Fiesta Restaurant Group is starting to see the fruits of its labor-focused labor. The Pollo Tropical parent company reported Q1 results late last week, which included same-store sales growth of nearly 10% and positive transaction growth of 1%.
This marked the fourth consecutive month of positive year-over-year traffic trends for the first time in over five years. CEO Dirk Montgomery, who moved into that role just last month, attributed much of the company’s momentum to improved staffing levels.
“We believe that greater leadership stability and effectiveness was a catalyst for faster speed of service and higher guest satisfaction scores in the first quarter versus the fourth quarter,” he said during the company’s earnings call.
The company has been laser focused on achieving this stability, and these efforts started in late 2021 in the throes of a historic labor shortage hindering the entire industry. In Q4 2021, for instance, the company developed a more comprehensive training program, including leadership development and talent management, for what it called a “redesigned executive general manager role.” Simultaneously, the company increased its emphasis on development within its operations training and expanded the number of regional directors of operation from four to seven to “reduce their span of control and improve the execution of the guest proposition.” According to then-CEO Rich Stockinger, this shift allowed for a greater focus and time on team member coaching.
“We can clearly see that the redefined general manager role, combined with investments in field talent development improves execution, increases team retention and drives guest satisfaction, all of which leads to improved financial performance,” Stockinger said during the company’s Q1 2022 earnings call.
Based on its initial success, the company expanded the program in Q4 2022 to include enhanced training for assistant managers that focuses on leadership skill and talent management. The company’s new goal is to complete the rollout of the leadership development platform across all levels of operations leadership this year. Fiesta is also developing operations best practices training modules to share systemwide.
In large part because of these efforts, the GM turnover rate decreased in 2022. Further, in Q1 2023, hourly turnover reached its lowest level since before 2019, with turnover down 11% compared to the 2022 quarterly average, and first quarter 2023 management turnover was well below the first quarter of 2022. Montgomery said drive-thru speed of service times in the first quarter also improved by approximately 15% compared to the 2022 average, while guest satisfaction, as measured by Net Promoter Scores, increased 19% in the first quarter compared to the 2022 average.
“In addition, monthly March and April NPS scores were the highest since 2021,” he said. “As noted, stability of our restaurant team members is a driver of improved execution and guest satisfaction …
“These results demonstrated our retention efforts are working.”
Contact Alicia Kelso at [email protected]
