If we were to declare a word of the year so far, it would likely be “efficiency.” Though not a new concept for any business, the approach – and perhaps definition – of efficiency has changed by necessity throughout the past three intensely challenging years. Efficiency has moved beyond a balance sheet focus to an itemized deep dive assessment of every part of the operation – from the pantry to the parking lot.
One restaurant company that has embraced this sort of holistic approach is Chili’s and Maggiano’s parent Brinker International. Since Kevin Hochman took on the CEO role last year, Brinker has moved away from bells and whistles like a robotic server test, a to-go-only model and Maggiano’s Italian Classics virtual brand. The company has also eliminated fry baskets and shrimp portioning during prep time and has added faster-cooking equipment. This is just the tip of the iceberg of what’s yet to come.
“There is no end to this. This is a new way of doing business,” Hochman, below left, said during a recent interview. “There is a convergence of factors making efficiency a hot topic right now and that won’t likely change.”
The first factor, he adds, is wage rates. For context, during Brinker’s most recent Q3 quarter, reported last week, the wage rate inflation was approximately 5%.
“The minimum wage is part of it, but really, it’s the market wages increasing. Nobody really sees an end in sight in these increases. Every year, it’s a headwind and we have to figure out how to pay for it. It becomes difficult to add more things to the business – whether it’s channels or innovation – because it’s not easy to just add labor to build sales if labor is already starting at a 5-to-6% headwind,” Hochman said.
A second factor is employee turnover – notoriously high in the restaurant industry and even higher since the onset of the pandemic. To improve retention, Brinker is working to add more value to team members’ jobs by eliminating “things that get in the way,” Hochman said. The elimination of shrimp portioning is an example here and was recommended by a back-of-the-house team member who simply stopped the 8-count process so she could focus on other guest-facing work.
“These team members came to our industry, versus driving an Uber or working at Amazon, so they can delight the guests, whether by making food or engaging with them. When they have to do things not necessary to delight guests, that work is not enjoyable,” Hochman said.
Brinker’s efficiency efforts have helped, as managerial turnover levels are now lower than pre-pandemic levels, while hourly team member turnover is trending in the right direction, Hochman said during the Q3 call.
The third factor pushing efficiency top of mind is speed. More restaurants are now driving more throughput through more channels and so, for its part, Brinker is examining anything in the operational process that may hinder speed. The company is currently phasing out its smallwares, for instance, used to measure certain ingredients.
“As we’ve gotten to know our teams, many are telling us they’ve stopped using smallwares to measure different items because it’s confusing. There is a red spoon for this ingredient or another spoon for this one – all different colored spoons, and they’re getting slammed while trying to figure out which spoon goes with which ingredient,” Hochman said. “The folks who are more experienced know how to use finger pinches instead of spoons and the food is still consistent; maybe even more so because they’re not using the wrong spoon. And it’s faster.”
So, Brinker has made those finger pinches the standard. The move has saved money on smallwares, time on plate assembly and team members no longer have to wash those dishes or get bogged down by spoon training. Hochman is comfortable pulling the plug on process hurdles as he’s found success in doing the same in his previous roles. While he was leading Pizza Hut, for example, the chain eliminated the use of plastic rings and cups to add sauce and toppings.
“There were like 13 different rings based on crusts and size, and maybe eight different topping cups and if it’s just a cheese pizza, you have to use 1.5 cups. It was just confusing, so we got rid of them, and nothing happened. There was no big waste increase or consistency issues,” he said. “I do think the industry has the best intentions when we put systems into place to create more consistency, or when we put in a process we think might be easier to train. But over time it sometimes has the opposite effect and things become more complex.”
That said, those best intentions were simply not enough during the past three years as the industry faced unprecedented cost and labor pressures. And so, the line-by-line examination of what is working and what is too complex has become critical. For Brinker, this has led to the elimination of not just processes, but also offerings. Chili’s menu now has 74 items, from 94 when Hochman started last year, for instance. The chain has also deleted over 30 pantry SKUs and “continues to find opportunities.” One pantry example is the company’s artisanal pickles for two of its menu items. Those pickles were only available in gallon-sized buckets that required a metal tool to open.
“Our team members had to pry these buckets open one side at a time, just like you would a paint bucket, and when they got the lid off, pickle juice would get everywhere, including on them. It makes me angry talking about it,” Hochman said.
The company is phasing out these pickles in favor of jarred pickles, and Hochman said this decision will not only make things easier for team members, but it is also expected to yield about $500,000 in annual savings for the company.
“Why did we get to that point? That’s why you need checks and balances on your food and business,” Hochman said.
Now, more often than not, those checks and balances are coming from the team members themselves.
“You might not think something is going to make a huge difference, but it will to the team members, and it will lead to cost savings. You have to get your hands dirty in this business and ask your team members what’s going on,” Hochman said. “They will tell you.”
Hochman noted it’s easy to quantify cost savings for the removal of items like artisanal pickles, but other efforts toward efficiency are a bit harder to pinpoint. Ultimately, Brinker is measuring its progress on these efforts based on margin improvements. Of note, Brinker’s consolidated restaurant operating margins were 13.1% last year. Last week, the company reported they were 13.4%.
“My job is to continue to see progress on restaurant margins and that has been evident year-over-year,” Hochman said. “We want to improve the returns and the way we’re doing that is by improving the four-wall economics. That’s why we’re focused on being more efficient across the board.”
Contact Alicia Kelso at [email protected]
