It’s no secret that employee turnover in the foodservice industry is one of the highest in the labor force. But while many quick-serve operators view high turnover as an inevitable part of business, some brands are offering employee-focused benefits to reposition their concepts as long-term career options instead of the site of dead-end jobs.
Experts say positioning quick-service jobs like this is a smart move as the economy slowly strengthens and the workforce becomes more competitive.
“Foodservice positions are typically seen as a job that people will come to work through the summers or as fill-ins during slow economic times,” says Kristine A. Sexter, president of WorkWise Productions, a consultancy specializing in recruiting and retaining talent. “But the stereotypical perception is that most people don’t stay and make a career of it unless they go into management.”
Sexter says quick-service operators compete with other industries for the same employees, giving people less reason to stick around if they aren’t satisfied with their job.
“They think, ‘I can quit my job on a production line at the window manufacturer and tomorrow go and apply for a job at a quick-serve company, and then next week apply for a job with very little training in health care and be making the same amount of money,’” Sexter says. “So it became a competition. You’re not just competing against other fast-food [companies], you’ve got to compete against other industries.”
One quick-service brand, St. Louis–based beef sandwich chain Lion’s Choice, has achieved employee retention rates that are nearly unheard of in the quick-service industry. More than 80 percent of the company’s approximately 275 full-time-equivalent employees have been with the company 10 years or more. Jim Tobias, president of Lion’s Choice, says the company recently set a record of having no turnover in all of the brand’s 15 stores over the course of a year.
He says a big reason for his brand’s retention rates are the benefits offered to employees, which he says aim to both attract and retain employees. To figure out which benefits do that best, Tobias says, the company asked employees what was important to them.
“Offering life insurance doesn’t do much to attract new people, because most people in the restaurant business are younger,” Tobias says. “The last thing they’re thinking about is life insurance. Things that new hires usually look for are things like medical insurance and dental insurance. So that helps get people in the door. Then, to retain people, we have things that help them on a long-term basis, such as the 401(k) program and life insurance. Those are things that are important to a person who’s been here for 10 or more years.”
Robyn Piper, cofounder of Piper Jordan, a consulting firm specializing in restaurant and retail employer benefit platforms, confirms that knowing what is important to employees is vital in crafting the right benefits program.
“What type of benefits to offer is always an employer-by-employer answer,” Piper says. “The employee demographics must be reviewed, because a 35-year-old female will inevitably desire something different than a 25-year-old male. I believe in offering a diverse suite of benefits, which allows an individual employee to select what is meaningful to them and their family at that particular stage in their life.”
This means it’s important for executives to understand the type of employee their company attracts, Piper says. “Are they young, college-age students, or are they 30-something parents? Build around them,” she says. “If you build a platform around the employees’ values, and not around yours as the plan-offering decision maker, you will build a platform that is attractive, is of value, and is protecting the employee—your most important investment.”
While more traditional benefits such as health and dental coverage, life insurance, and retirement plans are still important to quick-service employees, operators must get creative with the types of benefits they offer to truly stand out in a competitive market, the experts say.
Boston-based Boloco, a fast-casual burrito chain, recently started a transportation benefits program for all employees. The benefit was developed through quarterly retreats with employees to find out what was important to them. It also funds public transportation passes and gas cards for both full- and part-time employees.
“It’s not about what we decide they want, it’s about what they decide,” says John Pepper, CEO of Boloco. “We did a voting process, and transportation discounts were at the top of the list. It’s a very democratic process where it’s not being led by the top; it’s being led by the people it actually affects.”
Sexter says transportation stipends are a benefit valued by many quick-service employees. Another is paid time off. “If you ask most employees if they want to work and get paid double or if they want the day off as a reward, the majority will say they want the day off. They don’t want the money,” she says.
But money should never be overlooked. Pepper says Boloco raised its minimum wage to make sure the company was drawing high-quality employees with attractive compensation. Its minimum is now $9 an hour, while its average is $11 and more senior employees earn between $11 and $15.
“These aren’t groundbreaking numbers, but they’re higher than most of our peers,” Pepper says. “And we need to go higher.”
For operators concerned about the cost of benefits or higher pay rates, Sexter suggests they consider the cost of turnover, which she says is between 5 and 20 percent of each employee’s annual salary.
“You need to sit back and say, What is turnover costing me? There’s a turnover calculator on my website to illustrate how shockingly expensive it is,” she says. “It’s smart to sit down and ask employees why they stay and why they quit for a good sense of what the drivers of retention and turnover are.”
Piper says that in addition to asking employees for feedback, operators should also do analysis and benchmarking. She says it’s good to understand what benefits peer brands are offering and what kind of recognized turnover or return on investment they’re getting from doing so.
“If the evidence is compelling, which we can show that it is, companies will find the means in which to implement some type of benefit offering,” Piper says. “As budgets have been minimized over the years for employee benefit plans, we recommend that an employer begins slowly; perhaps all employee voluntary plans, followed by measurement of turnover and employee satisfaction.”
Tobias says operators will pay if they fail to engage and retain employees. “For every dollar we spend in retention through increased benefits, we’re saving money, a lot of money on recruiting and training,” he says. “You’ve got all the uniforms and got them signed up through payroll systems. It really saves a lot of money by decreasing your turnaround.”
Sexter says a good strategy for attracting more stable employees is tapping into valuable existing crew members. She says it’s smart to choose strong employees and ask them for recommendations, because “most people tend to be friends with people with similar values and similar work ethics.”
Dedication is the ultimate goal in keeping turnover low, Tobias says. He says operators who show dedication to their employees through benefits programs will find that those employees show dedication back.
“If you offer them benefits, you’re going to save money by not having to spend so much time turning people over and over again. How can you get good food and good service out of people working there three weeks? You really want the person who’s been around 10-plus years. The more money you put into benefits, the more money you’re getting back in your people.”