1995   25 Years   2020 

July 4, 2020

We're celebrating Clarion Group's quarter century of providing solutions and uncovering opportunities in dining and hospitality services.

Take a look at our prior years' posts below.  You may find something that's useful today. 

The new summer 2020 issue of Dining Insights Is at the printer and being readied for e-mail subscribers

➧ Planning ahead for the new work and learning environments

➧The FDA's advice for keeping on-site dining safe from old and new risks

➧ Case Study: How QA Audits Improve Performance

➧ How clients miss the full value of consultants' efforts

➧ Advice from top women chefs

. . . and much more.

To get your copy via mail or e-mail, send your name, organization and physical or e-mail address to info@clariongp.com.

What will business be like when (almost) no one’s in the office?

July 1, 2020
“The office has lost top billing as the place where white-collar work gets done,” proclaimed a pair of tech executives, writing in The Wall Street Journal and quoted in the Summer 2020 issue of Dining Insights’ lead article, “Planning Dining Service in the Post-Virus Era”.  

From March through June – and in varying degrees beyond – companies and institutions have been kept alive by executives, managers and many others working from home offices and kitchen tables.

“Newly remote employees will soon begin to see that productivity, innovation and creativity remain strong, if not stronger, under the new conditions,” according to Matt Burr, CEO, and Becca Endicot, editor, of Nomadic Learning, a digital training company.  “Organizations will learn that they benefit tremendously from losing the limitations that come from traditional office settings.” (nomadiclearning.com)

Maybe.  That’s pretty much what advocates of the open office were saying some ten or twelve years ago, before it became apparent that an open office left no place for someone to concentrate on a specific task.  (That’s one of the pluses to working at home.  No one except the spouse, kids and dog can bother you.)

The other side, not yet acknowledged by remote-working promoters, is the loss of what open offices were designed to encourage – casual encounters and informal face-to-face discussions where ideas are aired and new initiative emerge.  Gmail was conceived during a conversation over lunch in a Google cafeteria, according to company legend.

The shift to off-site working has been gradual but continuing as technology improved and expanded capabilities.  The January 2013 issue of Dining Insights noted, “Companies now have new ways to outsource even highly skilled work to freelance workers all over the world.”  The new way is “a pool of virtual workers that can be tapped on demand to provide a wide range of services,” Evgeny Kaganer of the University of Navarra, Barcelona, Spain wrote then in the MIT Sloan Management Review. 

This market is alive and well today.  Technical writers, among others, can be had for as little as $200 an assignment – no taxes, no benefits, no legal complications or commitments, not even a desk and chair for a day.

Over the years since around 2010, employees in search of work/life balance have increasingly worked a day or two a week from home.  Participation data for corporate dining facilities have reflected declining on-premises populations.  The Society for Hospitality and Foodservice Management’s semi-annual Industry Standard and Benchmark Comparisons survey’s reports of lunch participation in company dining centers nationwide tells the story:*
    1992:    An average 56% of available employees had lunch in the company dining center.
    2002:    43% of available employees
    2012:    Office environment, 35.9% (early in the trend to remote working)
    2016    Office environment, 35.0%
    2018    Office environment, 31.0% (latest data available)
    * Each year’s survey reports the prior year’s statistics.  The 1993 survey reported 1992 results, etc.

With the advent of Zoom and other conferencing software systems – and a hard shove from Covid-19 – remote office work has become nearly universal.  Whether, when and how a significant return to offices will occur are open questions at this point.  Obviously, if lunch participation falls much below the 2018 average of 31%, employee dining service will become not just unsupportable, but virtually obsolete in many office environments, seriously denting a large segment of the on-site food service industry.  Will it happen?

It would take a remarkably clear crystal ball to see what will happen in 2021 and beyond, including when and how the economy will recover, but based on experience during prior (but much slower) transitions in office arrangements and fluctuations in the economy, some reasonable expectations can be considered.

1.    It’s probable that physical presence in offices will average below 50% of actual employment  for a year or more, even after the coronavirus is tamed.  The comfort of executives and employees generally (no need to get dressed up; no commute) and company advantages (no or limited employee dining, coffee pantries, conference services and other expensive services to support; less office space needed) will be important considerations in deciding office populations.

Depending on the company, average daily office populations could be 25% or less.  Operations like call centers and tech support services operate as well remotely as they did when everyone was in an office.  Much other routine work probably can be performed remotely as well.  The use of freelancers for specific assignments may expand.
                              
2.    It will take a while for disadvantages to show up in various ways at different companies, each perhaps seeking its own solution.  For example, a company with 1,000 employees that reduced its office space as 75% of its employees worked remotely may find the office is now  too small if it must bring more people back to the premises.

3.    What other kinds of disadvantages?  Principally, the loss of face-to-face contact and communication.  Zoom or similar conference systems are okay; each participant can see the others’ heads and shoulders, but miss the vital body language which often speaks more eloquently than words.  Everyone has to take a turn speaking, making the conference more formal than it would be for a group around a table.  Meetings have to be scheduled; they can’t be spontaneous.  Serious negotiations, like contracts, are unlikely to be as productive when participants can’t face each other in person and measure the other party’s reactions.  There are no refreshment breaks or buffet luncheons when participants can relax and socialize informally away from the business at hand or a tough negotiation.

4.    Despite the Nomadic Learning folk’s forecast, the absence of informal meetings and interactions will inhibit creativity and innovation to some degree; maybe a lot.  Lone wizards might thrive, but team-oriented people aren’t hermits.  They may find working remotely in a group awkward and unrewarding.

5.    Humans are social beings.  If thousands of people are willing to face a bitingly cold November or December Saturday or Sunday to cheer a football team, why would they not want to gather in a more cordial atmosphere?  Employee morale depends on the enthusiasm and engagement of its people, identifying with the company and the stimulation of working with each other.  A company softball team or bowling club is unlikely to form among remote workers, eliminating one more tie to the organization.

Of course, times are changing.  New technologies may offset these apparent disadvantages; companies may find artificial intelligence is more efficient and reliable than humans, and the rising generation’s concept of work and life most likely will be different than that of their predecessors.

As wise people have been saying for ages, Time will tell.

Dining Insights is published by Clarion Group, a consulting firm providing solutions and uncovering opportunities in dining and hospitality services for companies, colleges and universities, government agencies and other organizations.  For information on how we may benefit you and your organization, call Tom Mac Dermott, 603/642-8011 or Ted Mayer, 617/875-7882 or visit our website, https://clariongp.com.

A Short History of Office Evolution

Office arrangements follow trends, the way fashions and diets do; they just don’t change as fast – the cost of restructuring facilities and buying new furniture and equipment is a bigger investment than new clothes.

But trends there are.  A photo of an office in the 1930s and ‘40s, even into the ‘50s, would show people busy at row after row of desks in a great open space.  Managers and executives had separate, four-walls-and-a-door offices, some alongside the open office’s wall or upstairs for the more important folks.  Size of office and access to a window (and the view outside the window) denoted rank.

As the need for massive squadrons of clerks diminished and jobs became more specialized, the “cube farm” became the way to go.  Everyone had an individual cubicle to call his/her own, demarcated by a five-or-so-foot high partition with space for a built-in desk and chair.  The size of the cube (some as little as six by eight feet) and location – in the middle of the floor or by a window – indicated rank.  A little better privacy, but not much.  The walls weren’t high and there was no door, letting in extraneous noise and neighbors.  A lot of cube farms survive today.

In the 2000s, the new way of structuring the office was the open plan – no walls (except maybe in the executive suite), a scattering of desks, tables, comfortable chairs and a couch around a coffee table, ping-pong and foosball tables along a back wall.  Convenient coffee pantries with free beverages and snacks and a large, open employee dining center serving everything from gourmet entrees to comfort food to vegan selections, catering to every taste at subsidized prices, were essential elements.

The idea, advocates said, was to encourage open interaction and spontaneous creativity.  The fact that it took less space than a conventional cube farm, coupled with the introduction of desk “hoteling” (desks not assigned, available for anyone to use, often first-come, first-served), wasn’t seen as a disadvantage by corporate management.  The concept was – and is – considered most important by tech companies and others where innovation and creativity are their primary competitive tools.

The downside that emerged was there was no place to hide when working alone or with two or three others on a task or a project.  Many companies found they had to provide semi-private spaces for such work.  The expansion of mobile computer connectivity helped solve the issue for solo work; the employee who had to concentrate could stay home and work, away from distractions.  As the technology improved, the idea of working from home (or somewhere other than the office) caught hold and came to be encouraged to varying degrees by employers.  Work/life balance was often the motivation.

By the 20-teens, remote working had become so popular that, as noted above, office employee café lunch participation rates fell from more than 50% in the 1990s to less than a third by 2018.  Of course, the most popular day for concentrating on important projects without office distractions is Friday.

Now, the coronavirus emergency has converted a nice amenity into a business necessity. As the emergency recedes, remote working will likely remain as a key element of the new way of doing business for many organizations. 

Minimum Wage Myths and Realities

 

Minimum Wage Myths and Realities

January 19, 2019
Twenty-nine states and some cities have minimum hourly wage rates above the federal $7.25 minimum.  Twenty states are raising their minimums again in 2019; some already are at the $15.00 widely-proclaimed living wage; other minimums are raised to $12.00 as part of annual step-ups to $15.00 by 2023.

Some minimum wage increase advocates say a person working full-time at the minimum wage should be able to support a family.  At $15.00 an hour, a full-time worker would earn $31,200 a year.  At $12.00, it would be $24,960.

According to the U.S. Department of Health and Human Services (www.healthcare.gov), the current “poverty line” for a family of three is $20,780; for a family of four, $25,100 and for five (mom, dad, three kids), $30,170.

Could a family of three to five people survive, let alone thrive, on $25,000 to $31,000 in New York, Chicago, Los Angeles or any other  major metropolitan area?

However well-intentioned, the minimum wage increase is – and has been since it went up from 75 cents to a dollar in 1954 – a temporary bandaid.  Necessary for folks at the bottom of the ladder, but still a short-lived benefit.

When the minimum wage increases, it has a ripple effect upwards, at least for the next four or five wage levels.  Since labor cost is a component of a company’s, a college’s, a non-profit’s and a government’s total costs, prices, tuition and institutional and government revenues must rise to cover higher costs – or organizations must be willing to absorb reduced profits or even losses – or take other steps to compensate for higher labor costs.

As these steps are taken, up the line from the local shop to the giant corporation, there are two effects: prices rise and organizations, especially businesses, strive to increase productivity – achieve the same -- or higher -- output with fewer labor hours.

Rising prices is the definition of inflation, eroding the value of the higher minimum wage until, in three or so years, it’s time to raise the minimum again.  That’s been going on since the federal minimum wage law went into effect in 1938 at 25 cents an hour, $10.00 a week.  (As a point of reference, my grandfather was a trolley car driver in Brooklyn in the late 1800s-early 1900s for $7.00 a week. Thirty years later, $10.00 wasn’t much of an advance)

The other effect of rising labor costs is increased automation, driving up productivity but reducing work opportunities for the less-skilled people at the bottom of the ladder, those the minimum wage increase was intended to benefit.

Nothing I’ve said here is a novel insight; it’s been said over and over every time the topic of increasing the minimum wage comes up.  The problem is the stance of the two sides: The proponents talk persuasively about the needs of people to earn a decent living; the opponents warn persuasively about the costs – high prices, fewer jobs for the un- and marginally-skilled worker.

Both are more-or-less right.  Higher wages help poor people.  Higher costs force prices up and/or efficiencies that reduce the need for labor.  Since nothing is done to adjust cause and effect, the cycle starts up again.

If the cost of the basics of life – food, clothing, shelter and an internet connection – somehow stays flat or rises less than the minimum wage rises, it’s likely the increased wage would provide a greater benefit to more people and last longer.  If more and more people emerge above the poverty line, however it’s defined, the benefit to the nation as a whole would be enormous.

Imagine what it would be like if the poorest people in the country had enough to eat, decent clothes, a non-leaky roof and an electronic link to the rest of the world (and of course, a good education) so they could climb from the bottom rungs up a few so the next cohort filling in below also could climb the ladder, following upward behind them -- paying higher taxes on increasing income, reducing the need for government aid and contributing to the nation's well-being.

How could that happen?  It would take a collection of wiser heads than mine, especially heads attached to the movers and shakers of government, labor, social movements and business – the people with most skin in the game – to put aside their self-interests to work it out.

Could that, would that ever, happen?  I hope so.  It’s the only answer I can see.
                                                                                                                            - Tom Mac Dermott

You can receive Clarion Group's newsletter, Dining Insights, in your postal mail box or via e-mail. Send your contact info to us at info@clariongp.com.  To learn about the services we offer, visit our website, www.clariongp.com or call Tom Mac Dermott, 603/642-8011 or Ted Mayer, 617/875-7882.

Are You a Co-Employer With Your Food Service Contractor?

            Companies, colleges and others who have outside contractors operating their on-site food services should beware of the risks they face in the rapidly evolving arena of employment law.  The widely publicized finding of the National Labor Relations Board General Counsel that McDonald’s is responsible for the employment actions of its franchisees is fair warning.

            The NLRB’s General Counsel has “found merit” in charges that McDonald’s and some of its franchisees “violated the rights of employees,” according to a NLRB press release.  “If the parties cannot reach settlement in these cases, complaints will issue and McDonald’s USA LLC will be named as a joint employer respondent.”

            Another warning comes in the NLRB’s current consideration of the relationship between companies and on-site contractors.  The case involves a company and its on-site service contractor.  A union is trying to have the company declared a joint employer who must participate in the collective bargaining between the contractor and the union.  The case is pending. 

             If these views stand, it isn’t a far reach to see how an organization could be held responsible for the employment actions of food service and other contractors on its premises.

             The U.S. Department of Labor, other regulators and labor unions have long tried to tie the host company or institutions to its service companies’ employees as a joint employer.  Sometimes, the host has made it easy to be linked – and held responsible financially – for actions over which it has, at best, only indirect control.

            The NLRB defines joint employment as when “two entities . . . share or co-determine those matters governing the essential terms and conditions of employment [including] matters relating to the employment relationship such as hiring, firing, discipline, supervision and direction.”

            When an organization requires its onsite food service contractor to submit candidates for key management positions and makes the selection itself, it’s opening the door to a finding that it is a joint employer.

            Other actions organizations often take that can lead to a finding that it is a joint employer with its on-site contractor include:

            • Negotiating with the contractor over the wage rates, pay raises and benefits the contractor offers its employees working on the premises.

            • Directing the contractor to promote, demote, transfer or take another action affecting one or more of the contractor’s employees.

            • Telling the contractor what hours its employees should work, rather than what hours of service to provide.

            • Paying bonuses or making other payments to the contractor’s employees or authorizing the contractor to make the payments and reimbursing the expense.

            • Treating the contractor’s employees as “members of the family” with privileges the same as, or similar to, those of its own employees – access to the on-site fitness center, for example.

            The basic defense against a claim of a joint employer relationship is a strong, clear statement in the operating contract that the contractor is the sole employer and has sole authority over all aspects of its employment relationships.    But if management interferes, even indirectly, in the actions of its on-site contractor related to the contractor’s employees and their wages, working conditions and the like, then the barrier created in the contract crumbles.

Clarion Group can analyze your dining and hospitality services and contractual relationship with your provider to help you avoid creating a joint employer relationship -- and improve operational and financial performance of you services.  For information, contact Tom Mac Dermott, president (603/642-8011 or TWM@clariongp.com) and visit our website, www.clariongp.com.

         

Ensure Your Food Service Operating Contract Protects Your Interests

The managers of corporate and campus food services and related hospitality services often make a mistake when they outsource these services by accepting the vendor’s "standard contract." Based on our experience, we recommend that you don’t accept this contract. It’s one-sided and not in your favor.

This isn’t the same situation as renting a car or buying a computer program where your options are take it or leave it. A food service contract, worth from several hundred thousand to many millions of dollars in sales, is much more important to the vendor than an individual customer is to a car rental company.

When we’re helping a Clarion Group client select a food service operator, we turn the tables and present the vendor with our "standard contract." We draft the contract in collaboration with our client’s attorney to ensure it’s fair to the vendor, but clearly delineates the vendor’s responsibilities and fully protects our client’s interests.

We’ve developed our contract format over two decades of food service consulting and adapt it to each client’s specific circumstances. Then we negotiate the final terms and conditions with the vendor, with our client’s participation and final approval.

Food service operating agreements used to be simple two- or three-page documents, but changing times and circumstances in the food service industry, government regulations and other factors have dictated that these agreements be much more detailed.

Important points to be included in a food service management contract, often omitted in the contractor’s proposed form:

• The vendor’s responsibilities should be clearly defined and the vendor should agree to perform its services to a high standard, defined as clearly as possible.
• The vendor should be an independent contractor, solely responsible for its employees and for its actions and not able to act as an agent for the client company. (If the vendor makes purchases or other commitments as the client’s agent, the client can be held liable for the vendor’s unpaid debts or other commitments.)
• The vendor has sole responsibility for the food it serves, from the farm field to the diner’s plate. Its program for ensuring the food it serves is wholesome, healthy and safe for consumption should be clearly described in the operating contract.
• Financial terms should be unambiguous, including the contractor’s responsibility for producing accurate operating statements promptly and providing satisfactory supporting material for its claims for reimbursement of costs. A contractor can produce financial statements within 10 days of an accounting period’s end date.
• Contractors receive rebate payments from their vendors, which they keep as additional income and do not disclose to clients. We have negotiated for our clients to receive a share of these rebates.
• The contract should be enforceable in your home state, not the vendor’s.

These are just highlights of the terms a food service contract should include. In our role as consultants, we level the playing field for our clients in their dealings with food service contractors because we know the players, their tactics and objectives. We ensure our clients have comprehensive, fair and enforceable contracts to guide their relations with their on-site service operators.

To learn how Clarion Group can ensure the operating agreement with your current or future food service contractor can be both fair to both you and the operator and fully protect your interests, contact us at info@clariongp.com or call Tom Mac Dermott, president, at 603/642-8011. 

Proposed OT Regulations Will Upset Management Structures

Proposed OT Regulations Will Upset Management Structures

April 14, 2014

Food service operators who are worrying about a possible increase in the minimum wage are looking in the wrong direction.

The federal government’s proposal to tighten regulations on exemptions from overtime pay has received little attention, but if implemented, will have a far greater and more immediate impact on corporate and campus food service operations that an increase in the minimum wage.

Operators will have to rethink and restructure their on-site food service management teams.

In March, President Obama directed the Department of Labor to revise the regulations covering the minimum salary level that exempts an employee with some supervisory responsibility from receiving time-and-a-half pay for work performed over 40 hours in a week. Currently, the minimum is $455 a week or $23,660 a year. Proposals for the new minimum are as high as $984 a week or $51,168 a year.

In contrast, the impact of a raise in the federal minimum wage from the current $7.25 to a proposed $10.10 an hour – when it happens – will be minimal. The minimum wage increase will be phased in over two or three years, cushioning its impact. Many states have already raised their minimum wages and federal contractors must pay at least $10.10 an hour. Few food service employees are paid less than $8.00 an hour now.

Federal law permits an employer to pay employees who have some supervisory responsibilities, such as overseeing two or three other employees and exercising some independent judgment in the performance of their duties, on a salaried basis. They aren’t compensated for hours worked beyond 40 in a week.

In a food service operation, these would be chef-managers, chefs who oversee other food preparation workers, assistant managers and many supervisor positions, such as shift leaders. Many of these positions don’t pay much more than the $23,660 minimum to qualify. When that minimum is raised, even to $35,000 or $40,000 a year, persons in those positions will no longer be exempt from time-and-a-half pay. Operators will have to raise salaries, redefine salaried positions or begin paying for overtime work on an hourly basis.

What ever course operators choose, their labor cost will rise, much more than it will when the minimum wage is increased.