Continuing to walk towards Jon and Adam Schlegel’s celebrated Snooze: An A.M. Eatery location at Denver’s Union Station was an act of pure optimism. I’d already called ahead and learned that it would take another hour for a table for two to open up. Still, I kept walking, with an entrepreneur’s confidence that I could find a way around the system — some way to skip the line. I checked in with the maître d’ who explained that, yes, there was a 60-75 minute wait for a table for two. I looked at the stunning surroundings of the recently renovated station and the lovely Colorado last-day-of-summer day outside and an idea sprang into mind. Could I order takeout? Yep, no problem. Here’s a menu. What would I like? A breakfast burrito. OK. It’ll be out in five minutes.
A “rate-determining step” is the step in a process that determines how fast that process can go. I’ve heard the same concept referred to as “the long pole in the tent.” Put another way, it’s the answer to the question: “what’s really slowing you down?” For the past ten years, I’ve spent many of my waking hours thinking about rate-determining steps at restaurants and how to neutralize them to speed the process. Maybe I’m an Ops guy at heart. I’ve always felt that there had to be ways for restaurants to move faster than they do and that technology and innovative thinking could be key tools in the process.
My visit to Snooze got me thinking about their rate-determining step (tables) and how this differs from the takeout-oriented brands that Olo has worked with over the past nine plus years in the business of helping restaurants provide faster, more accurate and more personal service to their loyal customers. For most fast casual restaurants lucky enough to have a rate-determining step present itself, it tends to be front of house order taking and payment tendering capacity that slows down the customer’s experience from walk-in to food-in-mouth. The restaurant has a back of house capacity to produce more orders or produce orders ahead of the customer’s arrival at the counter, but they have an outdated process for order entry and payment at the front of the house and that capacity does not scale. It’s constrained by the fixed number of terminals on the counter. These restaurants have come to understand that decentralizing the order taking and payment tendering process and putting it in the hand of the customer on his own smartphone is the easiest way to neutralize the order taking terminals rate-determining step.
Treat-oriented brands (e.g. customized/personalized cakes) actually have store hours as their rate-determining step. That is, in the traditional business model, customers must place orders in advance for their customized/personalized order and are oftentimes working or otherwise tied up during the store’s open hours. When we help the store to enable digital ordering twenty-four hours a day and seven days a week, it enables the store to accept prepaid and customized orders anytime that is most convenient for their customers, neutralizing the store hours’ rate-determining step.
Some brands have very small grills and therefore production capacity is their rate-determining step. For these brands, the solve was to enable them to provide customers with transparency into their capacity by creating a digital representation of their production capacity through setting product-level prep times and thresholds for order throttling. This has the impact of smoothing out the customer demand curve to place orders for pickup at off-peak times, which gives restaurants with limited production capacity more of an opportunity to run at peak production capacity, neutralizing the production capacity rate-determining step.
At Snooze, there were plenty of servers to take orders (no order taking terminal rate-limiting step), they were open for business (no store hours rate-determining step) and there was evidently plenty of grill space to make my breakfast burrito (no production capacity rate-limiting step). But there were no tables. Snooze, like many popular casual dining brands and fine dining restaurants, had tables as their rate-determining step. My willingness to eat outside on a nearby marble bench and Snooze’s willingness to serve me my breakfast burrito as a takeout order neutralized the tables’ rate-determining step.
Beyond these fixed rate-determining steps (order-taking terminals, store hours, production capacity, tables) there are of course also variable rate-determining steps (front of house employees, back of house employees, ingredients, and packaging). But by identifying your rate-determining step(s) and using the technology and innovative thinking that digital ordering enables to overcome it/them, your brand can contain its operational challenges to properly managing these variable rate-limiting factors (scheduling and inventory) to match demand. That’s the key to achieving maximum production efficiency and improving your top-line sales and bottom-line profitability.
Noah Glass is the Founder & CEO of Olo. Since 2005, Olo has helped restaurant brands increase revenue per square foot by delivering faster, more accurate, and more personal service through digital ordering. Today, over 9 million consumers use the Olo platform to order ahead and Skip the Line® at the restaurants they love.
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