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Smart Operators Hire GMs From Within

Consultant Fred LeFranc says the best GMs are usually hired from within.

Restaurant general managers are the heroes at the center of the operation’s four walls, and as the labor situation gets trickier, those star players are getting even harder to find. 

The tough labor situation is nothing new, but there are three major factors making hiring more difficult: an ongoing oversupply of restaurants, unemployment hovering at 4.8 percent (1 percent below the historical average) and general job growth. That means managers and potential managers have a lot of choices and won’t stay at a bad operation for long. Turnover reached an industry average of 40.25 percent for management positions, and it’s only grown in 2017, according to research firm TDn2K’s People Report. 

Of course, all that turnover affects restaurant performance. Brands with high turnover are increasingly called out for service failings, and in 2016 traffic at brands with higher-than-average turnover was 2.2 percent lower than average in 2016. 

Retaining good managers also means less time spent training and more time for higher-level strategy.  

“Your governor for growth is going to be your ability to develop general managers, that’s it. Not cash, not real estate,” said Fred LeFranc, consultant and a founding partner of Results Thru Strategy, an industry strategic advisory firm.

One just needs to look Chipotle for a great example of growth through manager development. 

“Until they hit the wall, Chipotle probably had the best succession career path I’ve ever seen for managers,” said LeFranc. “They were opening restaurants left and right, over 85 percent of hires were coming from within and they had such a great career path for people. To become a GM was very aspirational. And the opportunity to become a restaurateur was even better—now all of the sudden it’s $100,000 a year, I’m coaching other GMs, I get a Prius leased in my name. That is really what drove the growth.”

Getting that growth doesn’t necessarily mean paying out the nose. Competitive wages certainly help when all else is equal, but it’s just a matter of time before a pay-driven manager will leave for a wage bump elsewhere. To really retain talent, it all comes back to a familiar refrain: culture.

“What’s interesting is when you ask employees what they’re looking for, you don’t see compensation in the top five,” said Victor Fernandez of TDn2K. “Usually culture is at the top, advancement opportunities, development opportunities and scheduling flexibility are in the top three.”

This is one of the rare areas where franchise operators and independents are on equal footing. After a round of initial training, franchisors rarely provide ongoing employment guidelines for fear of being legally named a joint employer and responsible for the many franchisee employees. The best operators create their own systems, and most share a few important qualities: personal growth, transparency and balance. 

To 10-unit Minnesota Taco John’s franchisee Tamra Kennedy, that growth means education through business book clubs and regular knowledge sharing. 

“We look for GMs who will understand there’s more to know and there’s room to grow,” said Kennedy. “Someone who is willing to take on some of these lessons in leadership, mathematics matter, data; they don’t come to the job with it so we teach it.”

Whatever it looks like, a clear career path and ongoing education also helps identify future leaders already in the system. 

“What I’ve seen is the best general managers are grown from within. They have the best understanding of the brand and the system,” said LeFranc. 

And finally, giving managers room to actually balance managing the restaurants and all the administrative work will keep them from burning out. 

“If you stop and say, ‘What’s the No. 1 focus,’ it’s obviously going to be taking care of guests as they walk in the door,” said LeFranc, but GM tasks go far beyond that. “The skillset a general manager has to have nowadays is mind-boggling. It’s more than just technology, it’s all the law, the compliance, the different things that are pulling at them. If you look at the amount of admin work that’s grown in the last couple decades, that has just exploded.”

It’s time, he said, for operators to find solutions for the sometimes-overwhelming tasks their managers face. 

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