NRN coverage of the annual National Restaurant Association Show
Companies push technology and retention efforts, but higher pay still wins with employees
This is part of NRN’s special coverage of the 2017 NRA Show, being held in Chicago, May 20-23. Visit NRN.com for the latest coverage from the show, plus follow us on Twitter and Facebook.
Low unemployment and a restaurant industry adding jobs at a strong clip, along with rising minimum wages, have conspired to drive up labor costs for most operators.
The rising costs, coming at a time of weak sales, have left many operators searching for answers throughout their operations — from the amount of technology they add, and even the size of their restaurants.
“This labor line, this trajectory, is not sustainable,” Carin Stutz, chief operating officer of Denver-based Red Robin Gourmet Burgers Inc., said at the NRA Show on Saturday.
Solutions to labor issues vary greatly. Stutz, for her part, has implemented a number of strategies at Red Robin to keep good employees from jumping ship. For instance, the company has a “come as you are” policy, so workers no longer have to cover up tattoos or piercings, she said.
That policy “opens up your workforce in a pretty big way,” she said.
It probably helps that Red Robin’s CEO — Denny Marie Post recently received a very public tattoo at the company’s annual conference after workers met what executives considered a “high bar” for customer satisfaction scores.
“It was amazing what that did for our culture,” Stutz said.
The company also has a two-week scheduling policy, so workers know further in advance when they are scheduled to work.
“It shows respect for team members,” Stutz said. “They don’t have to wait until Friday to know when they’re working the next week.”
Stutz also said the company has “stay interviews” with good workers to catch issues that might drive them away, rather than catching those issues during an exit interview.
To be sure, higher pay remains the most important element of recruitment and retention.
Ryan Rose, president of Medina, Ohio-based Romeo’s Pizza Franchise, said the company is “starting to pay people more,” and that begins with general managers. The company has increased general managers’ average annual salary from a range of $33,000 to $36,000, to $37,000 to $42,000.
General managers are important, Rose said, because they influence everything else, including labor control and sales growth.
“We look at investing in the highest quality GM we can afford, and making life very good for them,” he said. “They influence everything in the formula that can make for a successful bottom line.”
His company also uses personality testing, and also tests workers on leadership skills to find people who could make the best general managers.
Rose, for his part, sees labor as an important part in driving topline sales, which can offset higher labor costs.
“Hire the right people to increase store sales, and labor will stay in check,” he said.
Some companies are finding workers from different groups. Sue LaTour, president of Passport Pizza, said the company takes advantage of incentive programs to hire people who just left prison.
She said the workers’ connection with a parole officer keeps them in check, and they are motivated to do well.
“This is a great workforce, because they’ve been through hell,” LaTour said. “They show up on time. They’re polite and helpful.”
Technology is playing a major role in companies’ efforts to control labor. Passport Pizza uses a scheduling program that texts employees 30 minutes before they start a shift as a reminder, so they can’t say they overslept.
“They’re always checking their phones,” LaTour said.
Many companies are also using kiosks and online ordering to make business more efficient.
Romeo’s Pizza Franchise generated just 6 percent of sales online when he started 28 months ago. After numerous improvements, that percentage is up to 40 percent.
That doesn’t directly influence labor, he said, but it does drive up revenue
“Our average guest check is $3 higher online than when they call into the store,” Rose said. “We’re doing more with less.”
“It’s not taking employees’ positions,” he added. “We still need employees. It’s all about increasing the top line.”
Rising labor costs are even influencing the size of restaurants. Stutz noted that Red Robin is shifting to a more mid-sized building.
“We’re trying to slim down, see if that helps a little bit,” she said.
Contact Jonathan Maze at [email protected]
Follow him on Twitter: @jonathanmaze
