FSD Research: Measuring Up

Productivity reports are becoming a larger part of the foodservice director's or general manager's responsibilities, according to FSD's 2004 Productivity Performance Survey (see full chart listing below). This includes such benchmark standards as employee headcounts and hours worked, transaction tallies, and salary and revenue average's all computed and calculated to determine productivity indicators such as salary cost per transaction and revenue per worker.

This year, nearly two-thirds (63%) of non-commercial operators surveyed say their top management currently requires regular submission of productivity reports (up from 56% last year). It's all a matter of holding people accountable and making sure staff members meet management directives to adhere to the mission of their particular organization.

Further proving the importance of productivity reports is the fact that just over three-quarters (76%) of operators surveyed say productivity standards are expected to grow as an operating tool in foodservice this year. It's no surprise that most of the operators doing more productivity analysis also say that profitability is becoming more important as a performance standard.

Only a little more than half of operators, however, expect productivity figures to improve this year. About one-third are predicting lower labor costs, one-quarter are eyeing more revenue, and just 15% expect to cut or otherwise control non-labor costs.

Another element factoring into the productivity equation is customer satisfaction, which nearly 80% of operators presently measure (about the same as last year). And nearly two-thirds (61%) say that they incorporate increases in customer satisfaction ratings into performance evaluations.

Of less, but still significant, importance in productivity standards are "quality measurements" emanating from customers. Just under half (47%) of operators surveyed say this input can be included in productivity standards. Such measurements include: plate presentation/eye appeal; taste; proper temperature; speed of service; and portion size.

The rise in importance of productivity standards may have something to do with the fact that nearly three-fourths (72%) of operators aren't seeing growth in profit margins this year. In reaction, 8-in-10 operators are surveying customers periodically to rate menu satisfaction—with the highest number of operators (36%) conducting those surveys twice a year. Only 9% are surveying customers weekly and 15% do it monthly.

Larger context: Beyond the scope of the FSD study, productivity of foodservice workers relates to—and is impacted by—changing dynamics within the larger food industry, which encompasses foodservice, food distribution, food manufacturing and grocery store sales. According to "Low-Wage America: How Employers Are Reshaping Opportunity in the Workplace," a study published this year by the Russell Sage Foundation, the number of food preparation workers in foodservice establishments declined by 160,000 from 1996 to 2000, mostly due to increased outsourcing and consolidation of the foodservice management business. Meanwhile, the number of food manufacturing workers processing and preparing food increased by nearly 5,000, indicating prevalence of the trend to outsource food production if not food management as well.

Pre-made prominence: In addition, foodservice providers are purchasing greater amounts and varieties of pre-prepared food than ever before, the study points out—shifting preparation work to food manufacturers. Researchers included case studies in the report based on interviews with foodservice providers. An executive at one of them, dubbed "Great Meals" in an effort to preserve anonymity, had this to say:

"The reason for [food prep outsourcing] is quality. There are things that you could buy that would make no sense whatsoever for you to make. There's even some desserts out there that the finest pastry chefs in [this city] couldn't make as good. You can pretty much buy anything prefab now."

As a result, the study continues, wages in food manufacturing become higher, suggesting that that portion of the industry could siphon workers from foodservice. "For example," the study points out, "in salad preparation, there are fewer jobs for low-skill food prep workers on-site and more for machine operators using large machines at manufacturing sites, with significant changes in pay level and job conditions." The study notes that in recent years, median wages in food manufacturing were 75% higher than in foodservice.

2004 PRODUCTIVITY REPORT FOR NON-COMMERCIAL MARKETS

COMPARING WEEKLY LABOR COUNTS & HOURS

AVG. TOTAL F/S WORKERS
ALL 82.2
HOSPITAL 65.3
NURSING HOME 58.0
COLLEGE 151.1
SCHOOL 99.4
B&I 23.6
UNDER-$500,000 24.0
OVER-$500,000 132.2

AVG. NO. WEEKLY FTEs
ALL 53.6
HOSPITAL 50.9
NURSING HOME 36.4
COLLEGE 94.7
SCHOOL 42.4
B&I 21.9
UNDER-$500,000 15.3
OVER-$500,000 72.6

AVG. HOURS ALL FTEs
ALL 2,212
HOSPITAL 1,958
NURSING HOME 1,654
COLLEGE 4,245
SCHOOL 1,486
B&I 844
UNDER-$500,000 528
OVER-$500,000 3,042

COMPARING WEEKLY TRANSACTION ACTIVITY

AVG. NO. OF TRANSACTIONS
ALL 23,203
HOSPITAL 11,234
NURSING HOME 6,210
COLLEGE 32,144
SCHOOL 27,350
B&I 10,915
UNDER-$500,000 3,833
OVER-$500,000 33,633

AVG. CAFETERIA TRANSACTIONS
ALL 14,300
HOSPITAL 7,026
NURSING HOME 4,123
COLLEGE 21,479
SCHOOL 23,162
B&I 7,555
UNDER-$500,000 4,474
OVER-$500,000 18,991

AVG. WEEKLY REVENUE
ALL $64,032
HOSPITAL $24,337
NURSING HOME $4,571
COLLEGE $178,552
SCHOOL $50,091
B&I $25,682
UNDER-$500,000 $8,751
OVER-$500,000 $86,978

COMPARING PAYROLL & CUSTOMER-COUNTS

AVG. WEEKLY PAYROLL
ALL $29,803
HOSPITAL $23,960
NURSING HOME $20,347
COLLEGE $58,236
SCHOOL $16,609
B&I $11,950
UNDER-$500,000 $6,086
OVER-$500,000 $41,056

AVG. HOURLY SALARY
ALL $12.14
HOSPITAL $12.10
NURSING HOME $11.93
COLLEGE $12.21
SCHOOL $11.47
B&I $13.04
UNDER-$500,000 $11.81
OVER-$500,000 $12.31
AVG. NO. OF CUSTOMERS
ALL 13,035
HOSPITAL 6,173
NURSING HOME 4,161
COLLEGE 19,876
SCHOOL 21,257
B&I 6,230
UNDER-$500,000 3,928
OVER-$500,000 17,383

COMPARING REVENUE OUTPUT PER-EMPLOYEE

AVG. REVENUES PER WORKER
ALL $689.00
HOSPITAL $308.50
NURSING HOME $66.50
COLLEGE $786.90
SCHOOL $900.90
B&I $1,135.40
UNDER-$500,000 $571.30
OVER-$500,000 $736.50

AVG. REVENUE PER HOUR
ALL $26.67
HOSPITAL $10.14
NURSING HOME $4.09
COLLEGE $33.95
SCHOOL $36.94
B&I $37.64
UNDER-$500,000 $19.00
OVER-$500,000 $29.70

COMPARING TRANSACTION-YIELDS & PAYROLL COSTS

AVG. TRANSACTION AMOUNT
ALL $3.15
HOSPITAL $2.48
NURSING HOME $1.37
COLLEGE $4.48
SCHOOL $3.04
B&I $3.88
UNDER-$500,000 $2.60
OVER-$500,000 $3.37

AVG. PAYROLL COSTS/TRANSACTION
ALL $3.26
HOSPITAL $3.41
NURSING HOME $7.74
COLLEGE $2.83
SCHOOL $1.10
B&I $2.47
UNDER-$500,000 $3.57
OVER-$500,000 $3.11

YIELD PER TRANSACTION
ALL -$0.11
HOSPITAL -$0.93
NURSING HOME -$6.37
COLLEGE $1.65
SCHOOL $1.94
B&I $1.41
UNDER-$500,000 -$0.97
OVER-$500,000 $0.26

ABOUT THE SURVEY
Findings for the 2004 Productivity Report are based on an industry-wide survey mailed to 4,000 operators in May. A total of 217 responses have been compiled based on staff counts, dollar figures, payroll and transaction data, and answers to questions on productivity measurements across all market segments.