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The Productivity Paradox

by Rick Shoffstall

Uncertain Times

These are indeed perilous economic times. The list of indicators is staggeringly broad and deep: real estate, stock markets, consumer confidence, federal and state budgets threatening insolvency, volatile commodity pricing, and the latest sovereign debt fears. With our economy driven largely by consumer spending (at nearly 70% of GDP), it is no revelation that restaurant companies are finding it increasingly difficult to grow and finance their businesses. Clearly, a competitive advantage is needed to gain a foothold in this rocky economy.

Zero-Sum Game?

In the eyes of many proprietors, one can either compete on service or cut costs, in a mutually exclusive showdown of sorts. One of my clients memorably labeled this dichotomy, "high touch vs. high efficiency." On the one hand, only impeccable service can maintain the customer’s fickle interest when expectations are sky-high for their exceedingly scarcer dining out occasions. However, if service comes at the expense of profits, one can only wonder if a restaurateur is engaged in a battle that will surely drain the coffers all too quickly. Besides, profit is the lifeblood of all business. Perhaps, an aggressive cost-cutting campaign is in order, as a means of riding out the storm until the consumer fully returns, pockets flush with discretionary cash?

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