Kharasch routinely recommends outsourcing payroll, due to complicated tax laws and potential repercussions from easily made errors, he says that outsourcing other functions can give an operation a fresh perspective, especially on basics such as menu and recipe development.
"Sometimes you need an outside set of eyes to look at things," he says. And that can be true for functions as different as developing pulled-pork recipes or attracting online orders.
Sign, Seal, Deliver
Le Colonial, an 11-year-old restaurant in Chicago’s upscale Gold Coast neighborhood, used to offer delivery on a limited basis. Customers who lived within walking distance of the 120-seat restaurant could phone in orders and busboys would walk to customers’ homes (or go by cab in bad weather) with meals.
To expand its delivery area and leave busboys in the restaurant, Le Colonial three years ago outsourced delivery. “We began working with the company on a trial basis and they did a great job,” says Joe King, partner at Le Colonial. He chose the contractor because it delivers to most Chicago neighborhoods, while other services he considered offered more-limited delivery areas.
The delivery service posts Le Colonial’s menu, along with those of other restaurants it serves, on a Web site. Each online order is routed to the appropriate restaurant, then picked up and delivered. The service’s fee is 30% of each delivery order; King says there were no startup charges.
Using the service has increased delivery orders from about 1% of business to 4% of sales. “It’s a very convenient source,” King says. The service is cost-effective because there is no additional payroll or overhead—other than the cost of food and the packaging—for delivery orders. A bonus is that the orders are largely incremental business, he adds.
Outsourcing delivery makes sense from an operations standpoint as well. “We’re not using restaurant staff to perform other tasks,” King says.
Customers are happy with the service to date. “The delivery firm handles our goods very well. Everything is in a temperature-controlled box, and they don’t rattle things around,” he says, adding that if a customer were to complain about cold or messy food or a late-arriving order, the delivery company would absorb the cost of the order.
Cleaning Solution
With three kitchens and round-the-clock service, the China Grill location in Chicago’s Hard Rock Hotel gets a workout. To ensure the facility stays in top shape, management outsources cleaning.
A crew of eight to 12 arrives every night at 11 p.m., working until 7 a.m., says Gerry Muldoon, general manager for the 181-seat, casual-upscale restaurant. “The company does a thorough cleaning: floors, walls, underneath cupboards, et cetera,” he says.
China Grill contracts for cleaning, and has since the restaurant opened two and a half years ago, because of its high volume, and to have professionals make the operation “100% clean,” Muldoon says. “There’s a lot to clean and it makes more sense for us,” he says of outsourcing the task.
It’s not cheap, however. Muldoon estimates that the cleaning company is paid about four times what handling the task in house would cost. “It’s a very expensive measure for us,” he says.
Using the service requires some prep. Security measures must be taken to prevent theft by workers. Plus, the cleaning must be monitored and managed. Muldoon changed services last year after becoming unhappy with a former company’s work.
The overnight crew does not absolve the staff of cleaning chores. Line cooks and other personnel still have daily cleaning responsibilities, Muldoon says.
Outside Perspective
Pockets, a 10-unit chain of quick-service sandwich restaurants, doesn’t employ a full-time marketing executive. Rather, the Winnetka, Ill.-based chain outsources marketing functions to a local consultant.
Fred Brewer, who handles other restaurant companies in addition to Pockets, began working with Pockets about eight years ago, says David Litchman, Pockets’ president. The reason is mainly cost: “He’s able to work for us for a reasonable price because he has other ways of generating income,” Litchman says. He does not view Brewer’s other restaurant clients as conflicts of interest.
Brewer’s chief contribution to Pockets has been launching its Web site and an accompanying online ordering system. Pockets began accepting online orders about three years ago, and e-orders now account for 50% of business. Litchman says that online orders average $13, compared to $11 for in-store delivery or takeout. Brewer’s e-mail campaigns to persuade customers to order online “have been the biggest success,” Litchman says.
Cost savings are the biggest outsourcing benefit. “A full-time person would have cost us twice as much, and an outsider brings new ideas to the table,” he says.
Pockets’ expansion plans call for three to five units to open in the next year, and Litchman is beginning to offer franchises. As the chain grows, he says he might consider bringing marketing in house.
Chef for Hire
Ed Doyle doesn’t work at SoulFire, a 75-seat casual barbecue restaurant in Allston, Mass. Still, Doyle, a chef-consultant, helped design the restaurant’s kitchen and menu, and recently helped owner Wyeth Lynch with a complete menu revision.
Lynch initially hired Doyle, who owns a Boston-based consulting firm, to help with kitchen and layout. Doyle’s initial work convinced Lynch to continue working with the consultant. “Ed took pride in what he was doing, and he wasn’t going to leave me hanging on anything,” Lynch says.
That hunch has proved correct. “Ed calls me and asks, ‘How are things going at the restaurant?’ and he’s not billing me for that phone call,” Lynch says. “That tells me I’ll get a lot out of him when I do call him to change things.”
The two meet once a month to discuss the menu as well as operational procedures; recent projects include reformulating SoulFire’s pulled-pork recipe. He says the SoulFire staff is happy with Doyle’s input, rather than resenting his part-time presence. One downside, though, is that a consulting chef isn’t in the kitchen daily, and therefore cannot pick up on operational nuances. Overall, “it’s worked out great,” Lynch says. Consultants “aren’t concerned with hurting people’s feelings; they’re not as tied to the process.
“Sometimes it’s good to say, ‘We’re going to listen to this guy and take his lead,’” Lynch says.
Net Gain
Four years ago, Hakata Grill in New York City employed 11 delivery people and five telephone order-takers. These days, the pan-Asian restaurant has 20 delivery people and one phone order-taker. Todd Nakasato, managing partner, attributes the growth to outsourced online ordering.
Nakasato added Hakata Grill’s delivery menu to a Web site that posts menus from dozens of restaurants. Customers sign on to place orders; the system handles credit-card payments and routes orders to the restaurants but does not handle delivery. The online firm charges a fee for the service.
Additionally, Hakata Grill gains access to corporate customers that the restaurant would not otherwise have reached. The system “has allowed my restaurant to be marketed to hundreds of companies I wouldn’t have been exposed to before,” Nakasato says. Online orders account for 80% of Hakata Grill’s delivery orders, with nine of 10 coming from corporate customers.
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