The Making of a Great Retail Store or Restaurant: High Quality Sales and Service Stops Business Losses (Hypothetical Discussion) (Case Study: Retail Store or Restaurant #3)

One of the basic areas of activity relating to the success of a retail store or restaurant is control of sales and quality of service. Restaurants and retail stores have many things in common and enough differences to be put in separate categories as businesses. One of the similarities is how employees function on the floor. Dining room of a restaurant and the sales floor of a retail store have more than a few things to share. The basic structure of most establishments has a few people standing within the proximity of customers and alert or in contact to provide services. The primary purpose of the contact is to provide services but managing the financial portion of the service transaction requires sales activities also. In a typical establishment in the United States, floor staff are recruited without many restrictions and are trained to work according to the standards of the establishment. It is very rare than any of the staff are trained professionals for such positions, though customary in other parts of the world, but they may have prior experience for the position. The basic floor operations means these individuals are scheduled to work on the floor following the initial and subsequent trainings. The employees provide labor and receive compensation while their performance may or may not be measured regularly. The general point to make here is the majority of sales floors and dining room floors in the United States are staffed with a bunch of people who were hired for the job and have some training. The emphasis of this system has been to provide a way to recruit, train and put to work a large number of people. The lower the level of skill the less the compensation and the easier to replace the staff with new hires. That is the preferred approach in this service areas in this country. The consequences are sales and service both can suffer and historically have. A business that needs to maintain its level of sales and service not to lose any customers must utilize a system that takes very good care of customers and keep them coming back. In poor economy or other similar business environments the loss of every customer is significant. A sales or service business built on sound principles will be able to return to the basics and stay close to its original business model until the business climate changes. If the business has fundamental problems in its original design, the return to basics will provide a partial solution. It is a common situation for the majority of restaurants and retail stores in America to believe in low-skilled and low-paid labor as the adequate source for performance. A typical retail establishment recruits people and the hired are trained and put to work. They may or may not receive any compensation in addition to basic pay. They are basically hired hands, in the old sense of the word, and work as they are told. Most retail places have guidelines for performance and customer service. They provide different levels of sales and service based on the philosophy of the company. The most important factor is the knowledge and the skill of such employee is usually limited to the product or service. The minimum level of knowledge and skill is universally accepted as enough in the United States.

A typical restaurant does not operate any differently. The majority of American restaurants of chain or independent operations hire their floor staff as the retail businesses do. As a matter of fact, most of the better systems of operations for restaurants were originally developed by retail businesses. Retail operations can be quite big and are dominant in many areas. They have historically spent large sums of money on research and development. Many of the better learnings of the retail business are also incorporated into restaurant operations. Most restaurants hire people, train them and put them to work as retail does. The level of knowledge and skill is enough to match the job and this usually means low in most cases. Employees do not need to have knowledge or skill beyond the minimum for their positions. This works in the best interest of the business. The employees are replaceable and new staff are easily recruited, trained and put to work. The learning curve to arrive at adequate performance is moderate and the majority are able to handle their jobs effectively. The level of performance has traditionally been kept low in order to keep this system simple and easy to operate. The costs are kept low, in the short run, also.

The big problem with both of these systems is the quality of sales and service is mediocre. The system is designed to achieve a mediocre level of performance so the people who are available, at low cost, can be put to work. A higher level of performance requires selection of better employees, longer (and more expensive) training and a trail period to prove the employee is performing based on standards. That is why high performance standards are not historically favored in US. Mediocre quality has become the norm because the system THRIVED on mediocrity. A good retail or restaurant that is built on sound principles will have good standards of performance built into the original design. In case of trouble, the business can always stick to the basics and be manageable. If the basics are faulty, then the return to basics will not be much of a cure for a troubled or stressed business.

The underlying assumption in both restaurant and retail fields has been that everyone is okay. The business can look and just PICK someone. This someone will most likely have what it takes to do the job. This person has to be checked and hired and then put to training. Training can be a few days or a few hours. A basic floor job usually does not have training that goes beyond these limits or will be expensive. This person can start work after training and in a few days or a few weeks will be performing as well as most people in that position can do. This goes on until the person cannot perform and has to be replaced. The next person is easily picked and is no problem to train and put to work. This system required the jobs to be simpler and simpler so anyone or most people can do the job for the least cost. The more people qualify for a job and want the job, the less the pay will be. The easier the job, the easier it will be to pick the cheapest person. The performance does not matter much because the American business has always set the standard. They tell the public what good service is by advertising. Public traditionally has had little say on the standard being adequate or not. If the retail or restaurant business is to operate on a sound level and run as a healthy business, the basic assumptions about who is the right employee and what is proper training and how to measure proper performance have to be accurate. The historical practice, by the American businesses, of simply picking or making up the basic assumptions has resulted in a business system with unsound structure nationwide.

If proper performance is one that satisfies the customer by benefiting them as best as possible within reason and financial limits, then the basic assumption for who is right for the job has to change to only those who are qualified and able to perform as such and not whomever the business owner picks to train the way one wants. Historically, a business was run by a person who had taken the time to learn everything about that trade or profession. Some required formal training before practice and others were learned hands-on. The basic standard for centuries has been the person who has achieved the skill and the knowledge level functions as a trade master and those who work with him (her) are either assistants (who do not become masters in time) or apprentices (who can and will most likely become masters in time). This system has been in existence since the biblical times and has been not favored in United States because of the rise of manufacturing. Manufacturing made it possible to divide the many tasks of a trade or profession into segments that can be performed by non-skilled persons. The advantage of this (assembly line) work flow was cheaper costs and higher quantities at the obvious loss of quality. This has been the history of the American business. The same ideas were incorporated when large chains of retail or restaurant sought to hire, train and manage millions of Americans at the lowest possible cost. The quality of sales and service was sacrificed at the cost of higher quantities at cheaper costs.

Why not think of the floor (sales or dining room) as the old system would? Why not setup the sales or dining room floor as the old system would? The person with the bona fide skills and knowledge, who was qualified to provide the service or make and sell the products, would be in charge of this floor and others would be helping this person. The assumption in American retail and restaurant business is any person that is picked off the street, hired and trained is as good as a master in this profession. Each employee (master of his/her profession?) is scheduled to provide services and sales at their convenience. This system works and has always worked at the expense of quality. If quality is the highest priority or business is so bad that every customer is indispensable, then the system that provides consistent quality is the only one to go by. The fact remains that training staff to become masters of the trade takes a long time and costs a great deal. However, American business has traditionally agreed that someone should know enough to run this business unit. This person is the manager or the owner and functions as the master with or without adequate skill and knowledge. Why not setup the floor so instead of a group of incompetent (and fake) masters running around providing inadequate service we always have one person who is truly trained and has achieved skill and knowledge for that profession running that floor and everyone else are helpers? American business recognizes the need for a manager person to run the place. Why not train this manager person or think in terms of each sales or dining room floor must have a hierarchy of staff with one being the top person. This person must have truly mastered the trade or profession (not the job description requirements) and paid adequately. The consumers and the business will benefit by being sure the quality of sales and service is always maintained at very high levels because this highly qualified person is able to understand and respond to high expectations of his/her profession in one’s position with this company. This formula ensures quality at all times. The loss of sales, and customer satisfaction will be minimized everyday and for every customer. This system will not lose customers and bring the new customers back. A retail or restaurant business built on the assumption that all people picked and trained are not okay to work on the floor but at least one person (working on the floor at all times) must be truly qualified to be held responsible for every interaction will be a business that makes the most of every sales and service opportunity while providing great service to the customers. A business that assumes one person, acting as trade master, is an absolute must on each floor at all times (or the sales and service will go to hell sooner or later) is a business that keeps all customers and brings the new ones back. This is a must for a sound business model design.

American business already recruits and uses manager persons to run the business. This model requires the floor to be staffed by one qualified person (manager must meet skill and knowledge requirements also or is no good for this personnel function) at all times. This person’s primary duty is to take responsibility for every single customer interaction and transaction. Such practice requires a team effort and the biggest problem that may arise is compensation. Higher compensation for the lead person is the obvious solution but team effort will not produce the real results also the team is rewarded and not individuals. The solution to make such system work is by providing all incentives for the team. The lead person and those who can contribute more receive a higher share but the overall pay is shared amongst everyone on each shift. Each shift must have a master and those helping. Some helpers do not care much and are there to assist. Some care much and want to do more and learn more and may become masters someday. The absolute key principle is to share the pay with team based on group performance. Each shift will have to work as a team and not a bunch of people with their own schedules working for a paycheck. The master staff member is the boss of the team. The team members learn to work together to provide best service and sales. Each person obviously is better at something. The present system of work assumes that everyone who is hired is good at everything the job requires. This is far from the truth. The result is mediocre performance because most people are good only at some areas and lag in others. In a team effort, the staff can make up for each other’s weaknesses and synergy will provide exceptional performance versus mediocre by skill-handicap persons running around.

The retail floor model should be obvious from what I have mentioned. On a restaurant dining room floor, one person who is truly qualified in skill and knowledge is to be the captain. This person and other floor staff work together for that specific dining room floor. The unbreakable rule is captain NEVER leaves the floor. On a typical lunch or dinner shift, the captain must be trapped within the invisible boundaries of the floor. The other staff are there to help him. Captain manages the service and sales on every table by taking the orders. The front server should put the orders in and the rest of the staff follow. If the captain never leaves the floor, he/she is always at the disposal of the guests (which is translated as superior service by everyone) and can manage all issues, problems and opportunities (for sales) immediately without any misses or surprises. The rest of the staff fulfill the other functions by being allowed to enter and exit the dining room floor for their duties. The level of service will be extremely high in such system and if all tips are always shared as a group the restaurant and the guests benefit from a team effort and not individual efforts. This system relies on synergy between the team members also and instead of problems, mistakes and complaints, the team always performs at high levels and is rewarded better than average. This is a healthy business model and keeps all customers and brings the new ones back. The most important factor is quality of service and sales is always high and even in poor economy the floor has minimum losses.

The real strength behind the stated way of doing the floor is the shift in the basic assumptions. The present system assumes anyone who the business thinks is okay for the job can and will do the job. The human system (at work for thousands of years) assumes some people can achieve the level of skill and knowledge needed for a profession (over time and experience) and that is the only way to be okay for the job. It is harder, more expensive and takes longer to develop the lead person (master) but the payout is the stop-loss on business losses due to mediocre levels of sales and service. The master system has worked universally anywhere in the world and during all times. It can be adapted for the American retail and restaurant business by ensuring each shift (and floor) is run by one truly qualified person who utilizes the other staff (who are not 100%) as assistants (and/or apprentices) and they are both evaluated as a team and paid as a team based on individual rank and contribution. It is worth the investment to find, recruit, train and put to work such lead people because the business losses due to poor service and sales quality can be cut to almost zero. The bottom line is the majority of the people who will work in retail or restaurant are not worth the paychecks they are paid and we have to work with them or no business will exist. A good solution to make them perform at levels of sales and service expected by ALL KINDS of customers is better than no solution which results in billions of dollars in sales and service losses daily. Cutting the losses is a great way to earn in good or bad economy and is the only way in today’s economy.

One final point is the American business has the problem of believing whatever they seek as the performance goal is possible and the employees can achieve. No system can work so arbitrarily. The late Dr. Deming spoke of the bean counter model in which the American business hires the employee to do a job and the job is FLAWED by nature (as in his example of counting the red beans) so the employee is blamed and fired. Another employee is brought in to do it and the same is done. The problem is the job is fundamentally b.s. and just because the business claims it can be done and the right employee is the one who can do it, that does not mean the job is doable. This is a very American phenomenon and has a good deal of arrogance and abuse built into it. The notion of performance and what is realistic and possible is very essential to making any business system work. Imaginary levels of performance for tasks that cannot be done are 100% American creations and this system will not work for companies that make things up or have a history of. Performance expectation must be realistic and doable.

*This post belongs to this week’s edition of Wine by Cush Magazine blog and published early in World of Cush also.


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