Improving Restaurant Culture: The How and Why
On January 1, 2018 minimum wage rate increases went into effect in 18 states and 19 cities and counties. Later this year, another 21 jurisdictions are expected to make similar increases while 17 additional states and cities are campaigning to raise their minimum wage.
In March, a Federal Spending bill abolished a 2011 rule that prohibited tip pooling in all circumstances with non-customarily tipped employees. Now, employers are allowed to expand tip pools and share the tips among a broader range of employees in states where tips are not recognized as wages.
How will this affect the 1.08 million tipped servers and more than 200,000 tipped bartenders working across the U.S.?
So, just what do these new rulings have to do with your restaurant? Considering the current labor pool, or lack thereof, the possible after-effects are daunting.
The Labor Pool
A survey released by the Federal Reserve found labor shortages across the nation and across the board in all industries. Many businesses said they had no choice but to increase wages in order to attract qualified workers. Many restaurants, however, do not have that option.
Some are turning to 20 percent service fees that are added on to each tab and put into a “pooled tip” in an effort to entice experienced staff for both the front and back of the house. Even with this incentive, some markets are finding it almost impossible to attract new employees. These restaurants are doing what they can to keep their current staff intact. It’s not only good for the staff, it’s good for the bottom line.
According to Modern Restaurant Management, restaurants are losing approximately $150,000 per year due to employee turnover. Their calculations centered around the Center for Hospitality Research at Cornell who broke down the cost when one employee bails ship. The total came out to $5,864 which included $3,049 in lost productivity.
The turnover rate in the hospitality sector exceeded 70 percent for the second year in a row.
What restaurants are suffering the most?
Those with low employee satisfaction. For restaurateurs, it is important to remember that employee satisfaction is not defined solely by their paycheck. While income certainly plays a part, the culture is also an important aspect, particularly for the age-group that makes up the majority of your restaurant staff—the Millennials.
Upserve’s Inaugural Restaurant Industry Report shared an interesting statistic they uncovered: Base pay rate had little impact on employee turnover. When OpenTable conducted a restaurant survey regarding company culture, only a fifth of the respondents described their restaurant culture as “very strong.”
It appears that creating a culture that attracts skilled talent should be first on most restaurateur’s list.
So, just what defines a restaurant’s culture and how can you improve yours?
A company’s culture is its personality. It includes the work environment, the company’s values, goals, and five-year plan. Some businesses have very visible cultures. Take Ben & Jerry’s. Though purchased by Unilever for $326 million in 2000, Ben Cohen and Jerry Greenfield, the original owners, still play solid roles in the company and culture that they developed over the years.
Their carton says it all: They are a socially conscious company who appreciate fun, great graphics, and financial success. And it’s evident in their company as well. They have a company nap room, a welcoming dog policy, and a “Joy Gang” whose job it is to find more ways to have fun. Leaders are encouraged to turn to employees to help make decisions.
So why does this matter?
Employees like to work in a fun environment. They like to spend time in a place that they “fit in.” This is why it’s so important to make sure that those you hire know your values and environment and understand the importance of aligning and feeling connected to these core beliefs.
Working for a company where you don’t fit in to the culture can feel uncomfortable and far less pleasurable, leading to quick turnovers and an unhappy staff.
What Makes up a Company’s Culture
The first step in defining your company’s culture is to create your vision and mission statement. Hiring staff that is aligned with your company policy is one of the most important steps you can take in the HR department.
Richard Branson, billionaire founder of Virgin Group states, “The first thing to look for when searching for a great employee is somebody with a personality that fits with your company culture. Most skills can be learned, but it is difficult to train people on their personality. If you can find people who are fun, friendly, caring and love helping others, you are on to a winner.”
A San Francisco Restaurant Group took a look at employee turnover costs and decided to address it by interviewing their staff. What they discovered was important to their staff surprised them and, in the process, saved the company over $100,000 a year in turnover costs.
The SF Restaurant Group didn’t just talk to their employees, they acted on what they heard. Employees can choose from a list of benefits that add up to about $100 per month. These include educational classes, dining or travel credits, as well as fitness memberships. According to the company, they’ve developed their staff predominantly through word of mouth and referrals within the industry.
Their findings and action demonstrate that a positive environment can lead to tremendous benefits for both employees and employers. And you can bet your customers can feel the difference when they enter your establishment.
Here is what they found:
- While benefits such as a good health plan was important to employees, other incentives such as a 401K plans were not.
- Employees valued their time and stressed the importance of flexible schedules and vacation plans.
- A high percentage of their employees stressed growth as an important aspect of company culture. Their ambitions varied, but almost all had goals from mastering specific tasks to owning a restaurant.
Creating your Restaurant’s Culture
There are a few essential aspects and qualities that make up a company’s culture. Consider the following:
First—and most important—define it. What do you want your restaurant to stand for? That doesn’t mean you have to be environmentally conscious to the point of giving 10 percent of your profits away. It does mean, however, that you need to be authentic. What are your principals and beliefs? What is important to you? Roy Disney, the brother of Walt Disney, once stated, “It’s not hard to make decisions when you know what your core values are.”
Flexibility in scheduling. You may wonder what being flexible has to do with a company’s culture. Most cultures are defined by individuals—people that have balanced lives outside of the work place. In order to attract these people, you must give them their heart’s desire: time to explore the world outside of work. Some like day shifts, other’s evenings. With a little time and effort, you can create a schedule that will succeed in creating a work environment that people are genuinely happy to be a part of.
Training and Development. There are very few humans who do not want to better themselves, feel as if they are progressing and heading toward a defined goal. One of the reasons McDonalds has been deemed so successful is that their restaurant culture is one that encourages learning. This leads to many brand-loyal employees who have nothing bad and everything good to say about the company they work for. Instituting training and development can be as simple as cross training, tuition reimbursement, contests or sommelier certification. Promoting from within creates a strong brand-loyal employee.
Engage your Employees. It’s interesting to note that while employees appreciated perks such as gym memberships and complimentary meals, engagement was the number one attribute that predicted successful employment.
According to Gallup Organization, an “engaged employee is a worker who is fully involved in and enthusiastic about his or her work.” They believe this is achieved by sharing your expectations and mission; providing support, acknowledgement, and feedback; and creating an environment that is dynamic and driven while providing room for individual growth. A Gallup study showed that the number of employees that felt engaged directly correlated with an increase in revenue. Businesses with disengaged workers showed a 37 percent higher absenteeism rate and 16 percent lower profitability.
A few of the strategies restaurants are using to engage their employees include cooking competitions and allowing employees to lead small projects. These can include staff taste tests when developing changes in the menu or encouraging recommendations when updating décor.
Recognize your Employees. A company’s culture is not just about creating a happy and healthy environment where employees and employers alike spend a large part of their lives, it’s also a major contributor to the quality of service that your customers receive. A friendly and hospitable environment exudes from staff to guests the minute they walk in the door until the check arrives. Recognizing and celebrating your team members creates such an environment.
Be sure to include the back-of-house staff in similar competitions by rewarding punctuality, attendance, food cost, ticket times and cleanliness. By incorporating these types of challenges and rewards, you create a culture that motivates each employee to excel and rewards those employees that rise to the challenge.
Even Napoleon Bonaparte, over 200 years ago, recognized that people seek purpose and recognition. “Give me enough medals and I’ll win any war. A soldier will fight long and hard for a bit of colored ribbon.”
Motivating the front-of-house staff through various competitions that involve upselling beverages and promoting appetizers and specials has been a long-standing incentive for restaurants. Technology has, fortunately, made this model easier to implement. Tipzzy uses the place where your staff spends much of their lives—their Smartphones—to educate, reward and incentivize your team.
Communicate Openly. Employers and managers create a productive culture by promoting open and honest communication. This entails direct conversations and feedback from those in leadership roles to team members as well as creating an environment in which employees feel that they can offer their unique perspective on what is and isn’t working in the company. This builds trust and the ability to address the challenges that arise between FOH, BOH, and management.
Offsite Team-building Experiences. According to an OpenTable survey, only 23 percent of restaurants offered offsite team-building experiences. These seldom used but proven methods build interpersonal bonds between staff members as well as a more enjoyable experience for your guests. You don’t have to attend a professional team-building event to improve your restaurant’s culture. Consider starting a league in a specific sport that many in your restaurant enjoy such as soccer, kickball, baseball, volleyball or touch football and challenge other businesses or restaurants in the area. If your staff isn’t particularly athletic, consider staff mixers that incorporate shared meals as well as games that require group interaction such as Pictionary or charades.
Redesign Employee Onboarding Packages. State your vision, mission and values. Stress vacation time and benefits. Get them excited. And, while it’s been shown that pay is not always or even largely responsible for a company’s culture, it’s a good idea to research competitors pay. Unless you live in an area that has embraced bartering, money matters.
Perks for Restaurant Employees. For many restaurants on tight margins, raising wages in order to compete with the local market is just not an option. If you can create a positive company culture that includes offering a few employee perks to let them know they are appreciated, you can produce an environment that people want to work in. This may include a free meal to employees during their shift, discounts if they want to bring friends or family, even developing a rewards program with other restaurants in the area so that staff can experience a discounted dinner at one of the neighboring businesses.
How do Potential Employee’s Learn About your Company’s Culture?
Job seekers often use the following resources when researching a company before they are hired—particularly important in a shallow labor pool.
- Check out your website. They’ll look for employee testimonials as well as your “About Us” page.
- Google your company and research online resources such as Glassdoor that provide reviews from employees.
- Go to your establishment “incognito” to check out staff and customer interactions on the sly.
If you’ve come to the decision that it’s time to establish or change your restaurant’s culture, here are a few additional tips:
Write down your core values—the beliefs that you hold dear. If you and your employees are like-minded in this area, you can overcome many obstacles and create greater engagement, performance, and long-term, brand-loyal employees. If you and your employees are not like-minded in this area, it’s safe to say that you or they will eventually call it quits.
Stand for your core values. If you have a written company policy that sounds good but doesn’t really represent your true self, your employees will, ultimately, see right through it and you. Authenticity is good for both you and your employees. In the end, you’ll find that improving your company’s culture benefits the whole of your staff as well as your customers.