How late should a fast food restaurant stay open?

How long is long enough? That effectively is the question asked in a recent Wall Street Journal article with regard to quick service restaurant hours of operations (Will Longer Hours Boost Sales?, Apr 29). Here is the issue:

With a lean economy squeezing their sales, thousands of restaurants are extending their hours to try to get more people through the door. But franchisees are learning that it can take a lot of work to get the most out of off-hours snackers.

The basic problem: Restaurants need to shoulder more expenses to keep the lights on longer—but the crowds usually aren’t that big at odd hours, and customers don’t end up spending very much. In fact, franchisees and industry experts say, some markets may not have enough all-night types to make the concept work at all.

The drop off in traffic in the wee hours of the morning is illustrated here.

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Fallen Arches: Fixing service at McDonald’s

What counts as good service at a fast food restaurant? Speed obviously matters but what about staff interactions? No expects a quick service restaurant to have a Zagat’s rating (although some Chicago hot dog stands are graded) but can fast food service slip so much that customers notice?

Apparently the answer is yes, and furthermore McDonald’s hasn’t been doing so well in delivering service (McDonald’s Tackles Repair of ‘Broken’ Service, Apr 10).

But achieving speed and friendliness of service across the chain has been a particularly elusive goal, at least in part because about 90% of McDonald’s restaurants in the U.S. are owned by independent operators.

In QSR Magazine’s annual Drive-Thru Study, the only comprehensive industry comparison of customer service at fast-food chains, other restaurants have consistently outperformed McDonald’s in those areas. In last year’s study, the average service time at the McDonald’s drive-through studied was 188.83 seconds, compared with 129.75 for industry leader Wendy’s Co.  Chick-fil-A had the top friendliness ratings. Out of the seven major chains in the study, McDonald’s was second to last in the “very friendly” ranking, just above Burger King.

So what are the root causes of the problem and what can they do about it?

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Those shelves won’t stock themselves

Another day, another Wal-Mart story. This one is from Businessweek and deals with troubles Wal-Mart is reportedly having getting goods on the shelves (Walmart Faces the Cost of Cost-Cutting: Empty Shelves, Mar 28).

Wal-Mart Stores (WMT) has been cutting staff since the recession—and pallets of merchandise are piling up in its stockrooms as shelves go unfilled. In the past five years the world’s largest retailer added 455 U.S. Walmart stores, a 13 percent increase, according to company filings in late January. In the same period its total U.S. workforce, which includes employees at its Sam’s Club warehouse stores, dropped by about 20,000, or 1.4 percent. …

At a Feb. 1 gathering of Walmart managers, U.S. Chief Executive Officer Bill Simon said Walmart was “getting worse” at stocking shelves, according to minutes of the meeting obtained by Bloomberg News. Simon said “self-inflicted wounds” were Walmart’s “biggest risk” and that an executive vice president had been appointed to fix the restocking problem, according to the minutes.

Note that this is not a supply chain issue. Rather it is a store operations problem. The goods are getting to the stores; they are just not getting out to the shelves.

At the Kenosha (Wis.) Walmart where Mary Pat Tifft has worked for nearly a quarter-century, merchandise ready for the sales floor remains on pallets and in steel bins lining the floor of the back room—an area so full that “no passable aisles” remain, she says. “There’s no manpower in the store to get the merchandise moving,” says Tifft, who oversees grocery deliveries and is a member of OUR Walmart, a union-backed group seeking to improve working conditions at the chain. “Customers come in, they can’t find what they’re looking for, and they’re leaving.”

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Would you deliver packages for Wal-Mart?

Right now, same day delivery is one of the hottest topics in e-commerce with multiple firms experimenting with different ways of fulfilling on-line orders tout suite. See this Wired graphic-fest for a summary of what different firms are trying.

Then there is this.

Wal-Mart Stores Inc is considering a radical plan to have store customers deliver packages to online buyers, a new twist on speedier delivery services that the company hopes will enable it to better compete with Amazon.com Inc. …

“I see a path to where this is crowd-sourced,” Joel Anderson, chief executive of Walmart.com in the United States, said in a recent interview with Reuters.

Wal-Mart has millions of customers visiting its stores each week. Some of these shoppers could tell the retailer where they live and sign up to drop off packages for online customers who live on their route back home, Anderson explained.

Wal-Mart would offer a discount on the customers’ shopping bill, effectively covering the cost of their gas in return for the delivery of packages, he added.

(Wal-Mart may get customers to deliver packages to online buyers, Reuters, Mar 28)

The article describes this as being at the “brain-storming stage” and I must admit that I don’t know where that lands on Woody Allen’s notion-concept-idea spectrum. Indeed, it strikes me as being something of an elaborate April Fools’ joke.

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Managing multisite services

How do you grow a service business when growing means adding locations? That’s always been one of my favorite topics in service operations. It poses interesting challenges on what must be standardized and where flexibility should be maintained. The Globe and Mail has an interesting profile of  Toronto entrepreneur who has had to grapple with these issues as he has expanded his takeout restaurant from one location to four (Restaurateur creates winning recipe to manage multiple locations, Mar 8). They’ve gone the emphasize-standardization route.

Over the next seven years, Mr. Ross opened up three more Veda locations, two in buildings on the main University of Toronto campus, in 2007 and 2009, and one this past summer at University and Dundas, close to a group of hospitals. To manage across these locations, he pays close attention to as much standardizing as possible.

Since Mr. Ross believes food consistency to be critical, all the cooking is done in a central location. This means not only that food in all of Veda restaurants is cooked using the same recipes, but that it all comes from the same batch. The cooking takes place in the original, flagship Yorkville location and is distributed to the other locations each morning.

To ensure that the right food is at the right place at the right time, Mr. Ross needs to be able to estimate demand at each location on each day of the week. He has systems in place that allow him to predict that, and to tweak the prediction if there are events, such as large conferences, in the area. As well, he has a driver on call at all times who can deliver food to a location within 10 minutes if there is unexpected demand and something is running out.

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Paying by the minute at a coffeehouse

How should a cafe price? After all, most users are actually consuming multiple things at a coffeehouse. Yes, they are getting a jolt of caffeine and maybe a muffin, but they are also consuming a meeting space or a workspace. Indeed, that space may be more important to some customers if getting together with a friend or finding a place with WIFI is more the point of the visit than having a coffee.

That gets us to Tsiferblat, a Moscow-based chain of cafes that has a different pricing model than Starbucks and the rest of the industry. Here is how NPR tells it (Rubles For Minutes, Not Mochas, At Russian Cafe Chain, Jan 10):

Welcome to Tsiferblat in Moscow. It’s one of two in the city, and in English, it would be known as the Clockface Cafe.

When you enter, Polina Poliakova leads you to a cabinet filled with defunct alarm clocks. “When you come to Tsiferblat, first what you should do is take the clock,” she says, explaining what she calls “the ritual.”

So you choose a sturdy Soviet model and Poliakova notes your time of arrival. …

Clockface is the brainchild of Ivan Meetin, a 28-year-old who got started in the business by experimenting with a cafe that ran solely on donations.

Clockface is different, he says. “You don’t have to pay for coffee or tea or cookies,” Meetin says. “You should pay for time, and time costs — I hope — [are] not that expensive.” …

You pay two rubles a minute for the first hour — slightly less than $4 an hour — and then one ruble per minute for the time beyond that. Any time after five hours is free — so you can never spend more than about $12 per person.

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Good news for better air travelers: More on-time flights

For those heading to an airport for the Thanksgiving holiday, the New York Times (Airlines’ On-Time Performance Rises, Nov 21) has some good news: More flights are leaving on time!

There are, of course, some devils in the details behind these aggregate numbers. Performance can vary by month simply because of weather (apparently August and January are the worst) and the numbers above do not reflect commuter airlines affiliated with major carriers (so going home to a small regional airport may be more touch and go). Also, as the graph makes clear, it sucks to be a major airline that like United goes through multiple computer glitches in a year.

So how have the airlines brought up their performance? By focusing on the processes needed to get planes out.

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Controlling queues with even-odd rationing

Here at the Operations Room, we love queues and few queues have gotten as much attention lately as the lines of drivers waiting to buy gasoline in New Jersey and New York following the hurricane. Stories abounded about wasted time and why allowing price gouging would actually be good. Of course, neither states cleared station owners to jack prices up. Instead, they implemented Nixonian rationing based on license plate numbers. Those with plated ending in even numbers got to buy on even days and those with odd numbers got to buy on odd days.

Now, the Numbers Guy column and blog at the Wall Street Journal is asking whether it worked (Fuel Rationing Is Hard to Gauge, Nov 16, and Does Odd-Even Rationing Work?, Nov 17). Turns out there is no clean answer on this. On the one hand, studies of when similar schemes were used in the early 70s claim to show they were ineffective but even those studies authors think this time may have been different.

“I’m not sure our analysis transfers directly to the Sandy shortage situation,” said Robert Goldfarb, an economist at George Washington University in Washington, D.C. In a 1983 paper, Prof. Goldfarb and co-authors found the odd-even rationing system could lengthen waits, because people who normally spaced out refills by an odd number of days—say, five days—might move up their regular refills to every four days to avoid running out.

William Huss, co-author of a 1981 paper with a similar conclusion, added that while his model “has a solid mathematical foundation, its assumptions regarding driver behavior are hypothetical and logical but not necessarily based on psychological research.”

I have to admit that I love that last quote since it could equally apply to every paper I have written. 

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Customer service via tweets

Just how productive can tweeting be? As the Wall Street Journal tells it, Twitter has become an effective platform for customer service at Citibank (Citi Won’t Sleep on Customer Tweets, Oct 4).

Frustrated by the 40 minutes she spent on hold with Citibank customer service, Stacy Small tweeted her displeasure. To her surprise, a Citibank agent tweeted right back. “Send us your phone number and we’ll call you right now,” read the message.

Within minutes Ms. Small, who owns a luxury-travel company in Los Angeles, was on the phone with an agent, one of about 30 customer-service personnel based in Jacksonville, Fla., and San Antonio who have received special training in social media. The agent took such good care of her that, now, whenever Ms. Small has a problem she bypasses the call center and instead tweets her concerns to the Twitter address @askCiti. …

Ms. Small was the beneficiary of a two-year effort by the Citigroup Inc. unit to overhaul the way it interacts with customers using social-networking sites run by Twitter Inc., Facebook Inc. and others.

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The gratuitous iPhone 5 post: Charging to stand in Apple’s queue

In case you have been living under a rock, Apple is releasing a new iPhone and if you stop by an Apple store this Friday you can get one. That is, of course, if you get there early enough. For most releases of new Apple gadgets people line up early and often in order to have the newest device a week before their neighbor. But waiting is a hassle. Or, perhaps, a market opportunity (TaskRabbit: We’ll sell ya a spot in the iPhone 5 line, CNET, Sep 13):

San Francisco-based TaskRabbit has rolled out a new program that lets people in the San Francisco Bay Area, as well as New York, purchase four hours worth of wait time in line at an Apple retail store for $55. That’s more than a quarter of the price of Apple’s entry-level iPhone 5, and $55 more than it costs to pre-order the phone from Apple’s Web site and carrier partners.

Surrogate waiting is by no means a new thing. What kind of neat here is that it is being intermediated on (potentially) a large-scale by a “distributed workforce” company.

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