By Craig Pendleton – President National Foodservice Consulting, Inc.
Published in Indian Gaming Magazine October 2018
What is the purpose of innovation?
Innovation (def) noun – the action or process of innovating, a new method, idea, product, system or process. synonyms: change, alteration, revolution, upheaval, transformation, metamorphosis, breakthrough
Innovation has benefits in many areas and often the benefits of a single innovation can provide positive results in multiple areas. Here are some of the potential benefits of the adoption of innovation:
Financial: increased revenues, improved profits, robust ROI systems, cost savings.
Customers: make things easier for customers with enhanced personalized and customized guest experience, reduction of redundant processes to allow staff more time with guests, less waiting time, increased customer desire to return due to new features/attractions, create curiosity with constant positive changes, deeply delineated satisfaction models for each customer.
Staff: simplify steps to service, simply steps to job performance, make work easier, enhance staff experience (easier and more fun), get managers out of the office and back in front of guests, save labor – a different solution to the staffing challenge that operators have found in recent years, employee friendly, Back of House reduce positions that cannot be staffed due to lack of candidates from the challenges of (licensing, drug testing, desire, aptitude and abilities), enhanced staff experience improving goals and retention, deeply delineated satisfaction models for each staff member, address generational evolutional differences in their desire for work experience involving more tech, more attractive work environment than the competition. Innovation can allow staff in guest facing positions more time with guests and a simpler work experience with a reduction of the minutia of repetitive tasks.
Efficiency: improved operational efficiencies, reduced steps, simplify, give back more hours in the day, faster feedback, input and seamless communications, real-time information, nimble and flexible business model, allow immediate adjustments to the business to correct problems before it is too late, tech conversion of as many processes as possible to streamline inefficient systems and reduce manual paper systems, automating manual processes to assist in staffing challenges and create attractive new processes.
Advantage over Competition: Stay ahead of the competition, more attraction to guests for return, talking points for the player/guests
Environment: Go green, reduce paper systems, less energy used, reduced ecological impact
“Cool”: Automated systems, cool stuff, cutting edge always and constantly something new, reputation for cool and WOW!, cooler than the competition, the environment and mindset of innovation property wide – what else is next?, what can we come up with and be the first?
Community: Younger generation involvement and friendly, more effective models and processes to give back
The list of benefits is endless. Innovation is a constant process. New ideas, inventions and tech are being developed and released/ applied daily. This doesn’t always mean more hardware, software or equipment. It can also involve different and more efficient processes from how things are being done today.
Examples of Innovation
The follow are two examples of innovation items within the food and beverage area that have long reaching benefits for many departments, the local community and the environment.
Enhanced Green Operations through the installation of internal composting liquefaction systems to reduce the amount of food waste in dumpsters and volume being hauled to landfills
Process: internal composting collection bins are installed by dishwashing stations. Food waste is separated from paper waste and placed into an internal composter instead of a trashcan. The system using enzymes or other technology converts the food waste into safe quality drain water within 24 hours.
Green/environment – it is estimated that between 70-80% (by weight) of trash disposed from restaurants is food waste. This waste contains a large density of water making it heavy. Using this system minimizes the trash going into trashcans, reduces the volume that has to be hauled to the compactor/dumpster at the back dock. Effectively reduces the amount of trash going to the landfill reducing costs and reducing the fuel use/carbon footprint of the trash collection vehicles. Less smell in back dock area, less insects. Near to zero food waste to landfill and zero methane production.
Staff safety – due to the elimination of food waste in the back dock area grease and spills are greatly reduced. The majority of the remaining waste is either recyclable materials or simple dry trash. Less distance walked due to the reduction of the amount of trash that needs to taken to the compactor, less chance of slipping with the reduction of spills on the floor, less weight lifted and hauled reducing the exposure to injury of the staff.
Physical space – reduction of the size of trash compactors/dumpsters in the back dock area opening up the receiving area for greater ease of deliveries. Lower frequency of trash pick-ups.
Legal compliance – this process eliminates the use of garbage disposals which have been outlawed in many areas. Wet trash in these areas must currently be added to the trash going to landfills. Often this requires pulping and then drying to process (all requiring energy costs)
Lower Waste Disposal Hauling Costs – lower waste disposal costs due to reduction of volume of waste going to landfill. These costs must be compared to the cost of the equipment acquisition (purchase or lease), enzymes/or additives (based upon system and technology), electricity and water used to operate. The calculation of savings/benefits also requires an estimation of projected costs in the future.
Diligence and research required: not all systems are the same; they use different processes both physically and chemically to break down the food waste. There are differences in the final grey water discharged down the drain. Some systems result in a large amount of grease in the waste water that can clog grease traps and sewer pipes; others may require a cessation of the use of many caustic cleaning chemicals being discharged in drain lines. Local plumbing codes vary per area.
Enhanced Inventory software and practices to streamline current systems
Process: adoption of a paperless, scanner and computer based inventory system. Using software this process allows building an inventory database organized by storage location that is calculated and tracked in real-time.
Receiving: new inventory is received and checked in using bar code scanners that are linked to the computer software to add inventory at the time of receiving.
Transfers/Requisitions: any transfers or requisitions are also processed via scanner and transmitted to the software allowing real-time calculation of total inventory, movement, location of all items and costs/value of inventory.
Ordering: on-hand counts for end of period inventory or for establishing current inventory for placing orders is also scanner based. On-hand counts are entered electronically and the software calculates and suggests order amounts based upon the amount of current inventory and established par levels. The operator reviews the suggested orders, makes adjustments and then places the order electronically or via electronic purchase order into the order/bid purchasing system. Inventory pricing for all items purchased are updated once the product is received.
Monthly end inventory: scanned into template based shelf by shelf inventory system. Inventory is priced by last purchase price and total value of inventory computed.
Paperless: environmentally and user friendly
Time saving via use of scanners for counting, issuing and receiving as well as pricing updated from purchase orders:. simple process to count, issue and receive. Auto pricing of inventory, prompted on-hand counts. Auto suggested orders based upon established pars
Accuracy: bar codes link directly to inventory item. Accuracy of counting allows reduction of whole property inventory by sampling use and movement of product during any past period of time.
Spot pricing check: each outlet/bar can be inventoried frequently with depletion of products compared to usage via point of sales records and through theoretical costing model depletion to compare actual use against ideal use of product. Costs per shift are easily calculated in problem areas.
Real-time entire casino dynamic inventory – at any time the amount and location of any product can be reviewed to determine where items may be transferred from, to avoid running out of stock without purchasing more if the product exists somewhere onsite.
Reduction in whole casino of inventory levels – especially liquor products. The reduction of inventory facilitates: less storage, less hauling, less money tied up in inventory.
Automatic orders, price updates, restock and requisitions of products – whole property inventory allows for history of on-hand inventories, usage, pars, orders, Auto updated pricing from purchase orders can be exported to recipe costing programs. With stock pars for storage areas the system can generate restocking auto pulls and replacement.
Diligence and research required: the physical areas, staffing, vendor ordering software, purchasing/requisition/ordering system software and accounting software may not be compatible with this type of system without additional interfaces and programs. Often this is available with the purchase of the system but can require a third party supplier.
Why don’t all operators constantly search for innovation?
These are the greatest challenges to innovation discovery and implementation:
Operational Habits: With a pure heart the best operators who believe that they are operating in the best possible way will do today and tomorrow the same things they did yesterday. Often they are too close to their business and are creatures of current routine.
Store blind (def) noun/adj. – seeing the same environment day after day from a close “in the business” perspective that does not allow one the ability to see operations with fresh eyes, from a distance. (i.e. “working in the trenches”)
Status Quo Mindset: Often the lower tech operated departments are of the mindset that “this is how things are done, and how they must be done”. The departments that use the least tech are generally the most comfortable in doing the same things repeatedly over and over.
Disparity of application of innovation between departments: Certain departments tend get the “goodies” more often. These are often tech driven departments. This can create an inconsistent application of innovation to some departments. Typically the departments that operate in a higher level of tech get the newest tech and expenditures (IT, gaming, and accounting), and may have more time or staff members whose interests lay within the tech and innovation world. These are not always the best areas to apply innovation over other departments who might benefit more from new applications.
Time and resources to perform the diligence required to research, discover and vet potential innovation: Though innovation within the industry is constantly evolving most supervisors and staff members do not have the time to dedicate to monitoring, researching and vetting new innovation. Many don’t have time to dedicate 10% of their week to studying new ideas, innovation, tech and processes.
Discovering potential innovation is only the beginning. With a large range of possible opportunities as well as many suppliers it is imperative that research and testing be performed prior to selecting a specific process or supply. Salespersons are motivated to sell their products and are not the best resource for comparing alternatives.
Other users of similar systems in operations positions at other comparable properties can be the best sources of referrals regarding the long term benefits and challenges with potential new systems. These are the people to ask if the innovation performs as advertised with questions such as: What were the challenges at the time of install and integration into operations? What was the service level after the sales? Were items as simple to use and as durable as they were promoted to be? What was the realized return on investment? What other benefits were discovered? How did the guests and staff receive the new innovation? The questions are endless but all very important prior to purchasing hardware, software or changing operational processes. Once the change is made it is difficult and often costly to go back or make major adjustments to the new system without causing strain on the staff and operations.
The solution: How to effectively seek and integrate innovation
Single Source Oversight: The best solution is a holistic “whole property” approach. This requires a dedicated innovation specialist responsible for coordinating research and implementing innovation across the entire business and all departments. This individual must report to the Director of Operations, General Manager or COO as well as the CFO (who budgets and plans for innovation expenditures).
A position of whole casino oversight can make it easier to see different options and different possible solutions. This dedicated individual would spend their time working with each department, identifying challenges, engaging and collecting ideas from operators, conducting staff focus groups, seminars, property tours, and vendor meetings. Further research should involve inventing and reviewing solutions used by the competition that they are already using to automate, systemize and simplify. Testing should be conducted with player focus groups, free trials, merging of ideas between techies and operators, possibly partnering with schools, labs, and groups to review non-gaming applications in business that can be adapted and modified to a casino environment. It is also important to look at each item and see if there are potential casino-wide application opportunities rather than solely an individual department application. The economics of allocation for new innovation makes much more sense when an idea can be applied to multiple departments at the same time.
Outside Resources: In addition to constant research and onsite department input research should include outside resources who see the innovational successes of others but are not embedded in daily operations and do not have a constrained view of the casino operations. They can enter the business with a “30,000 feet up” perspective, question processes and systems and make suggestions as well as to help facilitate finding opportunities, qualifying items, arranging for tests and helping with the training and change of process/operations.
Free Testing and Trials: Often new innovation does not have to have a direct cost for trial of software, physical devices, different procedures, and different ideas. Free is rarely totally free. Operators must always be aware of the cost of man-power when conducting “free trials”. Often new innovation products right off the shelf are not a perfect fit and need additional adjustments. These costs can be made conditional to the acceptance of the item or performed by other sources.
Measuring the ROI – Costs Verses Benefits: A challenge for operators with any implementation of innovation is how to quantify costs, benefits, and ROI in areas that aren’t easy to count (staff retention, quality of work, quality of guest experience).
Some cost benefit calculations are easy: A reduction in staffing of one position based upon 2 daily shifts of 8 hours = 16 hours per day x 7 days = 112 hours per week x 52 weeks = 5,824 hours saved annually. Using an average hourly rate of $10 with benefits of 40% = rate per hour $14 x 5824 hours = results in an annual labor savings of $81,536 that goes directly to the bottom line profits simply by the reduction of one staff member (often the one person you haven’t been able to find to hire)
Calculating the costs of training and turnover is different for all properties but industry estimates are approximately $2,000 – $5,000 for every staff member lost that requires replacement. What greater motivation could there be for considering simpler systems for job requirements and processes for staff to increase retention?
Making the Final Decision: After review of all suggested innovation ideas the final determination of which department gets new innovation should be made by senior casino management, not by the specialist.
Innovation is the constant practice of reviewing and improving processes and systems to create benefits for customers, staff and the casino. There are unlimited opportunities being created daily but most will not make it to casinos and be implemented due to lack of time and dedicated resources to project manage innovation opportunities on a continuous basis.
This process is best facilitated by a single person/department oversight that specializes in finding innovation opportunities for the entire casino, for the benefit of all through independent research and collaboration with staff, customers and suppliers. Innovation is not always costly to create and apply but must be carefully considered and researched prior to making a decision on direction. New innovation must also be comprehensively project managed by a resource other than the operators who are busy running their daily business. The dedicated specialist/department staff must be responsible for measurement and adjustments to the innovation after installation to receive the maximum benefits from the change. The days of “every department watching out for themselves” should be transitioned into the mindset of greater efficiencies in the future for the entire casino.
Craig Pendleton is the President of National Foodservice Consulting, Inc. He has consulted for the past 25 years as a Tribal Casino Specialist. He can be reached via email at firstname.lastname@example.org or visit www.nationalfoodserviceconsulting.com