Authenticity in Scaling the Vision: Defining Boundaries in the Food and Beverage Entrepreneurship Development Cycle

The October 2015 Food and Beverage Entrepreneurship Roundtable brought together over 30 food and beverage industry leaders, entrepreneurs, faculty, and students at the School of Hotel Administration at Cornell University. Discussion topics covered entrepreneurship in the food and beverage industry, including development, intrapreneurship, operational efficiency, beverage product development, and technology. The roundtable began with the presentation of a five-point framework on food and beverage venue development. The first three phases focused on the launch of a venue, including how to define the guest experience; the creation of operational functionality by strategically planning out the design, flow, and efficiency of a defined space; and development capacity. The remaining two points of the framework focused on post-opening considerations, including operating systems and culture development. Participants discussed the importance of culture in the growth of a business. They suggested that intrapreneurship needs to be fostered in the culture of an organization and in an educational curriculum for those who are preparing to enter the industry. Participants also discussed the fine balance between setting expectations for an experience and subsequently being able to maintain this experience in a fast changing environment. In particular they considered what it means to say no to customers. A discussion on the beverage industry focused on how to distribute products in a crowded marketplace. One method to ensure that the product gets into the hands of the consumers is face-to-face sales. Finally, in the technology session, the group discussed technology adoption, specifically focusing on the point at which technology detracts from the guest experience, how to minimize operational risk from technology, and how to maximize consumers’ adoption rates.

The Business Case for (and Against) Restaurant Tipping

Recent interest in replacing tipping with service charges or higher service-inclusive menu pricing prompted this review of empirical evidence on the advantages and disadvantages to restaurants of these different compensation systems. The evidence indicates that these different pricing systems affect the attraction and retention of service workers, the satisfaction of customers with service, the actual and perceived costs of eating out, and the costs of hiring employees and doing business. However, the author comes away from the data believing that the biggest reason for restaurateurs to replace tipping is that the practice takes revenue away from them in the form of lower prices and gives it to servers in the form of excessively high tip income. The biggest reason for restaurateurs to keep tipping is that it allows them to reduce menu prices, which increases demand. Thus, restaurateurs’ decisions to keep voluntary tipping or not should ultimately depend on the relative strengths of these benefits. The more that a restaurant’s servers are overpaid relative to the back of house and the wealthier and less price-sensitive a restaurant’s customers are, the more the owner of that restaurant should consider abandoning tipping. By this reasoning, many upscale, expensive restaurants (especially those in states with no or small tip credits) probably should replace tipping with one of its alternatives.

An Examination of Customers’ Attitudes about Table Top Technology in Full-Service Restaurants

This paper examines the influence of customer-facing technology in full-service restaurants. As a new addition to the service experience, tabletop devices offer the customer more control over the dining experience, and also increase customer participation in the service process, which has the potential to upset the traditional exchange between service providers and customers in restaurants. To examine how customers react to the use of tabletop devices, this study examines 1,343 point-of-sales transactions from 20 units of a full-service casual dining restaurant chain and matches customer in-restaurant transactions to their reactions to tabletop devices used during their meals. Results show that over 70% of the customers who used tabletop devices reported positive affect toward the device, with approximately 79% of customers reporting that the device improved their experience, citing convenience, ease of use, and credit card security as some benefits of using the technology. Approximately 80% of the customers who used the device reported that they would return to the restaurant because of the positive affect. The results also indicate that likeability of the device and tip percentage were positively and significantly connected to customer reports of the devices having a positive effect on experience and on desire to return. In addition, when customers reported increased return intentions, likeability of the device was higher regardless of reports of the device improving restaurant experience, showing that the introduction of tabletop devices had a positive effect for most—but not all—customers.

Does Tipping Help to Attract and Retain Better Service Workers?

A survey of several hundred restaurant servers in the United States found that servers’ attitudes toward working for tips and average tip sizes were weakly related (at best) to their service-orientation, intended job-tenure, and occupational-tenure. These findings suggest that tipping does not substantially help to attract and retain more service-oriented workers. Restaurateurs can eliminate tipping at their restaurants without fear that doing so will reduce the quality of their wait-staff.

Early Bird & Night Owl Evaluation Tool (EBNOET) v2015

The early bird and night owl restaurant tool found in the accompanying Excel file provides an estimate of the effects of offering off-peak special menu prices. Unlike the classic back-of-envelope calculation, the tool includes the effect of anticipated cannibalization of full-price covers and seeks to optimize table use. The tool also considers the revenue from new customers attracted by the early bird or night owl promotions, as well as the level of increased business needed to achieve the net monetary value target for the promotion.

FRESH: A Food-service Sustainability Rating for Hospitality Sector Events

This report presents a metric called FRESH (for Foodservice Impact Rating for Environmentally Sustainable Hospitality Events). FRESH can be used to evaluate the performance of any foodservice meal period or event in the hospitality sector with regards to its sustainability, based on seven measurements. These measures are: a (post-consumer) food-waste indicator, a no-show indicator (when unexpectedly few people show up), an over-show measure (when too many people show up), a planning indicator (measuring intentional overproduction), a portion-size indicator (measuring per-guest consumption against expectations), an economies of scale indicator, and a post-event indicator (which depends on disposal approaches). FRESH can help managers, authorities, and potential guests evaluate the sustainability of food production in any establishment.

The Influence of Table Top Technology in Full-service Restaurants

The use of tabletop technology continues to grow in the restaurant industry, and this study identifies the strengths and weakness of the technology, how it influences customers, and how it can improve the bottom line for managers and business owners. Results from two studies involving a full-service casual dining chain show that dining time was significantly reduced among patrons who used the tabletop hardware to order or pay for their meals, as was the time required for servers to meet the needs of customers. Also, those who used the devices to order a meal tended to spend more than those who did not. Patrons across the industry have embraced guest-facing technology, such as online reservation systems, mobile apps, payment apps, and tablet-based systems, and may in fact look for such technology when deciding where to dine. Guests’ reactions have been overwhelmingly positive, with 70 to 80 percent of consumers citing the benefits of guest-facing technology and applications. The introduction of tabletop technology in the full-service segment has been slower than in quick-service restaurants (QSRs), and guests cite online reservation systems, online ordering, and tableside payment as preferred technologies. Restaurant operators have also cited benefits of guest-facing technology, for example, the use of electronic ordering, which led to increased sales as such systems can induce the purchase of more expensive menu items and side dishes while allowing managers to store order and payment information for future transactions. Researchers have also noted the cost of the technology and potential problems with integration into other systems as two main factors blocking adoption.

Black-White Wage Gap Among Restaurant Servers: A Replication, Extension, and Exploration of Consumer Racial Discrimination in Tipping

There is a rich history of social science research centering on racial inequalities that continue to be observed across various markets (e.g., labor, housing, and credit markets) and social milieus. Existing research on racial discrimination in consumer markets, however, is relatively scarce and that which has been done has disproportionately focused on consumers as the victims of race-based mistreatment. As such, we know relatively little about how consumers contribute to inequalities in their roles as perpetrators of racial discrimination. In response, in this paper we elaborate on a line of research that is only in its’ infancy stages of development and yet is ripe with opportunities to advance the literature on consumer racial discrimination and racial earnings inequities among tip dependent employees in the United States. Specifically, we analyze data derived from a large exit survey of restaurant consumers (n=378) in an attempt to replicate, extend, and further explore the recently documented effect of service providers’ race on restaurant consumers’ tipping decisions. Our results indicate that both White and Black restaurant customers discriminate against Black servers by tipping them less than their White coworkers. Importantly, we find no evidence that this Black tip penalty is the result of interracial differences in service skills possessed by Black and White servers. We conclude by delineating directions for future research in this neglected but salient area study.

Pooling Restaurant Reservations to Increase Service Efficiency

This paper examines whether restaurant reservations should be locked to specific tables at the time the reservation is made, or whether the reservations should be pooled and assigned to tables in real-time. In two motivating studies, we find that there is a lack of consensus in the restaurant industry on handling reservations. Contrary to what might be expected based on research that shows the benefits of resource pooling in other contexts, a survey of 425 restaurants indicated that over 80% lock reservations to tables. In two simulation studies, we determine that pooling reservations enables a 15-minute reduction in table turn times more than 15% of the time, which consequently increases service efficiency and enables a restaurant to serve more customers during peak periods. Pooling had the most consistent advantage with higher customer service levels, with larger restaurants, with customers who arrive late, and with larger variation in customer arrival time.