Take-Out Brand Representation, Customer Service & Sales Performance Study

Clark S. Kincaid, PhD, Seyhmus Baloglu, PhD, George “Duke” Howard

The Harrah Research Center, William F. Harrah College of Hotel Administration, University of Nevada, Las Vegas, and Serena Bay Consulting, August 2010

Abstract and Background

Abstract 

Objective:  The objective was to survey high profile, multi-unit restaurant chains in the Casual Dining segments, Casual & Fast Casual, to assess and report on the quality of the sales and service cycle as it relates to the phone-in take-out dimension during the peak hours of the restaurants’ operations.

Methods:  Restaurant companies were selected for their high profile and reputation, sales volume, number of locations, appearances on “Top” restaurant lists, such as those generated by Consumer Reports and the National Restaurant Association.  More than 1000 locations representing 104 restaurant brands were surveyed, spread across as many regions within the country or areas within a region as possible. Survey calls were timed to test the quality of service at the normal peak hours of operation. All lunch calls were placed between 11:30 am and 1:30 pm local time, and all dinner calls between 5:30 pm and 7:30 pm local time.  Consistent guidelines were followed to ensure fair comparisons in the results between the different restaurant companies and the different locations within each company.  Each location included in this report was measured across multiple processes on a scale of 1 through 5 against an ideal that a service provider should seek to deliver to its customers.  The scoring is not relative to the performance of the norm being currently delivered. For example, grading the quality of the initial greeting or level of background noise,  a rating from 1 to 5 is used, 1 being the equivalent of an F grade or rating, up to 5 being the equivalent of an A grade or rating.

Results:  Quantitative analysis of the call connection (number of rings, seconds on hold) found a mean number of 2 rings, indicating that all participants in this study were adept at answering the phone.  The overall average total time on hold was 29.8 seconds, rated “poor” overall.  An average rating of 1.2 – 1.3 (“Unacceptable”) was found in the server’s efforts to “Recommend” (offer personal food item suggestions), “Up Sell New Products,” and “Up Sell Drinks/Deserts.”  An average rating of 2.1 – 2.2 (“Poor”) was found in “Product Presentation” (selling the brand), “Service Attitude,” and “Overall Impression.” An average rating of 2.6 – 2.9 (“Mediocre”) was found in “Initial Greeting,” “Product Knowledge,” and “Communication thru Call” (only 20% of the FSR’s surveyed repeated the order to the customer).

Conclusion:  The Casual & Fast Casual restaurant industries are still using old thinking, old systems, and facilities that aren’t equipped or designed to deal with a rapidly growing and evolving takeout world. The survey showed that the employees taking the phone orders scored “Unacceptable,” “Poor,” or “Mediocre” against all surveyed sales and service standards. The best overall impression score for any surveyed location was no better than adequate.  The average score across all surveyed categories would get a letter grade of “D.” The customer is clearly not receiving the quality of service that is appropriate to the level of sophistication dictated by the brands represented in the survey, the price point and the niche of the industry that Casual and Fast Casual dining describes.

Introduction

The modern take-out concept emerged out of what were once called “Fast Food” restaurants but are now called Limited Service Restaurants (LSR) or Quick Service Restaurants (QSR).

In the 1980’s and 1990’s, the market for take-out expanded, as it continues to do, into Full Service Restaurants (FSR), including the Casual Dining category. Casual Dining restaurants are defined as restaurants where waiter/waitress service is provided and the order is taken while the customer is seated. Customers then pay after they have eaten. Concepts included in the FSR category are a) family dining, b) casual dining, and c) fine dining (National Restaurant Association, 2008).

A hybrid between Fast Food (LSR) and Casual Dining (FSR) restaurants has emerged called the “Fast Casual” restaurant.  It is an LSR in that the meal is commonly ordered at the counter and paid for before the meal is consumed.  However, the food is typically more sophisticated than fast food and there is seating available in an environment that is more upscale than fast food.  There can even be limited service provided, such as tableside delivery and bussing.

The Casual Dining industry has responded to increasing consumer demand for take-out, and said, “Yes,” to its customers.  But, whereas LSR’s were proactively equipped and designed to meet the needs and expectations of their fast food customers in the sales and service cycle, the big chain FSR’s were equipped and designed primarily to take care of their full service walk-in customers and not those ordering take-out by phone.

By and large, the Casual Dining and Fast Casual chains retrofitted the existing model to accommodate the new demand, but did not, or were not able to proactively create a new model that would be consistent with either their own or their customers’ standards of sales and service. This has benefited neither party, nor those on the front lines whose job it is to provide and ensure that standard of sales and service.

This disparity and disconnect in the phone-in take-out vertical between what Casual Dining and Fast Casual Dining restaurants want to deliver and what they do deliver should be of concern in the industry. Yet the subject is under-studied and under-reported.

In June of 2009, with the sponsorship of Restaurant Revolution Technologies, a restaurant solutions provider, the Harrah Research Center, located within the William F. Harrah College of Hotel Administration, University of Nevada Las Vegas in conjunction with Serena Bay Consulting, a management-consulting firm, initiated an independent study of the state of the phone-in take-out business in the Casual and Fast Casual Dining industries. The objective was to survey high profile, multi-unit restaurant chains to assess and report on the quality of the sales and service cycle as it relates to the phone-in take-out dimension during the peak hours of the restaurants’ operations. Herein is an overview of the phone-in take-out dimension, the results of the survey, and a report on the opportunities for improvement in that dimension.

Background

According to several studies the future demand for meals not prepared in the home will continue to rise. Family characteristics found to impact demand for meals away from home include household income, time constraints faced by the household manager, the household manager’s age, number of people in the household, education level of the household manager, the household’s region of residence, and the household’s race and ethnicity (Stewart et al., 2004). Other studies also have determined that the Casual Dining operators are the most responsive to any changes in income (McCracken & Brandt, 1987; Byrne et al., 1998).

One way Casual Dining operators are addressing increased demand for take-out and the challenge of operating in times of economic recession is by expanding take-out and delivery services. Nearly all Casual Dining restaurants offer take-out with nearly 20% of operators offering delivery service. Operators see take-out and delivery as ripe for growth. About 40% of Casual Dining restaurants and 33% of fine dining operators believe delivery will become more popular in the near future. 50% of Casual Dining operators offering take-out expect their take-out sales to increase in 2009 over 2008. Customers appear eager for the expanded options: Close to half of all consumers surveyed said they would patronize Casual Dining restaurants more frequently if the restaurants offered delivery or had convenient take-out options (National Restaurant Association, 2008).

Over the years 2005-2008 take-out sales at Casual Dining chains have experienced annual growth of nearly 10%, almost twice the rate of the overall industry’s sales growth. This rapidly growing area within foodservice signifies a few key issues:

Consumers perceive ordering take-out food as a way of saving time and money without sacrificing indulgence. People who are working longer hours and coming home too tired to cook, and families who want to dine out but would rather save on extra costs such as baby sitting or transportation (Batalla, 2009). Consumers also perceive cost savings in alcoholic beverages, transportation considerations, and a reduction in the size of the gratuity.

When consumers were asked the primary reason for selecting a Casual Dining restaurant to order take-out food 18% stated being “in the mood” for the food at that venue.  Interestingly food quality was only important to 6% of take-out customers. More importantly 16% of customers cited convenient location and the desire of a favorite item as the primary factors influencing where to order take-out.

Take-out currently accounts for about 12% of business for restaurants in the Casual Dining segment. Now more than nine out of 10 family and casual dining restaurants offer take-out. High-end restaurants are also participating in the trend with nearly three-fourths of fine dining restaurants offering take-out service (The Food Institute Report, 2007).

At Outback Steakhouse the convenience of curbside service has helped to bolster take-out sales from $104 million in 2000 to $274 million in 2005. The convenience of curbside service has resulted in virtually no one coming inside the restaurant to pick up a take-out order (Warner, 2006).

Applebee’s has increased take-out orders from 5% of sales in 2002 to a current 10%, or $430 million.

Most of the growth in the take-out segment comes from people moving away from more traditional take-out options like Chinese, pizza and fast food as well as consumers doing less cooking at home (Warner, 2006). Nearly two-thirds (61%) of those under the age of 35, 54% of those35-54, and 45% of those 55 and older use FSR take-out at least once a week (Technomic, 2005).

Methods

Each of the more than 1000 locations included in this report were measured against an ideal that a service provider should seek to deliver to its customers, and that any one of those customers would hope to receive.  The scoring is not relative to the performance of the norm being currently delivered. A mean rating of 5 does not indicate that the location performed better than most everyone else, it means that the service provider, through its representatives, delivered what can and should be delivered.

Restaurant companies were selected for their high profile and reputation, sales volume, number of locations, appearances on “Top” restaurant lists, such as those generated by Consumer Reports and the National Restaurant Association.

Ten locations were selected per brand. There were no particular criteria for these selections except to spread them across as many regions within the country or areas within a region as possible. Ideally, one each would come from the South East, Mid-Atlantic, North East, Great Lake, Mid-West, South, Plains, Rocky Mountain, South West, and North West regions of the country.

The calls were timed to test the quality of service at the normal peak hours of operation. All lunch calls were placed between 11:30 am and 1:30 pm local time, and all dinner calls between 5:30 pm and 7:30 pm local time.

In the study, though all the authors did the interpretation of the data, all  surveys were taken by a single, independent source, by one of the authors of this report.  George “Duke” Howard is a management consultant with over 25 years in the restaurant industry. He worked his way up in the Chart House restaurant company from the kitchen, to front line management, district management, management training and development, and, ultimately, to heading up the Leadership Training program. Upon leaving Chart House, Mr. Howard started Serena Bay Consulting, which he created to help managers develop their leadership skills.  His consulting experience includes conducting leadership training to both external and internal customers for top U.S. Full Service restaurant brands.

Analysis

Scoring 

Service providers were measured against the ideal yet deliverable, service and sales cycle of a call-in order. The metrics would address the three key performance areas of efficiency, accuracy, and service.

Each metric was scored on a scale of 1 through 5, where a score of “5” means that the service provider performs at a level of overall excellence in the aggregate of the three applicable deliverables of the service/sales cycle of the call-in order: accuracy, efficiency, and service.

Assigned Grade Levels of Performance:

5 = Excellent

4 = Good

3 = Mediocre

2 = Poor

1 = Unacceptable

Answer Promptness:

1 ring = Excellent

2 rings = Good

3 rings = Mediocre

4 rings = Poor

5+ rings = Unacceptable

Hold Time:

0 seconds = Excellent

1 – 5 seconds = Good

6 – 10 seconds = Mediocre,

11 – 15 seconds = Poor

16+ seconds = Unacceptable

1.         Answer Promptness – FSR 4.2, LSR 3.9

Ideally, a call is answered promptly after one ring.  In the study, the average number of rings before the telephone call was answered was 2 rings indicating that all participants were adept at telephone answering.

2.         Initial Greeting – FSR 2.7, LSR 2.4

The greeting score (mean = 2.6) indicated that the greeting and the server’s name was understandable. However, no service smile in the delivery of their greeting and no enthusiasm for what they were doing. The Capitol Grille (3.7), Carrabba’s Italian Grill and Mimi’s Cafe (3.5) were the top performers in this category.  The bottom performers included Moe’s Southwest Grill (1.5), Taco Cabana, Saladworks,  Jimmy John’s Gourmet Sandwiches, and Fazoli’s (1.8).

3.         Hold Time – FSR 2.9, LSR 3.5

The ideal hold time would be zero.

Industry wide, the combined average hold time, for call transfers, interruptions, and/or to find information, was little better than mediocre. The biggest culprits were long holds for transfers from the person who answered the phone, to the person actually taking the order. The average total time on hold was 30 seconds. An average transfer hold was 17 seconds. An interruption hold was over 10 seconds, and hold time to field information, was on average less than 3 seconds.

4.         Background Noise – FSR 2.8, LSR 2.5

When ordering there was generally low but very distracting background noise with a mean of 2.7.  Outback Steakhouse was clearly the most prepared restaurant operation with regard to answering the telephone in a relatively noise free environment (4.4), followed by Pizza Fusion and Houlihan’s (3.8).  Tijuana Flats (1.3), Hooters and IHOP (1.9) had the most challenging phone environments.

5.         Product Knowledge – FSR 2.7, LSR 2.9

On the whole, product knowledge was mediocre as the servers did not know the product descriptions, but read them in a literate manner (mean = 2.8). 62.5% of the restaurants surveyed had product description problems and displayed a lack of knowledge of premixed ingredients.  Au Bon Pain (3.6) and TGI Friday’s (3.4) performed best, with Fuddrucker’s (2.1). Bennigan’s, Dave & Busters and Logan’s Roadhouse next (2.2).

6.         Presentation of Product – FSR 2.1, LSR 2.1

In terms of product presentation, the server was somewhat clear in naming and describing the items requested, however failed to display any enthusiasm (mean=2.1). Houlihan’s, Logan’s Roadhouse Grill and Tony Roma’s were clearly the poorest performers in this category receiving a mean score of 1.0 indicating a lack of enthusiasm for the product and a lack of clarity in describing the requested items.  The Capital Grille (3.2) and Tijuana Flats (3.0) were the leaders in this category.

7.         Personalized Recommendation – FSR 1.3, LSR 1.1

There were very few personal recommendations; only 3 of the 104 surveyed brands (Cheesecake Factory, BJ’s Restaurant, and Bob Evans) scored an average of 2 or more.  61 brands surveyed averaged a rating of 1.1 or less.  No descriptions of the daily special or significant features of menu items were offered (mean = 1.3). Only after being asked by the customer did 24% of the servers offer a personal recommendation.

8.         Upsell/New Products – FSR 1.3, LSR 1.2

Daphne’s Greek Cafe (2.7) and Ruby’s Diner (2.6) distinguished themselves from the other restaurant chains by attempting to offer or suggest items without prompting. Upselling efforts were very limited (mean = 1.3) with no apparent sales intentions.  Of the participants in this study 77%  did not make any consistent attempt at offering or suggesting items.

9.         Upsell/Drinks & Desserts – FSR 1.2, LSR 1.2

This area is ripe with opportunity for restaurant operators as none of the participants in this study scored 2 or higher and 66% did not offer or suggest any beverages or desserts. The mean score was 1.2 with none of the chains displaying any consistency in their order processing procedures.

10.       Condiments/Flatware – FSR 1.1, LSR 1.0

The offering of condiments and flatware were very poor as there was no offer of the following: bread and butter, utensils, condiments and paper plates (mean = 1.06) from almost all of the restaurants in this study. Only the Cheesecake Factory with a mean score of 2.2 occasionally offered condiments and/or flatware, and was the only brand to score 2 or higher.

11.       Communication thru Call – FSR 2.9, LSR 2.7

Pizza Fusion, Noodles & Company, The Capital Grill and Carrabba’s Italian Grill were the top performers in this category receiving a scores of 3.8, 3.5 and 3.4 respectively. The poorest performers were Chipotle (2.0), Moe’s Southwest Grill and El Pollo Loco (both 2.1). Overall it was easy to understand the servers, however, there were problems with their pace and energy (mean = 2.9). The most frequent problems with the greeting were fast talk and mumbling (33%). Only in 20% of the restaurants surveyed was the order repeated to the customer.

12.       Service Attitude – FSR 2.2, LSR 2.2

The average score for service attitude was 2.2 indicating that the restaurant chains reviewed for this study were only successful displaying two of the five service attitude attributes identified below. The Capitol Grille was the top performer with a mean score of 3.4 followed by Noodles & Company (3.2), Islands (3.0) and then Carrabba’s Italian Grill and El Torito at 2.9.

Restaurant chains performing poorly were Friendly’s at 1.3, indicating an almost complete lack of service attitude; Bakers Square, Benihana, Moe’s Southwest Grill and Sizzler at 1.6; and then Rubio’s Fresh Mexican Grill, Hooters, Sonny’s BBQ, Bennigan’s, Chili’s, Smokey Bones Grill & Fire Bar, Ruby Tuesday and Perkins Restaurant, all at 1.7.

27% of the participants only demonstrated one or two of the five service attitude attributes. Clearly the results indicate this is an area of opportunity for the restaurant chains examined in this study.

 Overall Impression – FSR 2.1, LSR 2.0

The Overall Impression was scored against the ideal of what can and should be delivered with the right environment, infrastructure, hiring, training, evaluating, management and leadership.  This overall impression summary considers all of the service and sales cycle metrics, but the score is not an average of the other 12 scores. An average would give equal weight to each of the individual metrics. Instead, this is of the cumulative impact the service provider had on the customer, as it relates to their execution of the service and sales cycle.

The most scoring weight was given to metrics that made the biggest impression. In this case, the customer had a bias toward a demonstration of enthusiasm for the brand, products, and the order itself, along with a competent execution of service that included the subjective qualities of hospitality and graciousness. A location that executed all the points of service well, but did not deliver them with a seemingly sincere desire to be of service, would never be scored better than mediocre in this customer’s eyes.

The mean score for overall impression was 2.1 for the 104 chains reviewed for this study. The Capitol Grille distinguished itself as the top performing restaurant receiving a score of 3.1 followed by Carrabba’s Italian Grill (2.8) and Noodles & Company and Tijuana Flats at 2.7.

The restaurant chains scoring in the bottom of this study were Benihana and Friendly’s (1.3) followed by Taco Cabana (1.4), Sizzler (1.5), Moe’s Southwest Grill, Sonny’s BBQ, Smokey Bones Bar & Fire Grill and Johnny Rockets (1.6). Fifty (48%) of the restaurants chains scored 2.0 or less in this study indicating ample opportunities for enlightened restaurant organizations to improve on this very important distribution channel. The employees encountered demonstrated adequate mechanics but did not succeed at upselling or personalizing the experience.

The overall impression of all surveyed restaurants was poor.

[This is an abridged version of the full study.  Contact us to get a copy of the full analysis.]