This tweet caught my eye:
Notice that sales have recently increased much faster than employment. A bit of that might be inflation, but surely that cannot explain such a massive divergence occurring over just a few months. Another part of the increase might reflect a make-up rise in productivity after the recent recession. But even that cannot explain the size of the increase.
More likely, the productivity numbers seem higher because restaurants are understaffed. I base that claim on three facts:
1. Personal observation. In recent weeks I’ve experienced some of the worst restaurant service in my entire life, most notably long waits in line at times of day when there would normally be no line at all.
2. News reports. There are many stories in the media indicating that restaurants are severely understaffed.
3. Logic. How could restaurant productivity all across the country soar in a period of just a few months, after rising at very slow rates from almost the beginning of recorded history? If there were some incredible recent technological breakthrough in providing restaurant services, wouldn’t we all have heard of it?
Restaurants had the option of raising prices enough so that sales matched the staffing levels available to serve customers, but prices are sticky in the short run for all sorts of reasons.
To summarize, restaurants have recently become more “productive” in the sense of delivering more pounds of food per worker. But in terms of actual economic productivity—delivering a nice experience to customers—I see no evidence of a recent surge in restaurant productivity.
READER COMMENTS
Brett
Jul 22 2021 at 1:37pm
There are a few pieces of technology that can really up restaurant productivity, but which weren’t as widely used before the pandemic. Those self-check-out pads at sit-down restaurants, for example. I could see that playing a role, since you then don’t need as many waiters doing cashier duty.
Online ordering and pick-up helps in that regard as well – not as many cashiers needed. A lot of places that didn’t have that option have it now.
Andrew_FL
Jul 22 2021 at 1:47pm
Self check-out doesn’t raise productivity it simply puts a certain part of production onto the consumer. Are you, as a consumer, doing any less labor on your order than the cashier was? Are you adding any more value than the cashier was? No? Then no actual productivity increase has happened, the labor time has just been moved out of the measured statistics.
Scott Sumner
Jul 22 2021 at 3:06pm
Yes, that’s my view too.
Lizard Man
Jul 22 2021 at 9:29pm
Have you have ever gone to a restaurant in China and used WeChat to order and pay for food? My own personal experience is that it is way more convenient and a nicer experience than having a water come and take your order, then input your order into a POS system to send it to the kitchen, then monitor your table to try to give you the bill at the appropriate time, then you have to check the bill and wait for the waiter to come and pick it up with your credit card, and then process the payment and return the receipt to you.
With ordering using WeChat and QR codes, you see pictures of the menu items before selecting them, you don’t have to wait for the server to take your order, and you don’t have to wait for them to process the payment. And they bring the receipt before bringing the food so that mistakes get fixed before the meal, not at the end when you are ready to leave the restaurant. Also, the wait staff then is much more able to focus on clearing empty dishes from the table, and keeping your cup full. Which just makes for an overall more pleasant experience, and I would bet that it also leads to faster turnover of tables. And a superior experience, especially if you hate slow service.
Restaurants might be one sector in China that actually has higher productivity than in the US, especially if you roll meal delivery into the measurements as well.
Scott Sumner
Jul 23 2021 at 12:11pm
Yes, my wife used WeChat when we visited China in 2019. I didn’t notice a huge change in productivity, but we probably did not use all the functions.
A
Jul 23 2021 at 7:20pm
Self-checkout usually increases transactions in a given period, particularly during rush hours. Waiting in line is a type of labor too, and turning that into checkouts is low hanging productivity fruit.
Jerry Brown
Jul 22 2021 at 5:02pm
From the restaurant’s point of view the waiter that does not have to process the payment can be using that time to serve other customers and therefore is increasing productivity. That you have to do the payment process yourself is just an added cost to the transaction from your perspective- but it still adds to the productivity of the workers at the restaurant because they can use that time in other ways.
JFA
Jul 22 2021 at 6:06pm
This seems incorrect to me. For a restaurant visit: You go to the restaurant, you look at the menu, you wait for the food, you wait for the staff to take your order, you wait for someone to bring your food, you wait for some to bring the check, then you wait for someone to pick up your check (I’m starting to wonder why the staff member rather than the customer is called the waiter).
With online ordering (and in store pickup): you still go to the rest and look at the menu, but everything else is completely different. There is far less waiting. When I pick up food from a restaurant, I’m there for maybe 5 minutes. There are some meals that don’t travel well, so there are some things that might not get produced. But overall I can’t see how productivity wouldn’t increase.
The same story holds for self checkout (at least at sit down restaurants). There is far less waiting. You don’t have to wait for the staff to take your order, bring your bill, pick up your payment, and finally bring you a receipt. Some places let you ping the waiter when you need their services. How can this not increase productivity. I bet it increases table turnover quite a bit.
Scott Sumner
Jul 22 2021 at 6:14pm
If that’s what consumers wanted then restaurants would have been doing that before Covid. It’s clear to me that the quality of service is declining, at least in Orange County.
BTW, there are also longer lines to pick up take out orders.
Garrett
Jul 22 2021 at 6:22pm
I agree that restaurant service has clearly declined, but by this logic either work from home policies would’ve been more flexible pre-covid or people don’t really like working from home as much as it seems like they claim to. I think there might be a way to explain this economically; information costs?
JFA
Jul 23 2021 at 6:42am
“BTW, there are also longer lines to pick up take out orders.” Dubious claim. Having had to regularly wait 1-2 hours to get a seat at a restaurant (if they didn’t take reservations) before the pandemic, I have never had to wait that long to get an online order, especially now that you can schedule the pick up time at most restaurants (and if I somehow had to wait that long, I can do other things at home before going to the restaurant, rather than having to just sit and wait at the restaurant). If you are facing longer wait times with online ordering, you’re doing it wrong.
I agree that some aspects of the dining-in restaurant experience have declined (you are almost certainly waiting longer), but couldn’t the extensive use of online ordering just be revealed preference. Over the pandemic more people became familiar with online ordering and now it could be the case that many who would rather not do all the waiting now think of ordering online has a good alternative for their meal.
Also, “delivering a nice experience to the customer” has never been *the* definition of “actual economic productivity”. That is only characteristic of the service. You would have to do some hedonistic adjustment to say whether or not the productivity has changed. When you say you see no evidence of a surge in restaurant productivity, what you are saying is that the increase in revenue per employee is offset (at least equally) by a decline in the quality of service.
derek
Jul 23 2021 at 10:08am
Look at the rise of fast-casual over the past several years. It seems very clear that this is in fact what consumers wanted pre-covid, but that pandemic conditions caused an acceleration in the shift.
I know that I now sometimes have trouble persuading people in my family to actually go to a restaurant instead of getting takeout to eat at home in pajamas.
Matthias
Jul 23 2021 at 7:58pm
In Singapore some of these trends were starting before the pandemic.
Eg the ‘order via restaurant provided iPad’.
One reason I can see why restaurants are slow to change is that above the lowest tier, restaurants are a very socially normed experience. So change can be a bit slow.
Similar to how it took a while for restaurants and bars to switch from life music to canned music.
MarkW
Jul 23 2021 at 9:07am
Self check-out doesn’t raise productivity it simply puts a certain part of production onto the consumer.
I disagree. With self-order and payment, nobody (neither customer nor employee) is having to walk back and forth from table to kitchen and cash register with orders and then bills and credit cards and receipts. If an online menu is done well it doesn’t take any longer to order than it does to read a paper menu and decide. And transcription and/or waitstaff memory errors are eliminated.
Lastly, one of the common ‘productivity’ killers for me is waiting for the bill and waiting to sign the credit card receipt before being able to leave. With electronic payment, you can leave as soon as you’re ready. It also eliminates having to wait for a waiter to come back by the table and see if you’d like anything else. If you want something else, you pull out your phone and it’s on its way. I hate waiting.
Scott Sumner
Jul 23 2021 at 12:14pm
OK, but I still have to wait for the bill when we eat out.
MarkW
Jul 23 2021 at 12:22pm
No you wouldn’t have to wait for the bill. Our recent experience with this was that you:
Scan the QR code at your table to get to the menu (includes the table # so they know where you are)
Select your food and drink choices
Enter your credit card information
Either pay in full at that point or leave the tab open
Staff brings your order when its ready
Order more if you want via the mobile web site
When ready to go, close out, add tip, hit ‘OK’ and go on your merry way.
Ken P
Jul 23 2021 at 12:44pm
Good point Andrew. Pushing work onto customer is not improved productivity.
Some restaurants I go to switched to ordering up front like McDonalds to reduce staff and get rid of menus. Every staff member reduces available occupancy. Most restaurants have raised prices. The same meals are costing me 30-60% more. Maybe prices were raised to be profitable with the number of customers allowed in building during restrictions?
On the plus side, some restaurants are now allowed to have outdoor seating that were previously not due to local regulation.
Aaron
Jul 22 2021 at 2:45pm
I would agree that probably 80% of the increase in “productivity” is a mirage, but technology is playing a role here too.
During the pandemic, a local brewery started putting QR codes on tables that link to an interactive menu that let you order and pay for beer and food. Someone then brings it to you once the order is placed. Previously, you would have to wait in line at the bar, and there was usually a wait in between orders as customers held up the line trying to figure out their order. The current set up seems much more efficient, if a bit impersonal. I haven’t seen this model in a lot of places yet, but it seems like a legitimate increase in restaurant productivity, even if I doubt it explains the entire trend here.
Alan Goldhammer
Jul 22 2021 at 6:47pm
The explanation could be as simple as restaurants were not prepared for a surge in business and many wait servers moved on to doing other things. We observed that airlines are experiencing the same problem in terms of providing service.
Most of our friends who are in the over 60 cohort are still uncomfortable about dinning inside. On a recent visit to Oakland all of our meals were outside.
Phil H
Jul 22 2021 at 8:59pm
There are three bits of technology that are reducing the number of waitstaff required where I live (southern China).
First is QR code ordering, as noted by Aaron in a comment above. I would say most cheap restaurants here now encourage you to scan the code, which makes a menu pop up on your phone, and you place the order there, rather than involving a waiter.
Second is continuing increased use of delivery food. Chinese cities are very dense (we all live in highrises), so food delivery makes sense here in a way that it may not in American cities, but I’m sure it’ll come to other parts of the world as well.
Third is waiter robots. These are cute little gizmos that the chefs load plates onto, and they can navigate their way around the tables. Of course, as yet, they can’t solve the hard problem of placing the food on the table, so a waiter is still involved in that. But if they can bring and present plates for diners to grab, a bit like a sushi conveyor, this model could work and could eventually displace waiters.
But still, it remains true that at the moment all of these three represent a degradation of the restaurant experience, and it’s not yet clear whether any of them will stick.
Lizard Man
Jul 22 2021 at 9:33pm
I just posted a comment above about eating out at restaurants in China, and how much I like QR ordering. My suspicion is that QR ordering can be used to reduce headcount, which would be utilized more by cheap restaurants, or to increase table turnover while still maintaining an attentive wait staff, which would be used by nicer restaurants.
MarkW
Jul 23 2021 at 8:22am
I’ve experienced extremely slow service recently too. Not unfriendly or inattentive staff, just very slow food preparation. However, I’ve also experienced order and payment entirely by a web site brought up by a QR code laminated onto the table (so they no not only what food has been ordered but which table). No staff required to take orders or handle paying the bill (and, BTW, there’s no possibility of people running out and not paying their bill — a credit card is required to order). This certainly seemed like a significant productivity boost.
Scott Sumner
Jul 23 2021 at 12:17pm
One thing I hate is when they say there’s no menu—“use your phone”. I usually don’t have my phone with me if I just go out for lunch. Why would I?
Or they don’t take cash. There are lots of annoying changes occurring all the time.
MarkW
Jul 23 2021 at 7:09pm
I usually don’t have my phone with me if I just go out for lunch. Why would I?
Lol — you’re not that much older than me, but you made me feel young. Asking ‘Why would I have my phone?’ at this point seems somewhere between ‘Why would I bring my wallet?’ and ‘Why would I be wearing pants?’. I’ve found the phone ordering places pretty much always have regular menus if you ask.
Scott Sumner
Jul 24 2021 at 12:04pm
I’m serious. Why would someone going out for lunch, or shopping, or to a movie need to bring their phone along? I didn’t need one in 1990, why now?
MarkW
Jul 24 2021 at 4:54pm
Seriously? In 1921 might have said something similar about 1890 — “I didn’t need a phone in my house then, why now?” One of my kids’ favorite movies when they were little was My Father’s Glory which takes place just after the turn of the 20th century. There’s a scene where rich Uncle Jules is showing off his new house. When asked if he has a telephone, he says “What? And have people ring me like a servant? No, I’ll never have one of those!”
So, yes, things have changed since 1990. Almost everybody carries a phone routinely and the world is taking advantage. It’s pretty much the same as expecting people to have Internet access (even though they didn’t need that in 1990 either — U.S. internet use in 1990 was in the low single digits).
Steve
Jul 23 2021 at 11:54am
How do Seamless, Grubhub, etc fit into this equation? I would guess they aren’t even included. Maybe this is not unique to last few months but a huge shift to restaurants making the same revenue but just handing off the “service” portion to a delivery driver could make it look like the above graph.
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