Hiring | KRG Hospitality

October 11, 2022by David Klemt David Klemt No Comments

The Crucial Role Systems Play

The Crucial Role Systems Play

by David Klemt

Having efficient systems in place does more than just streamline day-to-day restaurant, bar, and hotel operations and increase productivity.

Of course, that’s an excellent reason for operators to ensure they implement multiple systems. Front-of-house, back-of-house, and leadership team members need systems to perform at their best.

Six Sigma, kaizen, the technology stack, checklists, manuals, marketing strategies, the guest journey… Each of those systems and more are key to the long-term success of restaurant, bar, and hotel operations.

In fact, these systems should be developed and ready for implementation before the doors ever open for the first time.

Further, effective systems communicate the expectations for roles and tasks. Onboarding and training systems improve recruitment and retention. Also, they provide the transparency that today’s professionals expect from their employers. On top of that, systems help develop consistency, which keeps guests coming back.

A strong leadership team is effective at implementing and following systems. Overall, a strong team is one that understands, embraces, and adheres to a systematic approach to operations to achieve shared goals.

Simply put, the only way achieve success is to be strategic. One can’t be strategic without the implementation of systems.

But there’s another crucial role that systems play in restaurants, bars, and hotels.

Get Out

This topic is the byproduct of a recent KRG Hospitality client call. While explaining our approach to projects, our team touched on the importance of systems.

However, the topic wasn’t brought up simply to detail what systems the client would need to have in place.

A crucial role systems play in a successful operation is getting an owner away from their four walls. More importantly, allowing them to confidently and comfortably leave their business.

If an owner—be they a sole proprietor or business partner—can’t step away from their restaurant, bar, or hotel without worrying, something is wrong. Either the systems in place are ineffective, they don’t address every element of the business, they aren’t being adhered to, or they don’t exist.

Effective systems allow an owner to take time away from their business without micromanaging staff. Systems should also be in place so the owner or owners don’t feel anxious when they’re not working on the business.

Breathe

Stepping away to pursue a hobby, engage in self care, spend time with family and friends, or just because one wants to take a “lazy day” is necessary.

The strategic implementation of systems makes it possible for someone to take time away from their business. They can take that vacation, pursue that goal that doesn’t relate to their business directly, recharge, etc.

Of course, having systems in place also mean an owner and members of their team can travel. They can comfortably attend industry shows, make a guest appearance at a peer’s bar, or host a pop-up without worrying about the business. Having systems in place also makes it possible to travel to discover new F&B items, learn new techniques, and forge relationships with industry peers.

In other words, systems help owners and operators do something they likely haven’t done in months, if not years: breathe.

Image: Fabian Møller on Unsplash

September 26, 2022by David Klemt David Klemt No Comments

Canada’s Restaurant Labor by the Numbers

Canada’s Restaurant Labor by the Numbers

by David Klemt

While there are positive signs for Canada’s foodservice industry, recruiting and retaining labor continues to be a challenge.

Unfortunately, this isn’t a challenge unique to Canada. Operators throughout North America and indeed across the globe are facing labor shortages.

Restaurants Canada addresses this topic in their 2022 Foodservice Facts report. The non-profit research and advocacy group predicts sales will reach pre-pandemic levels by Q4 of this year.

However, restaurants, bars, and nightclubs may have to achieve traffic and revenue growth despite a significant labor deficit.

Please click here to access the 2022 Foodservice Facts report yourself.

Labor Shortage by Category

In their latest report, Restaurants Canada crunches the numbers for three distinct venue categories. These are quick-serve restaurants, full-service restaurants, and bars and nightclubs.

The organization finds that QSRs and FSRs are facing the greatest shortages. In fact, in response to a survey from May of this year, at least half of QSRs and FSRs aren’t operating with fulls staffs.

For QSRs, 52 percent of respondents say they perceive restaurants and bars they’ve visited to be understaffed. A bit over a third (36 percent) think staffing is “about right.” Unhelpfully, 12 percent “don’t know” if restaurants and bars have enough staff.

So, let’s switch gears to FSRs. Precisely half of survey respondends say restaurants and bars don’t have enough staff. Just like their QSR counterparts, 36 percent say that staffing seems to be at the ideal level. Fourteen percent respond that they “don’t know,” which doesn’t tell us much.

Per Canadians who responded to Restaurants Canada’s survey, bars and nightclubs are fairing better…at first. Frustratingly, a staggering 37 percent of respondents “don’t know” if bars or nightclubs have appropriate levels of staffing. Thirty-two percent think they’re understaffed, 31 percent think staffing levels are “about right.”

Industry professionals are probably already putting two and two together here. As long as guests receive the level of service they expect, from greeting to speed of service, to closing out their check, they think things are fine. If they’re made to wait longer than they want, they’ll likely say a restaurant, bar or nightclub doesn’t have enough people on shift.

Labor Shortage by Role

Okay, so the May 2022 Restaurants Canada wasn’t entirely helpful. It still provides interesting insight. That is, we know how guests perceive staffing in at least most instances.

So, let’s get down to hard numbers: shortages in specific roles throughout the industry.

Here, Restaurants Canada provides compelling information, even if it’s not what we want to see. In comparison to 2019, every role is down by thousands of people. In some cases, tens of thousands.

Below you’ll find the deficits by role:

Foodservice supervisors: -3,100
Chefs: -10,900
Bartenders: -17,600
Maîtres d’hôtel and hosts/hostesses: -21,100
Restaurant and foodservice managers: -22,400
Food counter attendants, kitchen helpers, and related support occupations: -43,200
Cooks: -44,400
F&B servers: -89,500
Other: -18,800

Add that up and that’s a shortage of 271,000 people throughout Canada’s foodservice industry. For further context, the industry boasted 1,265,700 workers. In 2021, the industry was down to 994,700.

Unfortunately, from 2020 to 2021, just 4,100 jobs were recovered, according to Restaurants Canada. This situation clearly shows that operators need to change their approach to staffing.

Now, more than ever, operators must focus on effective recruitment, onboarding, and retention. For tips on making improvements, click here. To learn how to implement employee surveys to boost retention and avoid costly turnover, click here.

Image: Brian Tromp on Unsplash

August 24, 2022by David Klemt David Klemt No Comments

Are You Surveying Your Team?

Are You Surveying Your Team?

by David Klemt

Successful recruitment is only one element of overcoming the current labor shortage—retention is another crucial element.

In fact, employee turnover can be incredibly costly. According to the Center for Hospitality Research at Cornell, employee turnover costs nearly $6,000 per hourly team member.

Now, consider what it costs to hire a single employee. On average, it costs $3,500 to hire that worker in the first place. So, the math is simple: Losing an employee costs an operator more than hiring one.

Unsurprisingly, turnover cost more than doubles—nearly $14,000—for a restaurant manager. In short, employee retention is arguably more important than recruitment and hiring.

Labor Shortage

Per Datassential, 33 percent of 801 survey respondents say the labor shortage is their greatest challenge in 2022. More than 70 percent of those respondents are independent operators.

However, independent, chain, and franchise operators appear to agree on one particular element of the challenge. Across segments, hiring hourly back-of-house employees is the most difficult.

In fact, Datassential’s latest FoodBytes report states that restaurants are coming up short in the kitchen. Two-thirds of restaurants are struggling to fill open hourly cook positions.

So, what’s the solution? Higher starting wages? Bonuses for remaining in role for 90 days? Benefits like health insurance and a 401K?

Each of those does work—for recruitment and hiring. What keeps a new hire from leaving after 90 days with their bonus cash, heading down the road to the next restaurant or bar?

It’s commonly agreed that the first 90 days of a new hire’s employment are the most crucial. Wages and benefits keep them in role for roughly three months. During that time, they’re deciding if their role and the employer’s culture are for them.

Employee Engagement

If you’re an owner, operator, or member of the leadership team, you know the importance of data. In fact, you should be obsessed with data collection and analysis.

Truly, the best way to make decisions that will impact the business is with information. Guesswork just doesn’t cut it. Yes, you should pay close attention to your “gut.” However, you should avoid acting on gut instincts before analysing the relevant data.

Wisely, many operators encourage their guests to complete satisfaction surveys. After all, their feedback is crucial to the success of any business. But what about employee surveys? Your team is equally as important as your guests.

Unhappy team members, unhappy guests. Unhappy guests, reduction in traffic. Team members fleeing your business? Your guests pick up on turnover. Eventually, you won’t have a business.

Now, you can assume your team is happy. You can feel like your leadership team is ensuring employee satisfaction and engagement. Or, you can know.

How do you know? You ask.

Satisfaction Surveys

Call it a satisfaction survey, call it a happiness survey… Either way, you’re asking your team members how happy they are with you and their role.

Operators will likely want to keep these surveys anonymous. Several sources that address employee surveys claim most employees prefer anonymity. Unfortunately, this is due to a fear of retribution from ownership or the leadership team.

Even with a healthy workplace culture, anonymity is probably the best for these surveys. Of course, if you’re implementing a 90-day happiness survey for new hires, anonymity doesn’t make much sense.

As far as company-wide survey frequency, there are several options. Once per year is obviously the bare minimum. Therefore, it’s not very effective. Every six months is better but is checking in on your team’s happiness twice per year enough?

The sweet spot appears to be quarterly surveys. More than that—monthly or bi-monthly—will likely get annoying.

Survey Questions

Below are a few questions to consider for your surveys. You’ll have to decide if you want to use multiple-choice, yes or no, matrix, or open-ended questions, or a mix of each type.

Another consideration is how your team will access the survey. The process needs to be as painless as possible. So, consider pushing a link via your scheduling platform, text, or QR code.

How happy are you working here?
How happy are you in your current role?
Would you recommend us to friends and family as a good place to work?
Does the leadership team make you feel valuable?
Do you see yourself working here a year from now?
Are we helping you succeed in your role?
Are we giving you what you need to progress in your career?

Image: Roman Kraft on Unsplash

June 17, 2022by David Klemt David Klemt No Comments

Viral Post Highlights Real Leadership

What a Viral Reddit Post Reveals About Leadership in Hospitality

by David Klemt

A text exchange between a restaurant manager and delivery driver posted to Reddit went viral last month.

Refreshingly, it didn’t make the rounds on news sites for the wrong reasons. Rather, the text conversation is a succinct example of emotional intelligence, empathy, and leadership.

Those interested in reading the text exchange in its entirety can follow this link. However, I’ll sum it up here.

Posted to the subreddit Kitchen Confidential, the conversation begins with the manager checking in on the driver, asking, “You doing OK?”

The driver says they’re “doing better but” is still dealing with a lot. After the manager asks if they should cover their shift that night, the driver reveals they may need to quit the job.

Instead of blowing up at the driver, trying to talk them out of their decision, or cutting the exchange short, they say, “It’s alright [sic].”

Going further, the manager says, “You’re [sic] happiness is more important.” They add that the business hopes the driver will return to the job when they’re ready.

Shall I Cover You Tonight?

Now, I tend to believe that most members of restaurant, bar, and hotel leadership teams are empathetic. I also lean toward believing that most are competent problem solvers.

However, we’ve all come across people who don’t belong in a leadership role. In some cases, a person’s lack of leadership qualifications doesn’t manifest until they’ve been in the role for some time.

My business partner Doug Radkey and I have had conversations about leaders who don’t seem to lead. At best, they’re examples of what not to do. At worst, they’re chasing away a business owner’s staff and guests.

Most recently, these conversations have centered around managers insisting that staff solve scheduling problems themselves.

Before I proceed, I acknowledge fully that we’re facing an unprecedented labor shortage. That’s no excuse for poor leadership.

What, exactly, is the leadership team doing that they can’t manage the schedule? Further, with today’s modern scheduling platforms, why is filling available roles difficult for leaders? Several scheduling apps make it a painless, automated process.

The manager in this Reddit text exchange doesn’t demand the driver find someone to cover their shift. Instead, they behave like a manager and handle it themselves.

Don’t Ever Discount Yourself

If you’re active on LinkedIn and have a sizeable hospitality-centric network, you’ve likely seen posts about how the industry needs to be more people-focused. Not in terms of guests—that’s obvious.

Rather, the consensus is that we’re not going to solve the labor problem if we don’t treat staff as well as we treat guests. Some of these posts may be a bit saccharine, but they’re not incorrect.

Let’s review the texts from this manager:

“You doing OK?”
Your “happiness is more important.”
“We love having you here.”
“You’re an awesome person.”
“Don’t ever discount yourself.”

When’s the last time you and other members of the leadership team asked a staff member if they’re okay? And if you’ve asked recently, did you get an honest answer? Did you want an honest answer?

A restaurant or bar team that doesn’t trust leadership isn’t going to bother providing an honest answer to that question—they feel like the leaders don’t care about them.

Looking at the rest of the texts above, do you and your leaders take the time to recognize and thank staff? Even the shyest team member wants recognition for a job well done.

Those in leadership roles need to develop their skills constantly. Contrary to some in those positions, leaders aren’t there simply to lord their authority over others and dish out punishments.

So, before your next team meeting, gather the leaders. Find out if every member of the team is checking on staff, valuing their health and wellness, and tackling the mundane tasks that are inherent to their roles.

The maxim is true: People don’t quit jobs, they quit people. If your leadership team isn’t leading with empathy, you can expect your labor issues to compound. No amount of excuses will turn that around.

This article by KRG Hospitality director of business development David Klemt was first published by Bar Business and can be read in its entirety by following this link.

Image: Brett Jordan on Unsplash

June 6, 2022by David Klemt David Klemt No Comments

Back of House Report: The Labor Challenge

Back of House Report: The Labor Challenge

by David Klemt

A recent report from Back of House reveals opportunities for operators amidst the current staffing challenge.

In their report, the restaurant technology platform suggests effective hiring and retention solutions. For example, helping staff find meaning in their work.

To download and access the report in its entirety, please visit BackOfHouse.io.

For some of the platform’s insights into staffing, keep reading.

Why People Leave the Industry

Obviously, people take jobs for a variety of reasons. Often, a person’s first job has one or two motivations: money and/or experience.

Some estimates put a gig in the restaurant industry as the first job for a third of Americans. In Canada, restaurants are the top employers for those under 25 years of age.

However, Back of House sees value in looking at a different metric: Why people leave the industry.

As Back of House states, knowing why someone would leave their job helps an operator determine what benefits to offer to retain talent.

Now, it may be tempting to assume pay is the top reason people leave jobs. Per Back of House, however that’s not the case. Broken down by age group, below you’ll find the reasons people are leaving hospitality:

Pay: 26 to 35
Schedule: 46 to 55
Lack of opportunities: 26 to 35
Lack of benefits: 26 to 35
Work environment: 18 to 25

Look at these issues through the lens of someone moving through life. When first entering the workforce, more people want to find the right employer and workplace. From their twenties to thirties, more concern is placed on moving up, making more money, and receiving benefits. And, per Back of House’s findings, time becomes more of a consideration as people age.

Meaning and Value

Per Back of House, there are two important elements of employment that keep people engaged.

One, meaning in the work they do. In other words, feeling that their work has value. Two, staff want to feel that they’re employers value them.

Of course, both make sense, no? If a person doesn’t see their role in the industry as valuable, they’ll always be looking for the escape hatch. And if they feel that they’re employer doesn’t value them, why would they continue working for them? People, as they say, quit bosses, not jobs.

So, Back of House recommends that operators demonstrate they value their team members by:

investing in their staff;
supporting their staff; and
respecting their staff.

Now, good leaders should already do all of the above. It should go without saying but if someone feels a lack of respect, support, and interest from their employer, they’re not going to remain in their role for long.

And who could blame them? That seems like a terrible workplace and a waste of a hospitality professional’s valuable time. Time, of course, that can be better spent finding a good leader to work for who will help them progress in their career.

There are further insights one can glean from Back of House’s report. To download “Understanding the Staffing Challenge,” please click here.

Disclaimer: Neither KRG Hospitality nor its representatives received compensation to promote this report. The team at KRG simply feels all operators will find value in downloading and reading it, and considering the information contained therein.

Image: Joao Viegas on Unsplash

April 25, 2022by David Klemt David Klemt No Comments

Hiring Struggles? Engage These Age Groups

Hiring Struggles? Engage These Age Groups

by David Klemt

Staff turnover rates are still above pre-pandemic levels and there’s no silver bullet solution. However, two companies have some helpful advice.

Both Service Management Group and Technomic shared their tips during Restaurant Leadership Conference. Interestingly, each company has a different approach to the current hospitality industry labor problem.

In short, both SMG and Technomic advise operators to engage with vastly different age groups. However, they each have information that supports their recommendations.

Service Management Group

Jennifer Grimes, senior vice president of client services for Service Management Group, co-presented a session with Jim Thompson, COO of Chicken Salad Chick.

SMG is a software-with-a-service platform that seeks to the employee, customer, and brand experience. One crucial element of the company’s mission is the reduction of staff turnover.

During the RLC session, Grimes shared several years of hospitality turnover rates:

2017: 72%
2018: 75%
2019: 79%
2020: 130%
2021: 86%

First, some context. The general consensus is that the industry’s average turnover rate has been between 70 and 80 percent for close to a decade. However, in comparison to other industries—10 to 15 percent—that’s stratospherically high.

Secondly, the turnover rate has been on rise since before the pandemic. Per some sources, the rate jumped from 66 percent in 2014 to 72 percent in 2015, a trend that continues to this day.

For SMG, the age group operators should seek to engage—generally speaking, of course—is 25 to 34 years old. Per the SWaS platform, this group was the most engaged pre-pandemic.

One reason for SMG’s suggestion is that Boomers appear to opting out of the workforce.

During the presentation by Grimes and Thompson, the latter shared that Chicken Salad Chick predicts the 2022 turnover rate to be just slightly above the 2019 rate.

Technomic

Unsurprisingly, Technomic had some numbers to share during RLC 2022 in Scottsdale, Arizona.

Per data provided by Joe Pawlak and Richard Shank, 70 percent of operators are still struggling with labor. Recruiting, hiring, and retaining staff doesn’t appear to be getting any easier four months into 2022.

Technomic also pointed out that the US saw the lowest population growth in its history last year: 0.1 percent.

Additionally, almost 17 percent of the country’s population is now at least 65 years old. In 2019, 48 percent of people 55 or older retired. That number is now just over 50 percent for the same age group.

Nearly seven million American consumers turn 60 each year, while four million turn 70 or older.

Logically, one may assume that Technomic is saying a significant portion of the US population is leaving the workforce. So, it’s best to focus on the same age group as SMG recommends.

However, Technomic is recommending a different strategy. Per Pawlak and Shank, retirees (mostly ages 55 and up) tend to have valuable managerial skills and experience.

Obviously, those skills and all that experience can be of great benefit to operators and our industry.

Certainly, all groups should be engaged by operators seeking to recruit, hire, and develop their teams. So, as KRG Hospitality sees recruitment, operators should craft targeted, authentic messaging that appeals to each age group.

Image: Sebastian Coman Photography from Pexels

April 20, 2022by David Klemt David Klemt No Comments

Chain Restaurants: Present & Future

Chain Restaurants: Present & Future

Technomic presented the state of chain restaurants, now and next, during Restaurant Leadership Conference 2022 in Scottsdale, Arizona.

Obviously, the entire hospitality industry is facing significant struggles. Rising costs, supply chain chaos, labor shortages and challenges, inflation… The past two-years-plus haven’t been easy.

However, there’s reason for operators and their leadership teams and staff to be optimistic. Additionally, independent and small-chain operators can learn from Technomic’s findings.

Challenges & Threats

Well, let’s take our medicine first, starting with the supply chain. In short, it’s bedlam.

Joe Pawlak (standing in for David Henkes) and Richard Shank of Technomic said as much during RLC 2022. Per their data, 35 percent of operators dropped at least one manufacturer between 2020 and 2021.

Whether because of rising costs, an inability to consistently deliver product, or other factors, operators had to adapt. Clearly, there’s a nasty trickle-down effect when an operator drops a supplier.

And then there’s inflation. Interestingly, Shank calls what we’re seeing currently as “existential inflation.” Relating to consumers, this means their confidence is shaken in terms of spending.

Of course, this type of consumer perception manifests in several ways. For example, some guests cut down on visits. Others will cut down on ordering, skipping appetizers and desserts. Perhaps they have one less beer, glass of wine, or cocktail.

Also, some guests “trade down.” Meaning, there are consumers who opt for casual restaurants rather than fine dining. Or, they’ll move from fast-casual to QSR.

Looking at the numbers, however, nearly 40 percent respondents to a Technomic survey say they’re visiting restaurants less. This makes sense, as 81 percent are concerned about how inflation will impact them personally.

On the operator side of inflation comes pricing. During Pawlak and Shank’s presentation, they used QSR dinner pricing as a real-world example.

According to Technomic, the tipping point for guest perception of good value is just $7. At only $10, consumers feel things are getting expensive.

As Pawlak and Shank pointed out, this is a problem. After all, the average price for dinner at a QSR is $10.08. That number may already be higher today.

Opportunities

Medicine taken, we can move to the good news.

First, Technomic predicts a strong Q3 this year. Additionally, they don’t expect double-digit year-over-year inflation.

In terms of labor, Technomic doesn’t expect costs to go down. However, they do anticipate that they’ll level off rather than rise.

Then there are the numbers. For the top 500 chains in the US in particular, 2021 was a “banner year,” according to Pawlak. On an aggregate basis, sales for the top 500 (McDonald’s is number one, for those wondering) are up 17.9 percent.

Also, every category of restaurant is performing better. The top 500 chains, for instance, are up 18 percent year-over-year. Midscale restaurants are up 38.5 percent. Casual is up 30.2 percent while fast is up 22.2 percent, QSRs are up 13.2 percent. As far as the biggest bump, fine dining is up 56.9 percent.

Looking at 2019 for obvious reasons, the industry was down 49.1 percent in sales in April 2020. However, the industry was down just about a single percentage point in February of this year compared to the same time in 2019.

So, how do we keep sales trending upward when facing inflation and other threats? Pawlak, Shank, and Technomic have some advice.

Operators, for instance, can implement the “balanced barbell” pricing strategy. In this model, high-value items drive business alongside premium offerings. In other words, don’t discount the entire menu just to entice guests to keep visiting.

Once guests get a taste for falling prices, they’ll consider the lower prices the standard. After that, any increase can be perceived as “too expensive.” Of course, discounting the whole menu also impacts guest perception of the brand negatively.

In addition, Technomic suggests offering higher net profit discount bundles, and implementing off-premise, large-party strategies.

Should Technomic’s predictions prove true, the industry may see an even stronger Q4 and start to 2023.

Image: Alex Haney on Unsplash

April 18, 2022by David Klemt David Klemt No Comments

This Simple Test Reveals Process Problems

This Simple Test Reveals Process Problems

by David Klemt

There’s an easy way to identify whether there are changes that need to be made to processes and practices that only requires observation and time.

Luckily, it doesn’t take much time, either. In less than a week, an operator can determine if there are issues relating to onboarding new hires.

This simple test was shared during the 2022 Restaurant Leadership Conference in Scottsdale.

Interviews are Just the Start

It should go without saying but here we go: The hiring process doesn’t end with the interview.

An operator or their leadership team found an amazing job candidate? Awesome! That’s no small feat these days.

However, that’s just the first step in hiring and building a rock star restaurant, bar or hotel team.

Step two is onboarding, step three is training, and step four is advancement.

For KRG Hospitality, onboarding goes far beyond filling out federal and state paperwork. There’s more to it than setting up direct deposit and getting a new hire on the schedule.

Rather, operators need to implement a fully developed onboarding process. The key word there is “process.”

True onboarding includes the review of an employee handbook and an introduction to the business. During this process new hires should become familiar with the brand’s history, vision, culture, mission, and core values.

By the end of this process, a new team member should understand what’s expected of them, both in their individual role and behaviorally. Additionally, they should be introduced to the entire team.

In reality, the onboarding process is the development of a professional relationship.

The Test

Technically, the actual test for operators is for them to have in-depth hiring, onboarding and training processes in place.

So, operators should take a moment to review whether they have those processes.

However, the test I’m talking about here relates to onboarding directly. It’s simple and it was shared during RLC 2022 by Jim Thompson, COO of Chicken Salad Chick.

The only requirement is a few days’ time and an observant operator and/or leadership team.

Let’s say a candidate nails the interview. In particular, their personality is perfect for the available role. As the the hospitality industry maxim goes, hire for personality, train for skills.

The new hire works their first shift but their personality doesn’t shine through. However, that could be first-day jitters. Unfortunately, that personality the leadership team hired for is nowhere to be seen during their next few shifts.

According to Thompson, if a new hire’s personality doesn’t shine through within four shifts, there’s likely a process and practices issue. The lack of personality is an indicator that the new team member doesn’t feel confident in their role.

The onboarding process—either too shallow or nonexistent—is a likely culprit. Operators can use this test, a simple four-shift observation of a new hire, to determine if there’s a problem.

Once identified, the operator and their leaders can put their heads together, review the issue, and implement effective, positive change.

Image: Caroline Attwood on Unsplash

April 13, 2022by David Klemt David Klemt No Comments

Leadership Facepalm, Part Two

Leadership Facepalm, Part Two

by David Klemt

In a stunning example of tone-deafness and callousness, a franchisee executive sent an email that led to severe consequences.

And no, I’m not talking about the termination of the offending exec. That, in my opinion, was well deserved.

In this instance, the email has led to mass resignations and damage to a global restaurant chain’s reputation. What’s more, the negative impact to the brand’s reputation comes from consumers and employees.

Of course, I’m talking about the now-infamous Applebee’s “gas prices” email.

The Email: Labor

Let’s just jump right into the email, because…wow.

“Most of our employee base and potential employee base lives paycheck to paycheck,” writes the executive. “Any increase gas prices cuts into their disposable income.”

This could have been an excellent example of awareness and perhaps even empathy. In the context of this email, it’s appalling.

Why? Mainly because this executive appears to be celebrating the fact that Applebee’s employees, at least those who work for this franchisee, are barely earning a living wage.

“As inflation continues to climb and gas prices continue to go up, that means more hours employees will need to work to maintain their current level of living,” continues the author.

In this exec’s view, this franchisee is “no longer competing with the government when it comes to hiring.” He cites stimulus payments and boosted unemployment support have run out. Therefore, he reasons that people will be forced to return to the workforce.

The author further points to competitors increasing wages to recruit and retain employees. This, he figures, is untenable and some will have to close their doors. So, the labor pool will fill up and this franchisee will benefit.

The Email: Wages

Some of what I’ve laid out above is accurate. According to some estimates, about two-thirds of Americans live paycheck to paycheck.

Additionally, it’s accurate to state that some employees will seek more hours to combat the effects of rising costs. Further, yes, the labor market is turbulent and challenging.

And, unfortunately, some independent operators are facing incredibly difficult decisions. To recruit and retain, they’ll need to be competitive and raise their wages. To pay for that, they’ll need to raise prices, passing on rising costs to customers. In some instances, for some operators, that will prove unsustainable.

However, an executive in this industry shouldn’t be delighted about any of this. And they certainly shouldn’t see it as an opportunity to potentially pay employees even less.

You see, the author of this email suggests that the franchisee can bring in new workers “at a lower wage to decrease our labor (when able).”

He then recommends monitoring employee morale to ensure that the Applebee’s operated by this franchisee is their “employer of choice.”

For me, however, the most eyeroll-inducing line is this: “Most importantly, have the culture and environment that will attract people.”

Images of printouts of the email reveal that at least a handful of recipients agreed. “Great message Sir! [sic]” reads one response. Another paints the email as “Words of wisdom.”

Clearly, the culture and environment are unhealthy.

The Consequences

Before I proceed, know this: I’m not going to name the author. It’s not remotely difficult to find the author’s name if you feel the need.

However, I will name the franchisee that finally fired him. American Franchise Capital reportedly owns more than 120 Applebee’s and Taco Bell locations in nine states.

So, to be clear, this executive didn’t work for Applebee’s directly. In fact, Applebee’s has disavowed the former executive and the email.

In the interest of clarity, it’s possible the author worked for Apple Central LLC, owned by American Franchise Capital.

As far as fallout, it was swift. According to reports, consequences were realized immediately. A Kansas franchise manager was shown the emails, printed them out for staff to discover, and comped the meals of everyone at the location. Then, he quit and the staff walked out.

Per reporting, four other Applebee’s managers quit, as did several employees. The location remained closed for at least the following day.

If reports are accurate, Applebee’s lost five managers, nearly a dozen employees, and sales from a location for at least two days. That’s just the localized fallout.

Applebee’s, of course, is distancing the company from the former executive. However, that’s not going to stanch the reputational bleeding and turnover.

As we know, a significant percentage of consumers want to know their dollars and support are going to companies that align with their values. The same is true of employees; they want to work for companies with values they can get behind.

A Final Thought

This now-infamous email was sent March 9. Just two weeks later, it was circulated and went viral. The author, gleeful about being able to hire employees “at a lower wage,” was fired before the end of March.

I’ve seen several takes on this situation, and I’ve read some accompanying leadership advice. One in particular caught my attention.

Unfortunately, it’s not because I thought it was great advice: Be cautious about what you send via blast emails.

I’m not saying one shouldn’t be careful about what they send out in emails—that’s good advice. However, that’s not the lesson I’ve learned from this situation.

Personally, I see this as a lesson in emotional intelligence, relationship intelligence, brand culture, and work environment.

At least two companies, one with annual sales in the billions of dollars, another in the hundreds of millions, have had their reputations tarnished. The fault may not lie with Applebee’s but they’ll be dealing with the consequences regardless.

If an operator is going to learn anything about being cautious, it’s this: Be cautious when hiring those in leadership positions. Be cautious about those with whom you enter into partnerships. And be careful about how you view those who work for you.

If you aren’t seeing those who choose to work for you as people worthy of your respect, as human beings, your brand’s culture is poisoned.

Image: Daria Nepriakhina on Unsplash

Military combat helmet in digital camouflage

November 9, 2021by David Klemt David Klemt No Comments

Adding Veterans to Your Team

Adding Veterans to Your Restaurant, Bar or Hotel Team

by David Klemt

Do more this Veterans Day by encouraging those who have served to apply and interview for available positions on your team.

There are several benefits to providing job opportunities to veterans, regardless of the country (or countries) in which you operate.

Of course, there are dos and don’ts that come along with recruiting, hiring and working with veterans.

Benefits to Hiring Veterans

Before we begin, a caveat: Remember that veterans are individuals. “Veteran” is a label, a designation, a descriptor. In no way is one person who is a veteran interchangeable with another.

That said, there are some elements of military service that are similar to those of successful hospitality operations.

Teamwork, a strong work ethic, leadership skills, precision in tasks, achieving goals, consistency in results… When a restaurant, bar or hotel team is operating at its best, it can be said they work with military precision.

Generally speaking, veteran job candidates bring experience to the table that can benefit an operator greatly.

Additionally, it’s commonly said that hospitality leadership should hire for personality because they can train requisite skills. Speaking generally again, many veterans are so used to receiving specialized training that they’ll likely appreciate and respond quickly to yours.

If you want your business to operate with military precision, why wouldn’t you hire military personnel who fit well within your team?

Questions to Ask During Interviews

Obviously, there are definite dos and don’ts when it comes to discussing a veteran’s military experience.

As curious as you may be about some aspects of a veteran’s experience, questions shouldn’t be invasive or offensive.

Some examples of questions you should ask are:

“What did you do (in the Air Force, Army, Coast Guard, Marines, Navy, National Guard or Reserves)?”
“Why did you choose that branch of the military?”
“How long did you serve?”
“Do you come from a military family?”
“Where were you stationed during your career in the military? Did you visit any other countries?”
“Where was your favorite place you visited or lived?”
“How do you think your experience in the military will benefit you here?”

As you can see, nothing in those questions should make a veteran applicant uncomfortable.

Questions and Behaviors to Avoid

Speaking of discomfort, there are many questions that you should never ask a veteran. Not just during the interview process, but ever.

Also, if a veteran informs you they’re uncomfortable answering a question about their service, that should be respected.

Examples of questions and topics you should avoid are:

“Do you have PTSD (Posttraumatic Stress Disorder)?”
“Do you find it hard to get back to ‘real/regular’ life after being in the military?”
“Did you ever get shot/stabbed/bombed?”
“Did you ever kill anyone?”
“What’s the worst thing that ever happened to you while you served?”
Current military conflicts, particularly if you haven’t served in the military.
Referring to elements of work through military analogies.
Insulting branches of the military if you never served.

In short, treat veterans with the respect their deserve, as you should any other member of your staff. Veterans aren’t novelties or curiosities—they’re people.

For too long, veterans have faced undue scrutiny and undeserved stigmatization. It shouldn’t be difficult to turn that around when the solution is simple: Give veterans respect; treat them like people since that’s precisely what they are; and provide equal opportunity.

Image: israel palacio on Unsplash