Project: I worked with Touchpoint Media on articles for a Bank of America small business microsite. This assignment was to write an article to help restaurant owners and managers with employee recruitment and retention.

I was given the topic and it was my job to find the sources and resources to include.

This article is no longer online so I’ve included the copy here:

Finding and keeping the best employees in the restaurant industry

Franchise restaurants are well known for high turnover rates and experts say the broader industry trends aren’t expected to improve anytime soon. In 2014, the foodservice industry’s annual turnover rate across segments was 94 percent for hourly employees and 34 percent for managers, according to the 2015 Restaurant Industry Recruitment & Turnover Report by Dallas-based People Report[1]. But savvy franchise owners know that recruiting and keeping the best restaurant employees and managers provides them an edge on the competition.

“With that 94 percent turnover average, recognize that there are some concepts that have 135 percent turnover and some that have 20 percent turnover,” says Jim Sullivan, CEO of Sullivision.com, a global foodservice consultancy. Sullivan’s newest book, Fundamentals, is aimed at getting the restaurant and retail industry to focus on the basics. “I don’t think [high turnover rates] are a hopeless cause. I think we can turn this around, and in fact there are chains out there who have.”

Victor Fernandez, executive director of Insights at TDn2K (Transforming Data into Knowledge), the parent company of People Report, says there is more than anecdotal proof that focusing on recruiting and retaining the best employees pays big dividends. “One of the things we’ve found by connecting the dots between the brands, there is a correlation between management turnover and same store traffic in restaurants. Those markets where you have lower turnover than your peers, you outperform your peers in same store traffic,” Fernandez explains. “There’s an incentive for you to get it right because those who do get it right get better business results.”

Return on retention can be as important as ROI

According to the People Report, industry turnover costs are high: it costs $1,157 to replace an hourly team member and $13,947 to replace a manager.

Similarly, it costs twice as much to recruit a new employee as it does to train an existing one, according to Sullivan. “If managers are constantly recruiting and retraining, think about the strain and stress it puts on their ability to lead,” Sullivan said. “These unit managers are forced to manage people instead of leading teams, which increases their turnover, too.”

Sullivan says that restaurants who understand return on retention is as important a metric as return on investment will strive to create an environment that is caring, treats employees with dignity and respect, and offers fair compensation. “The other key element is strong leadership because you want someone who practices care, dignity, respect and has created a culture in which you feel good about where you work,” he adds.

Build a defined, visible culture

Sullivan preaches to his clients: strong culture, thin rulebook. “Culture eats strategy for breakfast,” he says.

Ensuring that fun is built into the culture is what food retailer Tom+Chee has been building since launching its business in a tent in Cincinnati in 2009. The company has more than 30 stores open now and is on track to surpass 50 by the end of 2015, with plans to double that again by the end of 2016.

“Our goal is to be the biggest and most loved grilled cheese brand. That love starts from within,” says Marty Boyer, director of marketing for Tom+Chee. Ensuring that culture starts with choosing the right people to be franchisees, who can then hire the right employees to personify the Tom+Chee culture.

Boyer said the fun culture comes from many elements of the business—from how the store is set up to encouraging employees to have family and friends dine in their stores to giving employee food discounts and more. “We have awesome T-shirts. When you give people really comfortable, awesome T-shirts you know what they do? They wear them even when they aren’t working,” he said.

Create a win-win environment

Laura Ann Hart and her husband, Eric, have operated a Tom+Chee store in northwest Atlanta since April 2014. They typically have between 17 to 22 employees, mostly high school and college age, and their goal is to keep them for at least three years.

To do that, the Harts look for win-win relationships. “We look at our purpose as being a stepping stone to teach the employees we bring in responsibility, give them leadership and a sense of service,” she says. “They become great employees for us and we give them the skills so they can move forward in life.”

For example, a student from a local culinary school gets exclusive kitchen prep experience, a kitchen manager who eventually wants to open up his own smoothie shop gets to attend business seminars with the owners and a manager who wants to own his own Tom+Chee is being groomed by the Harts to run their second location.

And for all employees, Laura Hart says, “they know our management staff really cares about them as people. We make sure everyone is thoroughly trained, and we go out of our way to make sure we’re giving them the time off they need.”

Fernandez says his data show that for franchise employees to be happy they look for professional growth opportunities and flexibility with schedule. “Especially in the hourly world, there’s sometimes little you can do about pay given the economics of the business,” he notes, “so the key is to make the job appealing by offering other things.”

Consider turnover a chance to reevaluate

Pam Hoffmaster, who along with her husband, Bret, runs a quick service restaurant in Pennsylvania, says some employee churn is inevitable and not necessarily bad.

“It does force you to re-evaluate your staff to see how an existing employee can grow into a new position,” she explains. “We have been able to cross-train a number of employees who have moved from front of the house functions to kitchen staff due to turnover. This allowed us to hire another entry-level worker who we can train and develop for future opportunities. We know where are strengths are by now, so we want to fill in the holes with employees that help us get to the right recipe as a team.”

Hire for attitude, make it a team effort

Hoffmaster says that, when hiring young employees in the franchise space, it’s more important to focus on candidates who have a good work ethic and team mentality rather than relevant experience. “We have found that the skills can be learned, but the motivation of wanting to be a team player is key in being successful in our culture,” she says.

Another effective hiring tactic Hoffmaster uses is to involve the new hire’s direct supervisor. “We have started having the shift leaders do the initial evaluation, allowing each of them to review and evaluate the candidate,” she explains. “This has been very empowering, giving them a piece of the responsibility for the team.”

Takeaway

Don’t settle for high turnover rates—retention can be a key competitive edge in a cutthroat industy. Build a company culture that attracts and retains the best employees by offering fair compensation and a cooperative environment. And surround new employees with managers who are involved with the hiring process and who treat employees with dignity and respect.

Pull Quotes: “There is a correlation between management turnover and same store traffic in restaurants. Those markets where you have lower turnover than your peers, you outperform your peers in same store traffic.”— Victor Fernandez, executive director of Insights at TDn2K

Pull Stat: $1,157 to replace an hourly team member and $13,947 to replace a manager— April 2015 Restaurant Industry Recruitment & Turnover Report

PQ: “We have found that the skills can be learned, but the motivation of wanting to be a team player is key in being successful in our culture.”—Pam Hoffmaster, owner of a quick-service franchise in Pennsylvania.

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Meta-tags: franchise restaurant, foodservice, turnover, employees, managers, employee recruiting, employee retention, turnover costs, return on retention, return on investment, skills, attitude, first-line supervisor, leadership, compensation, cooperative environment, initial evaluation, team buy-in.