General managers are the backbone of the restaurant. The best employees understand the operations and establish a culture of care and respect for others, while still holding them accountable. These leaders far outperform those who do not pay close attention to customer service, employee turnover, sales, and profits.
The current climate of our industry is creating significant pressures on general managers. When adjusted for inflation, manager compensation in both full-service and limited-service segments is down by over 10 percent from 2019 to 2022 . Also, nationwide staffing shortages have left restaurant managers with less help. In short, the GMs are being asked to do more work for less pay.
There is a movement taking place within the restaurant industry to address these challenges. It is a shift in mindset and has restaurant operators rethinking what they expect from their GMs.
To help explain this shift, let’s compare running a restaurant to flying an airplane. On any given flight, there are two critical roles being performed. One is the flight attendant(s) who are focused on tending to the immediate needs of passengers. The other is the pilot(s) who have her eyes on the horizon and is paying attention to the outside forces that impact the plane. In a restaurant, there is a GM who is in the store focused on the immediate needs of guests, staff, and vendors. There is also a district manager who has her eyes on the horizon and is paying attention to long-term forces and trends that are impacting the business.
GMs are now being taught to fly the plane. In other words, they are being trusted with increased authority, autonomy, and compensation. Why is this so important? Because manager tenure is the number one indicator of employee sentiment. Employee sentiment is the number one leading indicator of customer sentiment. And customer sentiment is the number one leading indicator of sales growth.
Below are three specific actions that restaurants can take to convert their managers into operators:
Provide managers with operator tools
Just like all the buttons and levers on an airplane may be baffling to a flight attendant, restaurant operations can be just as overwhelming to new managers if it is not optimized for quick action.
Empowering general managers with accurate, real-time data and reporting is key to driving profitability. Their time should not be spent in the back office trying to read spreadsheets, making sense of old data, or piecing together disparate reports to make sense of the financials.
Implementing an easy-to-read, timely “control panel” can help general managers make informed decisions that drive growth.
A simple way to begin this process is to provide a one-stop shop that displays real-time prime costs (Sales - COGS - Labor = Prime Profit):
1. Sales – Daily forecast vs. actual sales to show trends.
2. COGS – Purchases, inventory, and recipe management all culminating into the Actual vs. Theoretical Analysis report at the end of each period.
3. Labor – Real-time labor data up to the hour. Also plugging in forecasted sales to the Scheduling module.
4. Prime Profit – Seeing an actual P&L through the Operations Statement which shows P&L info for the current week, period vs. budget, and last year.
Help managers understand the “why”
To become effective operators, general managers must understand the underlying reasons behind their actions. Invest the time to ensure that they understand why each task is important. Once they understand why daily duties such as entering invoices, asking for credit memos, or conducting inventory are important they will be more likely to focus on the result rather than the activity.
By involving managers in the decision-making process and explaining the rationale behind choices, operators foster a sense of ownership and engagement. Regular team meetings, one-on-one sessions, and feedback loops create an open dialogue that strengthens trust and aligns managers with the business's mission.
Ensure managers have “skin in the game”
Without skin in the game, managers are not personally impacted by the business’s performance. Providing initiatives to reward GMs for optimal performance encourages them to run the restaurant as if it was their own.
One way to elevate the trust you have in the manager is to change their title to “leader” or “restaurant operating partner”. Next, build a comp structure that allows your leaders to accrue equity in the business by offering an additional compensation stream for those who deliver on the company’s business goals.
When compensation is based on company performance, the manager’s decisions will be based on "what's best for the store" instead of "what's best for me." For example, a general manager who earns $100,000 per year in base salary can be offered the ability to earn $10,000 in stock grants for high performance as an incentive.
Providing avenues for professional growth and advancement within the organization or future franchise opportunities motivates managers to develop their skills and take on greater responsibilities. Jimmy John’s restaurants are a great example of how a corporation and its franchisees can offer training and development programs, as well as internal promotion opportunities, demonstrating commitment to their employee’s long-term career progression.
Transforming general managers into successful operators requires a comprehensive program. By equipping managers with modern technology, mentorship, and performance-based incentives, operators can inspire managers to become proactive leaders who drive profitability and elevate the restaurant to new heights.
Morgan Harris is the Co-Founder and Chief Customer Advocate at Restaurant365.