Article
Labor management key to fast casual cost savings
Operators who improve on training now are more likely to have profitable stores and happy employees.
August 18, 2009
Labor costs, especially those related to turnover, remain a perennial concern for fast casual operators. With the latest federal minimum wage hike bringing entry-level hourly wages to $7.25, operators may be faced with a tough decision — reduce staff or raise prices.
Neither option is preferable, especially for those operations that already have pared their staff in light of the economic recession. Many also have raised prices in response to last year's high commodity costs.
Improving labor management, starting with the hiring process and continuing through training and retention programs, is the more prudent solution, experts say.
"We've seen this (type of economy) before," said Kacy Oden, director of membership relations at People Report, a research and consulting firm specializing in restaurant labor-force trends.
"Companies do one of two things," she said. "They either slash the training budget or they double down and they focus on their people. Those companies that focus on their people, they're going to be the ones on the other side of this recession."
Improving or refining training processes is important because well-trained employees naturally perform better as a result of having a clear understanding of what's expected of them, Oden said. Successful training programs begin with seeing employees as people with needs and potential, not just "how can they flip the burger faster," she said.
Oden suggests operators focus on three key areas to foster long-term employees:
- Ensure that training mirrors real life — Know that today's teens are tech savvy and have little patience for reading manuals. Play up to their learning style with solutions such as iPod training modules.
- Make the training fit your culture — At Taco Beuno, for instance, employees take on the persona of Bueno Heads, not just staff members. But be sure that sense of culture is carried on beyond the first 30 days and into continued training.
- Focus on the employee as a person — Give them skills for life beyond just learning the store's operations. For example, the Sed de Saber program can help Spanish-speaking employees learn English as well. (Sed de Saber is a Leap Frog-based learning module that teaches workforce and language skills to Spanish-speaking employees.)
Start with management
Another key to employee success is giving managers the right tools, especially since management turnover correlates to employee turnover, said Kara Barker, director of retail and hospitality industry marketing at workforce management company Kronos Inc.
Automated labor management tools give managers the ability to be more productive and alleviate some of the burdens of hiring and training, Barker said. Hiring management software, for example, can help cull through applicants to find the best employee for the right job.
With today's high unemployment, many operators are seeing 40 or more applicants per opening. Using screening metrics like that in Kronos' hiring solution can help managers match an applicant's traits and skills to those needed for the role.
"People tend to be happiest doing what they're good at, so the hiring application really helps organizations make sure they're hiring the right person for the task at hand," Barker said.
Culture of quality, accountability
Labor management solutions that oversee training also can help with employees' success — and ensure their proficiency and job satisfaction, said Jon Ciampi, vice president, product management for SumTotal, a talent development solutions provider.
SumTotal offers a number of solutions aimed at helping restaurant operators create a culture of quality, which directly correlates to a store's profitability, he said. First, the store or brand sets its goals for quality performance, from the food to customer service. Then, the training solutions clearly communicate those goals and assess that employees understand them.
The company has found that if at least 80 percent of a store's employees pass their training at a proficient level, that store is 80 percent more likely to have double the profitability than a store with employees not at that proficiency level, Ciampi said.
No matter the training method used, a successful training solution features an online assessment that measures an employee's understanding of the operations methods, he said. Those online tools also use automation features to track employees through training and compliance modules, relieving managers of that task.
Ciampi said operators who focus on accountability create a culture of quality, reducing their employee time to readiness as well as the need for additional manager oversight. That focus on accountability continues beyond onboard training, often based on results from mystery shopper assessments.
"If they can create a culture of accountability, if they can clearly communicate what their quality metrics are and focus areas that they're concerned about and (ensure) the employee has a clear understanding of what's expected of them, then they create a culture that is of a higher caliber than, say, competing stores," he said.
Keeping them around
Stores that focus on quality and accountability also find their turnover rates are lower because employees feel supported and understand their roles, Ciampi said.
"When they understand all this, the store is doing better, so more people want to stay there and (more customers want) to be there. And they're finding that's the best retention strategy."
People Report has found that organizations with employee bonus plans and those that promote from within have the strongest retention rates, Oden said. Employees are more likely to stay with an organization if they see a clear path of succession, that by working hard there are opportunities for advancement within the company.
Voluntary turnover has become less of an issue for operators over the last year and a half since employees have fewer job opportunities available to them elsewhere. According to People Report data, in the last quarter, 75 percent of quick-service restaurants saw turnover rates for hourly employees drop, and 50 percent saw turnover in management rates drop. Overall, the QSR turnover rate fell 17 points to 129 percent at the hourly level.
But operators cannot take their employees for granted and assume they will stick around once the economy improves.
Oden said successful operators will think beyond the current employment situation and take steps now to ensure their employees want to stay once the economy recovers.
"Now is the time to make sure you have A-level people, from your unit-level employee all the way up to your multiunit managers, because you've got that wealth of people out there," she said. "The next step they should be thinking about is (that) it is going to turn around and those companies that aren't thinking like that, they're going to be left in the dust too."
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