Cheesecake capitalism

Atul Gawande, best known for his writings on health care, has a new article which begins with a description of dinner The Cheesecake Factory:

The place is huge, but it’s invariably packed, and you can see why. The typical entrée is under fifteen dollars. The décor is fancy, in an accessible, Disney-cruise-ship sort of way: faux Egyptian columns, earth-tone murals, vaulted ceilings. The waiters are efficient and friendly. They wear all white (crisp white oxford shirt, pants, apron, sneakers) and try to make you feel as if it were a special night out. As for the food—can I say this without losing forever my chance of getting a reservation at Per Se?—it was delicious. 

The chain serves more than eighty million people per year. I pictured semi-frozen bags of beet salad shipped from Mexico, buckets of precooked pasta and production-line hummus, fish from a box. And yet nothing smacked of mass production. My beets were crisp and fresh, the hummus creamy, the salmon like butter in my mouth. No doubt everything we ordered was sweeter, fattier, and bigger than it had to be. But the Cheesecake Factory knows its customers. The whole table was happy (with the possible exception of Ethan, aged sixteen, who picked the onions out of his Hawaiian pizza). 

I wondered how they pulled it off. I asked one of the Cheesecake Factory line cooks how much of the food was premade. He told me that everything’s pretty much made from scratch—except the cheesecake, which actually is from a cheesecake factory, in Calabasas, California.

Wanting to know how The Cheesecake Factory was able to churn out high-quality fare at a competitive price at its many locations, Gawande went behind the scenes at one of its restaurants. What he found is fascinating:

To show me how a Cheesecake Factory works, [manager Dave Luz] took me into the kitchen of his busiest restaurant, at Prudential Center, a shopping and convention hub. The kitchen design is the same in every restaurant, he explained. It’s laid out like a manufacturing facility, in which raw materials in the back of the plant come together as a finished product that rolls out the front. Along the back wall are the walk-in refrigerators and prep stations, where half a dozen people stood chopping and stirring and mixing.

The next zone is where the cooking gets done—two parallel lines of countertop, forty-some feet long and just three shoe-lengths apart, with fifteen people pivoting in place between the stovetops and grills on the hot side and the neatly laid-out bins of fixings (sauces, garnishes, seasonings, and the like) on the cold side. The prep staff stock the pullout drawers beneath the counters with slabs of marinated meat and fish, serving-size baggies of pasta and crabmeat, steaming bowls of brown rice and mashed potatoes. Basically, the prep crew handles the parts, and the cooks do the assembly. 

Computer monitors positioned head-high every few feet flashed the orders for a given station. Luz showed me the touch-screen tabs for the recipe for each order and a photo showing the proper presentation. The recipe has the ingredients on the left part of the screen and the steps on the right. A timer counts down to a target time for completion. The background turns from green to yellow as the order nears the target time and to red when it has exceeded it. 

I watched Mauricio Gaviria at the broiler station as the lunch crowd began coming in. Mauricio was twenty-nine years old and had worked there eight years. He’d got his start doing simple prep—chopping vegetables—and worked his way up to fry cook, the pasta station, and now the sauté and broiler stations. He bounced in place waiting for the pace to pick up. An order for a “hibachi” steak popped up. He tapped the screen to open the order: medium-rare, no special requests. A ten-minute timer began. 

...I brought up the hibachi-steak recipe on the screen. There were instructions to season the steak, sauté the onions, grill some mushrooms, slice the meat, place it on the bed of onions, pile the mushrooms on top, garnish with parsley and sesame seeds, heap a stack of asparagus tempura next to it, shape a tower of mashed potatoes alongside, drop a pat of wasabi butter on top, and serve. 

...[Mauricio] put the steak dish under warming lights, and tapped the screen to signal the servers for pickup. But before the dish was taken away, the kitchen manager stopped to look, and the system started to become clearer. He pulled a clean fork out and poked at the steak. Then he called to Mauricio and the two other cooks manning the grill station. 

“Gentlemen,” he said, “this steak is perfect.” It was juicy and pink in the center, he said. “The grill marks are excellent.” The sesame seeds and garnish were ample without being excessive. “But the tower is too tight.” I could see what he meant. The mashed potatoes looked a bit like something a kid at the beach might have molded with a bucket. You don’t want the food to look manufactured, he explained. Mauricio fluffed up the potatoes with a fork. 

I watched the kitchen manager for a while. At every Cheesecake Factory restaurant, a kitchen manager is stationed at the counter where the food comes off the line, and he rates the food on a scale of one to ten. A nine is near-perfect. An eight requires one or two corrections before going out to a guest. A seven needs three. A six is unacceptable and has to be redone. This inspection process seemed a tricky task. No one likes to be second-guessed. The kitchen manager prodded gently, being careful to praise as often as he corrected. (“Beautiful. Beautiful!” “The pattern of this pesto glaze is just right.”) But he didn’t hesitate to correct. 

“We’re getting sloppy with the plating,” he told the pasta station. He was unhappy with how the fry cooks were slicing the avocado spring rolls. “Gentlemen, a half-inch border on this next time.” He tried to be a coach more than a policeman. “Is this three-quarters of an ounce of Parm-Romano?” 

...The managers monitored the pace, too—scanning the screens for a station stacking up red flags, indicating orders past the target time, and deciding whether to give the cooks at the station a nudge or an extra pair of hands. They watched for waste—wasted food, wasted time, wasted effort. The formula was Business 101: Use the right amount of goods and labor to deliver what customers want and no more. Anything more is waste, and waste is lost profit. 

I spoke to David Gordon, the company’s chief operating officer. He told me that the Cheesecake Factory has worked out a staff-to-customer ratio that keeps everyone busy but not so busy that there’s no slack in the system in the event of a sudden surge of customers. More difficult is the problem of wasted food. Although the company buys in bulk from regional suppliers, groceries are the biggest expense after labor, and the most unpredictable.  

Everything—the chicken, the beef, the lettuce, the eggs, and all the rest—has a shelf life. If a restaurant were to stock too much, it could end up throwing away hundreds of thousands of dollars’ worth of food. If a restaurant stocks too little, it will have to tell customers that their favorite dish is not available, and they may never come back. Groceries, Gordon said, can kill a restaurant. 

The company’s target last year was at least 97.5-per-cent efficiency: the managers aimed at throwing away no more than 2.5 per cent of the groceries they bought, without running out. This seemed to me an absurd target. Achieving it would require knowing in advance almost exactly how many customers would be coming in and what they were going to want, then insuring that the cooks didn’t spill or toss or waste anything. Yet this is precisely what the organization has learned to do. The chain-restaurant industry has produced a field of computer analytics known as “guest forecasting.” 

“We have forecasting models based on historical data—the trend of the past six weeks and also the trend of the previous year,” Gordon told me. “The predictability of the business has become astounding.” The company has even learned how to make adjustments for the weather or for scheduled events like playoff games that keep people at home. 

A computer program known as Net Chef showed Luz that for this one restaurant food costs accounted for 28.73 per cent of expenses the previous week. It also showed exactly how many chicken breasts were ordered that week ($1,614 worth), the volume sold, the volume on hand, and how much of last week’s order had been wasted (three dollars’ worth). Chain production requires control, and they’d figured out how to achieve it on a mass scale.

Pause for a moment to consider how amazing all of this is. From the use of standardization to the deployment of technology to the obsession with quality control, The Cheesecake Factory goes to extraordinary lengths to deliver value to its customers. It has made a virtual science out of something as ordinary as restaurant food. Does the company do this because it truly has a love affair with its customers, or because all of its employees are exceedingly kind and generous human beings? Unlikely. Rather, it's done in the pursuit of profits, which are typically attained by providing products and services that people enjoy or find useful at a price they are willing to pay. 

This is the very essence of capitalism. Excellence is rewarded, while waste and poor quality are ruthlessly punished. Remember, in a pure capitalist environment, profits are nothing more than the reward for a job well done. It's essentially the complete opposite of the public sector, which is synonymous with mediocrity and vast amounts of waste. The profit-driven system trumps the politics-driven system virtually every time.

This, ultimately, is the great frustration of the libertarian. Given the choice between capitalism and government, the libertarian wants as much of his/her life as possible governed by the former. The left, meanwhile, takes the opposite tact, dedicating itself to the restraint of capitalism and the promotion of government. It's a philosophy that, given the overwhelming preponderance of evidence, is nearly impossible to understand.