Productivity Analysis

Abstract

On-site food service has evolved into a major segment of the multiunit restaurant industry, with 1998 sales expected to exceed $80 billion. Surprisingly, productivity analysis of on-site food service is still performed using measures that fail to capture the complexity of today's operations. Traditional partial-factor productivity measures do not account for relationships among resources. Labor productivity, in particular, is often used as a surrogate for overall operational performance, without regard to other relevant variables. Aggregate and multiple-factor measures are more robust, meaningful measures than partial-factor measures for analyzing actual operational productivity. Moreover, multiple-factor productivity measurement allows managers to compare diverse operations. Using multiple-factor or aggregate productivity measures, as outlined in the article, allows managers to compare self-operated units with contracted operations, thereby providing a basis for such decisions as whether to outsource. Properly conceived and applied measures enable managers to evaluate the relationships between productivity and management policies. They serve as a barometer for monitoring the effectiveness of operational changes such as new production methods, integration of work teams, and implementation of new technology.