Nationwide Restaurant Consultant

Six Sigma & Lean in the hotel and restaurant consultant market is a relatively untouched territory, the costs of becoming a champion vs the perceived low value to this industry combined with the studies required to become a company-wide implementer are extensive. However, as I started trying to find new ways to improve our own business and the processes we roll out to our own hotel and restaurant clients, it became clear that Six Sigma and Lean could, if accepted absolutely be the solution. Learning about six sigma and its relative dominance in the manufacturing or product based industries the more I saw the value in the service industry and specifically for us being a restaurant consultant and overall hospitality consulting company.

The critical error we see in restaurants and hotels every day is the manager or owner running from small fire to small fire every day attempting to solve the obvious symptoms of a problem that arises. If an owner could stand back and recognize that identification and elimination of the root cause of a problem is actually the correct process then naturally the business becomes more efficient and the problems are eliminated. This situation seems so obvious but is so rarely implemented. Root Cause Analysis (RCA) is a Six Sigma method which forms part of continuous improvement and most importantly is best applied to restaurants due to the reactive nature of management and the net result is by default the decrease in problem recurrence. The Six Sigma RCA allows one to understand there is probably more than one root cause of a single problem and therefore more than one corrective action. It also defines the process to find/identify the root causes ranging from the “5 Whys” to the “Ishikawa Diagrams” all designed to find the right tool to find the root cause of a problem. Our application of RCA within our clients has had dramatic results almost instantly, moving past the theoretical problem solving and actually creating a turnkey restaurant with process driven problem solving and eventually the ability to predict probable failures.

The largest issue we found for application of Six Sigma to our restaurant clients was identifying and understanding the difference between the standard product based six sigma studies (manufacturing) and the service base, in general, the new issues in service arise based on 3 core differences:

Inseparability – The customer is involved in the actual production process, the service is delivered and consumed at the same time.
Perishability – Being intangible, the service cannot be stored.
Heterogeneity – difficulties in standardizing services every time for every customer.

The goal however, remains the same, reduce costs by eliminating defects.

This goal however, also created the recognition that six sigma alone does not suffice, because a restaurant does have a production line (manufacturing) as well as a service component which is where the importance of LEAN comes in and its execution alongside that of six sigma can truly yield the greatest results.

How do you get company wide acceptance of Six Sigma in a restaurant where there is an ignorance to the value of data, higher than national average attrition, lack of formal education in the restaurant/hospitality market and and a relative laissez-faire attitude to restaurant management. How does one effectuate a Lean strategy in a kitchen without having to train the staff or educate them on a concept they frankly have little interest in. The answer is turning to process based operation which provides limited opportunity for error already built in. This lack of opportunity for failure (defects) does prove that company wide acceptance of Six Sigma is in my opinion not required, and instead a process driven business is accepted and adhered to on a management and data collection level.

The focus of Lean is improving flow process of any product during its production, which in layman’s is the reduction of waste and the raised speed of the process. The concept of Lean that I find most applicable in the restaurant process, specifically the kitchen is Jidoka which essentially is about identification and eradication of any wrong points in the production line – both of which could be opportunities for the production of a bad product (defect). At the same time, the front of house (service component) is reliant on six sigma which focuses on removing variations in a process, running such processes in a streamlined manner and most importantly satisfaction of client requirements.

Trying to combine the assets of Lean and Six Sigma is an evolving process, as my education and knowledge increases the more I am able to convey to clients how the system works, the process and the expected results. Six sigma is based upon philosophy and lean is based upon techniques but technically Lean is part of the six sigma methodology.

For someone who is familiar with six sigma, would they not prefer to eat a restaurant or stay at a hotel where they know the principles have been implemented and by default would the restaurant or hotel facility not see a significant increase in both customer experience and bottom line from this process? The question is how to educate our clients on an unknown process that seems too corporate or too out of their league, or in many instances too unknown.

When I speak with clients about the need to use this methodology as the backbone of our consulting engagement, many turn off the second they hear the DPMO (defects per million opportunities) however when it is really defined as just driving toward a virtually defect free process the next question is always how. The key to a strong consulting project is being able to define a key metric (KPI) and use that as the baseline to judge success. Many people use NOI as the obvious benchmark, but the reality is that changes in the organization don’t have maximum effect on the bottom line overnight only projected and trending bottom line results. So perhaps there are other KPI that can be used which is where the DPMO is so vital.

In a new quick serve concept that is looking to test the feasibility of a specific product or cuisine the metric could be number of guests through a door per day and the average transaction achieved per guest. In this instance if the two metrics are in line with expectations, it means the product is viable and now a focus can be on improving the processes to achieve greater financial results – now a focus can be put on customer wait time, speed of food delivery and so forth, all covered by Lean (infinite queue assumptions) and will provide the modifications to the model to see the desired financial return. This is the backbone of Lean and Six Sigma.

In the example of Starbucks, per Pete Abilla’s fantastic series:

It seems that the majority of the effort in the Starbucks adoption of lean manufacturing principles is around increasing the quality of the coffee, more consistent taste outcomes, and on reducing the time it takes to make coffee and serve the customer.

Putting the brand identity issues and customer experience aside, modeling the Starbucks queue isn’t difficult, but can be a bit complicated because of one major reason: Product Complexity.

According to one source, there are at least 87,000 to 168,000 drink combination’s available at Starbucks. Now, if you’re into the combinatorial mathematics, this might be an interesting theoretical problem, but from the perspective of a customer and real life, that many options is neither good for business nor good for the customer.

(Read Pete’s whole series here: http://www.shmula.com/starbucks-why-lean-why-now/5639/)

Fast food is a perfect six sigma opportunity as Ms Ybanez-Delid refers to in her article on this very topic. The six sigma team would aim for the least wait time, for the acceptable temperature and for the time that food remains above that temperature. To achieve this, the team would most likely do the following:

1. To reduce wait times, additional personnel are put on duty at peak times. During these busy times, the function of order taker and cashier are separated from the function of order fulfillment (also improves order accuracy) and a second window used. Drink dispensers are located near the pickup window to reduce walk time. Customers are allowed to phone in or fax in orders.
2. To improve the accuracy of the orders, the order is repeated to the customers and confirmation requested. Some fast food chains have computer screens so that the customer both sees and hears the order being repeated. The order is confirmed again at the pickup window.
3. To insure that food remains hot until it arrives at the destination, changes have been made in the packaging. A simple aluminum foil wrapper helps to keep the heat in.
4. To improve the accuracy of change, the cashier pushes iconic buttons defining the content of the order and the machine calculates the cost plus any tax. The cashier enters the amount received and the machine
calculates the correct change.
5. As a control mechanism, timers are used to record customers wait times.

This all looks so simple. Actually, it is — and it is doable, if the company makes the process its system. In other words, if Six Sigma is the culture and Lean is the process, then it is achievable. The question now comes down to definition of quality product, what is the acceptable standard, especially among restaurant customers whose standards vary wildly, whose benchmarks for judgment differ and demands or modifications to the end product are a consistent part of the production line process?

Lean thinking tells us that quality is the extent to which goods or services meet or exceed customer expectations. Customer satisfaction should lead to repeat utilization of the service (recurring guests); so if ‘zero defects’ are the goals of manufacturing then ‘zero defection’ should be the sign of quality coming to a restaurant. Measuring these components can be a muddled and difficult feat, especially given the technological and financial limitations of many restaurants operating on slim margins.

Customer satisfaction is a multistage process where levels of satisfaction are multiplied as different facets of the service are exposed to the customer. These facets cover a broad range from ethical practices of the business to timely response to knowledgable staff etc. So for instance no matter how fresh and tasty a McDonald’s burger is, for a customer who has moral issues with the low wages of their employees, fulfillment will never be attained. The key notion is that different customers have different patterns of expectations for the components involved and so, is it possible to have zero customer defection? Not everyone likes the same things and thinks in the same way and thus the service provider must focus on the elements that will please the majority only.

Also as services are intangible, there are greater problems in the measurement of quality, as mentioned, what constitutes quality may be different for different individuals based on their perceptions and past experiences and thus what defines defect in services? Often this will be an obvious matter of simply delivering what is promised, yet in most cases reliance on customer feedback, complaints and measurement (YELP?!) will have to be used for awareness of issues. Six Sigma advocated the measurement of such variables as the only way to gain insight into service defects.

The final barrier to overcome is the need for data collection – this is the core component of Six Sigma that can be so difficult in the restaurant market. The Six Sigma methodology relies heavily on statistical analysis; most restaurants have minimal data and examination of their techniques, thus this may poise an initial hurdle. Over and above almost all owners have a fear of metrics and don’t connect their use to services. Breyfogle explains “They (services) don’t appreciate the importance of creating meaningful metrics that give insight into how their business processes perform over time. This can lead to fire fighting common cause variability as though they were special cause”. He argues that only the use of statistical control charts will enable services to focus on prevention rather than reacting to problems. Monitoring processes is the only way to progress from subjective hypothesizing of reasons of error to concrete data and this one of the main principles of Six Sigma.

In summary, the importance of Lean & Six Sigma in a restaurant or hotel can have incredible returns for the operator in building a stronger customer, increased efficiency and most importantly impact on the bottom line. As we continue our path to become Six Sigma champions, and continue our education this article is merely an opportunity for owners to recognize there is a standard that can be applied and that using the DMAIC (Define, Measure, Analyze, Improve & Control) project methodology is delivering real results to our clients bottom line that you should take notice and see how you to can start the process of learning this invaluable management tool.

Thank you to many of the experts and Six Sigma forum members who assisted us in translating and showing us how to best apply Six Sigma to an industry that has low adoption rates and in adding, correcting and making this document invaluable to our restaurant & hotel clients.