A Menu for Management

By Garry Kranz

Jun. 21, 2007

When Bubba Gump Shrimp Co. goes trawling, tiny sea creatures aren’t the only catch. The San Clemente, California-based company is also trying to haul in the best workforce possible—one that’s competent, highly motivated and fiercely loyal.

    Themed after the 1994 Tom Hanks film “Forrest Gump,” the restaurant franchise is reshaping perceptions of the restaurant industry, which for decades paid little attention to high turnover and even less to career development. From a single restaurant on Cannery Row in Monterey, California, in 1996, Bubba Gump Shrimp has grown into a chain of 25 restaurants globally, including 18 in the United States. Many are in tourist hot spots, including Honolulu; Breckenridge, Colorado; Daytona Beach and Orlando, Florida; Gatlinburg, Tennessee; and midtown Manhattan.

Since formally establishing its training and development department in 2001, turnover in the managerial ranks has been reduced by half, from 16 percent down to 8 percent. In addition, most of its approximately 200 store managers have been promoted from within.

Retention of managers shows up in hard dollars. Having well-trained managers who stick around saves a Bubba Gump restaurant about $600,000 in recruiting costs, or about 10 percent of its estimated annual sales of $6 million, says Steve Moreau, who launched the initiatives when he was director of training and development. Moreau took over as the company’s communications director in 2006.

In addition, Moreau says year-over-year increases in same-store sales, as well as a higher concentration of sales per square foot—two key metrics used by restaurants and other retailers—are the direct result of more intensified training efforts.

In an industry that has a tough time luring new recruits—much less persuading them to pursue food service as a career—Bubba Gump Shrimp is setting standards for innovative training. It was one of five food service chains in 2005 to win a Spirit Award from the National Restaurant Association Educational Foundation, given to restaurants that demonstrate industry-leading practices in hiring, training and retaining employees.

“People are our greatest asset simply because they are the [main] point of contact with our guests. Failure to invest the training and development of those people would be a failure to grow our business,” Moreau says.

Trawling for talent
   Employee training at Bubba Gump Shrimp is closely integrated with such functions as recruitment and hiring. Candidates are assessed during behavioral-based interviews that focus on personality and aptitude. Emphasis on related job experience often is secondary to a person’s attitude, Moreau says, which makes it easier to train someone after they are hired.

“Rarely do we ask about an individual’s experience level. We are most interested in who are they in terms of their attitudes and behaviors,” Moreau says.

He adds: “We can train people to be effective servers, cooks, bartenders, whatever. But we can’t train them to be kind, thoughtful of each other, and [to] interact well with colleagues and guests.”

The approach of hiring for attitude enables Bubba Gump Shrimp to begin grooming potential leaders from the first day on the job, using a combination of job shadowing, classroom work and relevant skills training.

“The goal isn’t to have people complete training in a set number of days,” Moreau says. “The goal is to train them so they’re prepared” to do the job confidently

Bubba Gump Shrimp illustrates how attitudes toward employee training are shifting within the restaurant industry. For years, restaurants were content to tolerate high staff turnover as a way to keep payroll costs low. It is a practice that experts say is slowly dying out, as large dining chains recognize the value of staff continuity brought about by career development.

“If you’re spending lots of money to find good people, it makes good sense to invest in their development,” says Teresa Siriani, president of People Report, a Dallas organization that tracks human resources trends in the food services sector.
Siriani’s organization notes that two-thirds of casual-dining restaurants plan to launch new training programs in 2007, with one in three fast-food chains doing so.

Competition for consumer dollars is intensifying. The restaurant business may be the unheard signal of a strengthening U.S. economy. As consumers grow more confident, they are eating out more and spending more when they do. Restaurants across the country are looking forward to a record-breaking year, with sales expected to jump 5 percent to $537 billion in 2007, according to the National Restaurant Association, a Chicago-based trade group.

The skyrocketing sales are generating above-average job growth in the industry. Roughly 13 million people work in the U.S. food service industry, second only to the federal government in total employment, according to the Bureau of Labor Statistics. By 2014, employment growth in dining establishments is expected to increase 16 percent. That equates to about 1.9 million new jobs. By comparison, the total U.S. labor force is projected to increase 1 percent annually during the same time frame.

To prepare, restaurant chains are pushing food services as a potentially lucrative career option, especially for people who aspire to positions in management. To overcome the grueling schedules, companies have begun to pay restaurant managers handsomely. General managers are usually between 30 and 33 years old, much lower than the average age for managers in other U.S. industries, and operate franchises that generate about $2.5 million in annual sales, Siriani says.

“How many people in their 30s can say they’re running a $2.5 million business?” Siriani says, adding that it it’s not unusual for established GMs to earn six-figure salaries.

Top-flight managers at Bubba Gump Shrimp often get recommended by their peers for an advanced development program known as President’s Camp. Instituted in 2002, the invitation-only program is part of Bubba Gump Shrimp’s succession planning.

President’s Camp enables restaurant managers to meet with top executives to hone the skills they’ll need to move up to more advanced managerial slots, Moreau says. During the weeklong event, promising top performers get some of the tools they’d need for management, including lessons in how to read financial statements and courses in personal development.

Managers are chosen by peers based on sets of objective criteria, such as a manager’s rate of employee retention, guest satisfaction surveys and guest return rates—although selection also is somewhat subjective. If an established manager believes a younger manager can benefit, that is another valid criterion for recommendation, Moreau says.

In addition, Bubba Gump Shrimp runs an in-house coaching program that certifies fast-rising professionals as employee trainers. They include bartenders, chefs, head waiters and other managers who interact with employees and coach them on the job. In a sense, these trainers embody a type of retention success by assuming greater leadership roles and “ownership” of the business, Moreau says.

With the employee-trainer piece in place, new managers assigned to run a store already have a ready-made support system to ease their transition. Restaurant managers at Bubba Gump Shrimp also undergo a form of reverse mentoring, learning each job skill from employees in a real work setting. Managers train a minimum of three days in each job, with employees coaching and evaluating them. This approach does two things, Moreau says.

“First, it establishes empathy [in managers] for what employees go through and the demands they face,” he says. “Second, it establishes our trainers as valuable assets for managers once they graduate” from training to run the restaurant. On average, general managers stay with the company about 6½ years before changing jobs, Moreau says.

Other franchises are following similar development paths. Monical’s Pizza, a 57-store chain in the Midwest, has partnered with Harvard Business School Publishing to provide a suite of workforce development programs for its 1,000 employees, from people in entry-level jobs to upper management.

In an industry where turnover is as high as 300 percent, Monical’s recognized that motivated managers can quickly make a positive impact on a restaurant’s bottom line and its ability to satisfy customers, says Harry Bond, the company’s president.

By focusing on individual training for managers and giving non-managers a chance to prove themselves, Monical’s companywide annual turnover has dropped to 53 percent. Management turnover is better, at 7 percent, Bond says.

Turnover by the hour
   As effective as management training is in the industry, similar programs for hourly employees aren’t having the same impact. The rate of hourly turnover spiked to 114 percent in 2006, its highest level since 2003, according to People Report. At 127 percent, Bubba Gump Shrimp’s hourly turnover rate is slightly higher than industry average, a fact partially attributable to many of its restaurants being in areas that thrive on seasonal tourism.

But restaurant chains of all types, from fast-food joints to fine-dining establishments, face similar woes. Siriani notes several factors conspiring to make staffing an acute challenge for restaurants and other firms in the food service and hospitality industries.

For one, she notes many people between 16 and 24—traditionally a strong demographic for finding hourly workers—are opting out of the workforce. Many are deciding to attend college before joining the workforce, but a good many view restaurant jobs as dead-end positions.

Also, now that the U.S. economy is on firmer footing, other talent-hungry industries are aggressively recruiting restaurant employees to fill their own needs.

“If you need energetic, hospitable people who can think on their feet—all the criteria that make for a terrific restaurant employee—why wouldn’t you want that [person] in your business?” Siriani says.

The restaurant industry is trying to capture the attention of would-be workers much sooner. The National Restaurant Association Educational Foundation has been successful in getting its ProStart curriculum in 1,400 schools in 47 states. About 54,000 students take the courses annually.

“We see this as an opportunity to change students’ perceptions of the food service industry and get them to focus on it as a career,” says Wendi Safstrom, vice president of management development at NRAEF.

ProStart consists of two years of coursework, exams and 400 hours of work experience for students to receive a national certification of merit that is widely recognized within the industry. The program also enables students to compete for scholarships and other forms of advanced study in food services at about 60 U.S. colleges and universities.
Those are the types of initiatives that could help restaurants change their approach to training and professional development.

Notes Moreau: “It doesn’t serve us in any way to turn over staff randomly. That’s old-school thinking that just isn’t productive.”

Garry Kranz is a Workforce contributing editor.

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