There is a very clear connection to sales and service. That service and that experience are what’s driving the sales. We can see that in our data.
In this episode of “A Deeper Dive,” Joni Thomas Doolin, founder and chairwoman at TDn2K and Jonathan Maze, executive editor at Restaurant Business Online, discuss the worst labor shortage the industry has seen in decades. TDn2K’s People Report product has been tracking turnover in the restaurant industry for almost twenty years. Through multiple business cycles including the Great Recession, levels of turnover have never been recorded as high as they currently are in the industry. And yes, these turnover rates do impact industry sales.
“On a fairly regular basis we are able to dig into the difference between companies with top financial performance and the rest of the companies we track. There is a very clear connection to sales and service. That service and that experience are what’s driving the sales. We can see that in our data,” Joni shared. “When you dig into the other piece of the puzzle, the engagement data, you see the brands that have more highly engaged employees are also stronger in every single service attribute, including intent to return.”
Reducing turnover rates in a manner in which companies can make a profit is one of the bigger challenges. For operators seeking to do this and build employee loyalty to their company, Joni shares some strategies.
Focus on Better Selection and Recruiting
First, start with better selection and recruiting. Joni acknowledges this isn’t an easy focus during a staffing crisis. Especially when the majority of turnover for employees is voluntary. In addition, the number one reason for turnover is job abandonment. This is putting increased pressure on managers who don’t have much time outside of keeping the doors open and remaining staffed.
Retain and Engage Restaurant Managers
TDn2K research is leading toward the key metric for any operating brand list in the retention and engagement of managers. When companies can secure the tenure and stability of their general managers, everything else will roll from there. Due to the exacerbation of wage pressures over the last decade, many businesses restructured to put the money at the employee level. While this seemed like preventative maintenance at the time, compensation for general managers has remained relatively flat or even declined in the past decade.
Joni points out that general managers have jobs that are far more complex and difficult, yet what has been invested in that position simply has not kept up. And restaurants are paying for it. Additionally, the growing age cohort in the workforce is the 55+ age group. General managers are now responsible for managing a multigenerational workforce, which will require more development, not just training.
Create the Culture You Want
Finally, tackling the labor crisis starts with knowing the “why” and making it the “how.” Joni suggests that people are not necessarily going to care about the same issues as the owners of the business. Take the time to understand what workers care about and invest the time toward it. This is an opportunity for companies who perhaps can’t pay the highest wage but can look at other things that really matter to their workers and take care of that. Building this purpose into the business model will contribute toward creating a community of people that will get engaged with the idea.
The good news for the industry is that tackling the labor issue is not impossible. There are brands, across all segments, that are figuring it out and doing a better job in these areas. And it’s their huge competitive advantage.