Wendy’s made waves last week when it announced during its fourth-quarter earnings call that it would be making service and experience improvements to compete more with fast-casual companies like Five Guys.
Executives at the iconic brand stated that they would expand Wendy’s new prototype, but it was another part of the strategy that resonated in the industry: The company plans to review all store employees—from counter employees to district managers—and do “a complete people reboot,” said Steve Farrar, Wendy’s chief operating officer, during the earnings call.
The reboot will entail keeping only "the five-stars" and "rounding out the crew with exceptional new hires," Farrar said.
At a time when unemployment is still high, the economy is still shaky, and job creators are universally praised, mass layoffs may strike some as being insensitive. But human resources experts say this strategy could pay big dividends for Wendy’s.
“Wendy’s could devote gazillions of dollars to new products, new marketing, reimaging, etc., but if they keep a lot of disengaged, poorly trained employees, then it will all fail,” says Joni Doolin, founder and CEO of People Report, a human resources research and analytics firm.
“From a very broad perspective, they are spot on in terms of identifying how critical it is to make that step.”
Doolin says Wendy’s initiative will likely be very expensive, and that it will “require a lot of communication and a lot of training.” But she says stores should see increases in same-store sales within three to six months after going through the reboot.
“These are not complex jobs,” she says. “Those standards and training should be delivered in a reasonable amount of time.”
John Kelley is the vice president of training and human resources for White Castle, as well as the incoming president of the Council of Hotel and Restaurant Trainers (CHART). He says improving a company’s in-store experience would either require training new staff or retraining existing staff, so Wendy’s would be in for a big investment one way or another.
With this method, Kelley says, Wendy’s has an opportunity to weed out staff members that may be dragging an entire team down. He says high-quality crew members tend to do better when surrounded by other high-quality crew members.
“People like to be working with other people that are like them,” Kelley says.
But for other companies interested in a complete “reboot,” Kelley suggests they exhaust all of their other options first.
“I think you want to make sure that you … have given every opportunity for those team members, and make sure they’re well trained,” he says. “Sometimes, despite your best efforts, there are people who have potentially become disengaged and you’ve done everything you can to try to engage them.”
Kelley also reminds that while it might seem like bad timing to lay off workers, the jobs themselves will not be going way. “There’s an awful lot of people out there looking for jobs,” he says. “While they might be putting some people back in … to the pool of unemployment, they’re going to be replacing them.”
Wendy’s might also be striking while the iron is hot. Because of the recession, Doolin says, there are many more quality employees joining quick-serve teams, and many more still available for hire. She says that while the fast food industry used to be perceived as an industry of teenage workers, today the average age of employees is closer to 30.
Also, while turnover in the industry historically hovered above 100 percent, she says the average today has “dropped like a rock” and is “well below 100 percent”—closer, she says, to pre-recession turnover rates of the casual-dining industry.
But turnover is starting to go back up, Doolin says, and 2012 will see more quick-serve companies snatching up top-notch employees.
“We are getting reports that the majority, over half, of quick-service companies who were involved in [People’s Report’s] Workforce Index this quarter plan on hiring additional staff,” she says.
By Sam Oches