In today’s episode, Doug Hall and Michele Welch dive deep and answer some of our customers’ and prospective customers’, most frequently asked questions. Whether you are currently working with a service company or looking to work with one for the first time, we cover many of the questions that come up during this process.
This episode is going to alleviate a lot of the confusion and headaches you may have about the process of working with a commercial kitchen repair company and what to expect. Being informed and educated about working with a foodservice company will save you time and money!
So Doug, what is the average hourly rate people are expected to pay when working with a professional service company?
Good question. In New York, street rate for a non-contracted commercial foodservice repair company is probably going to range from $115-$160 per hour. Currently Tek Express is $125/hour for customers that located in Manhattan. But the average hourly rate is dependent on the level of service that a customer signs up for. And what I mean by that is, if a customer has an account and they have us coming out to do specific contracted work, then very often the labor rates can be reduced; so it would be a negotiation to reduce the rate labor points based on the either the volume of work or the type or scope of work that is being called out for.
So you mentioned a street rate versus a contract rate, besides pricing are there any other advantages to having a contract in place?
Absolutely! Contracts can be customized. And what I mean customized, I mean not only for the scope of work that is performed but also for the price; and the frequency that the work is performed to fit the budget of just about any establishment. It really doesn’t matter whether we are talking about a chain restaurant, a hospital, a stadium, a hotel, or a corporate kitchen. It really doesn’t matter. What matters is, that at least for Tek Express, we would create a contract or a scope of a work that would directly relate to what the needs of the customer were.
If you need us there monthly, fine. If you need us there two times per year, that’s okay too. If you want us to sanitize all of your ice machines, we can put that in the contract. If you don’t want that, and you want to deal with that in an á la carte basis, then you can do that as well. But the most important thing is, the more scope of work that you sign up for should get you better pricing because then we can budget around that. We know what work we’re doing for you; we know what we can do for you and that’s an advantage pricewise.
There’s obviously other advantages about having a contract. A contract where a service company is visiting on a regular basis, means that your equipment is going to maintained more effectively; and the maintenance on your equipment on a more regular basis has a tangible, long-term effect on what you will pay during the life of your equipment.
So just like a car – if you keep changing the oil and checking the tires, and doing the right thing for a car, it’s going to last you far longer than if you never changed the oil and never changed the tires.
Awesome, great. So let’s change the conversation. I really want to discuss response times. Specifically, how quick can expect that a technician to be at their establishment if something should go wrong – if there walk-in cooler is no longer cooling or their stove is not working? What is that time expected?
Well, first off we understand that anyone that calls us from a commercial establishment is under the gun; and everything is an emergency. But in reality, it really isn’t an emergency. There are real definite emergencies.
For the most part, if you were to place a service call with us in the morning, we’d probably have somebody there by the afternoon anyway. But sometimes that is not even fast enough. So if you have a walk-in cooler or a walk-in freezer where the product is at risk, well six hours is not fast enough. We probably need to get somebody there within 2 hours or 4 hours so that we can save your product.
And it’s even less than 4 hours, probably more like 2 hours if we’re dealing with a plasma bank or a pharmacy refrigerator or a morgue refrigerator. We have to be there faster for certain hospitals. So the response time should be proportionate to the nature of the emergency. So as a general rule of thumb, things like a walk-in refrigerator or a walk-in freezer, a blood or a pharmacy refrigerator, or in some cases a dishwasher in a hospital – those are high priority items. Those are probably things that you should expect to see a technician in place between 2-4 hours.
If it’s your panini grill and you have seven other panini grills, well heck, maybe it’s okay to do that later in the afternoon. It’s not quite important to get somebody there immediately.
Okay. So what are some common discounts or packages for a company that subscribes to a long-term service?
That’s a really good question. You can really look at that as a two-part question. So first, is the labor rate. If we are there performing preventive maintenance and if we are there on a regular basis, you might even qualify or really deserve to get a package that is what we call an “unlimited labor package.” Which would mean essentially you pay one flat rate and there is no additional charge for labor. Unless it’s very specific kind of, very big, big scale projects. But for the most part, you can actually sort of prepay for labor upfront and if you have a lot of equipment and if you’re really using that equipment on a frequent basis then the sort of pay one price upfront is pretty good. It’s like the amusement park. You pay one price and if you want to ride the rollercoaster all day long, you can ride it an unlimited number of times. So that would be one of the discounts where you can really take advantage of having a technician there on an almost daily, maybe sometimes a couple of times per day basis, depending on what you need.
For the other side, one of things where you can be very creative is on parts pricing; and let me explain what I mean by that. Everybody thinks that you only need parts when things break down. That is not exactly the truth. You do need parts that are called ‘wear item parts.’ Wear item parts are things like, maybe like gaskets. They may be things like air filters. Believe it or not there’s grease filters and ovens that need to be changed. There’s casters on carts that wear down.
If you can, work with your service company, or if you would work with us, to say, “I need to go through X amount of these items per year.” Whether they are casters or gaskets or filters. We can discount those parts upfront and install them as the year go.
So there’s really a two-part discount. When we’re in a contract and we’re really with the customer, we can actually discount parts that we know we’re going to replace. What does that mean? That means that maybe every three months, or quarterly, we’re going to replace the grease filter. Chances are you’re already doing it anyway. But you build it into a service contract, you can ask for a discount, the filter get’s replaced under a PM, it’s not a separate service call, and you can discount the parts. That’s tremendous savings when you think about it that way.
Some great advice there Doug. So let’s move onto the question of mileage. I know that’s a question that comes up often. What would someone expect to pay in mileage charges and is there a difference if they do have a contract with a service company?
Of course. In New York City, mileage charges don’t often apply. We tend to call them travel charges. But geographically, the way that things are charged by service companies depends on where you’re located. So if you are in a more rural area, then it might be a mileage charge. That would be the way a service company would be able to compensate for the amount of time it takes for a technician to get there or the amount of miles they are traveling.
In New York City, as anybody who has been here, especially now around the holidays, well I don’t know. Try driving anywhere around the Rockefeller Center area when they’re lighting the Christmas tree. So you may go an 1/8 of a mile but it might take you three hours. So in New York City, it wouldn’t be uncommon for somebody to travel charge by the hour versus by the mile.
In our case, usually what we do is we pre-set an hourly travel charge because we are an urban environment. But if we are dealing with suburban areas, we may go to a mileage charge.
When you have a service contract, you can pre-negotiate some of those rates. So for some of our contract customers, for standard service hours, we may cap the travel at one hour. So even if we’re going into the city and we’re going to fix your restaurant in Rockefeller Center, and it’s the same day they are lighting the tree, it’s may take us 2-3 hours to get there, but if you’re a contract customer we might cap that at an hour for you so you wouldn’t you wouldn’t pay any more than an hour – in a case like that.
Overtime hours and times on weekends, the typical charge, you’re usually paying for a three hour minimum, for after hours work, for emergency work.
Well that’s definitely a great incentive to have a service contract in place, for sure. So how about payment? I know every service company is different. But how is payment usually managed between the customer and the service provider?
Just like anything else, as we develop a history with our customers we can move toward billing. And so probably, what we would do is say that a customer might start off with us on what we call a ‘COD’ basis. That means that, we might take a credit card over the phone. We might have their credit card and charge that credit card. We might accept a check in advance. We might accept a cash at the door kind of a thing. And that would be the way that we would start. For other establishments as we develop a history, we can go to setting terms. So our prefered method is that we bill you on a net 30 day basis and so we would send you a list of invoices, we would copy you with all the supporting material and would expect the customer to pay within 30 days.
But in some hospital worlds the payment terms are longer. Sometimes hospitals pay 45 days, or 60 days, or 90 days. Hospitals get that extension of terms because of the volume of work that they do and because of the labor rates they pay. So there’s always a trade-off.
But for the most part, we can accept cash, credit cards, and checks and eventually you would be on an open account, usually net 30 days.
So great. So basically like any vendor. If you have that relationship in place and if you’ve been working together for a long time, then you can always negotiate the payment. So, when looking for a service company what should they be looking out for, in terms of you know, they have different types of equipment from different manufacturers? Should they be working with one service company ideally that caters to all those manufacturers? What are your suggestions with that?
Well I think it’s important to know that the service company that you’re dealing with has relationships with certain manufacturers. How critical is that? It’s nice during the warranty period. It may affect parts availability. But, at the end of the day it’s about the experience that a service company has in fixing specific types of equipment. So if you’re interested in working with the service company and you are a chain restaurant, then you pretty much know that your equipment or your type of equipment is going to be pretty similar to any other chain location. So you’re gonna want to ask that service company if they deal with other chains. If you’re a hospital, there’s a specific set of equipment that you’re working with. If you’re a food production facility where you’re doing cook chilled and producing mass quantities of food, it’s important that your service company has experience in dealing with that.
From a manufacturers perspective, for the most part, service companies represent different manufacturers. And when they do that, I would think of that as an added bonus. So if, for instance, your service company is the manufacturers’ factory authorized service agent for a significant amount, or for some key pieces of equipment in your kitchen, that might something you may want to consider.
That means that we can factory training. We get a direct tie-line into the technical support area of those factories. It’s a plus, it’s a nice to have, it’s not necessarily the exact requirement. But for a company like Tek Express that has, or is the factory authorized service agent for well over 30 different manufacturers, that can be comforting for some of our clients because they know that we’re getting information directly from the factory and we’re dealing directly with the factory when it comes to training. So, it can help.
Great. So one last question. I know operational costs is a big problem with owner operators. So what are some things that they can do to reduce service and operational costs?
It’s a very good question. The simple fact of the matter is it comes down to what grandma used to say, “An ounce of prevention, is a worth a pound of remedy.” What I’m saying there is, if you’re getting your equipment looked at on a frequent basis and the frequency is completely dependent on heavy-duty use the equipment get, you are going to prevent catastrophic failures; because the catastrophic failures are the ones that cost big money.
You can’t predict them. You don’t know when they’re happening. You don’t know when your equipment is going to go down. But Murphy’s Law says, it’s going to happen at the worst possible moment. It’s going to happen after hours, on a weekend, on a holiday weekend and you’re going to pay through the nose for any service company to come and try to put that fire out.
Can a preventive maintenance program completely eliminate that from happening? Absolutely not! But what a preventive maintenance company can do is at least give you a heads up that it may be happening and I would guarantee you that over a course of a year, you would see less catastrophic repairs than if you didn’t have the preventive maintenance.
So any final words you want to share? Or do you think we covered it all?
Well, I think we’ve probably covered it. What I would suggest when you’re looking for a service company is make sure that they have the experience in dealing with your product, make sure that they have factory trained technicians, make sure that they can flex to your needs; and if they all do and they all can, then what you ought to do, is you ought to select a service company that you like the best – that you get along with the best. Because when equipment goes down, and it will, it’s important that you have somebody who you feel comfortable with, that you can trust, who can come in and make you feel comfortable.
Sometimes no matter how good a service technician is,or a service company is, there’s going to be a lead time for parts, there’s going to be a delay in getting that equipment up and running. You want to be working with a service company that’s going to communicate, reach out to you, and take this relationship from just being a billing event or a transactional event, to a personal event.
Think of it as in the old days, when a police officer would walk the beat. So if you were a store owner, you would know who the policeman is and you would know about him and you would talk to him or her and you would have a relationship with them.
So when the crime occurs, that police officer responds in a different manner. You kind of want that with your service company. When something goes down, how a relationship with your service company. Feel comfortable with them. Feel that you can count on them. Let them be the officer that’s walking the beat that you see on a frequent basis. So when bad things happen, you get better level of service.
I love it. I think what you said is right on point. It’s so important to work with a service provider that is not only reliable, but also someone you can communicate with and build that relationship over time.
Thank you so much Doug for sharing your expertise. I’m sure that people are going to get a lot of great value from this conversation. Whether they are in a situation where they’re looking for a new service provider or in transition and looking for a new one. So, thanks again!
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