Retention, Turnover - the Good, the Bad and the Ugly
by Bob Gershberg, CEO/Managing Partner Wray Executive Search
Lost productivity, customer dissatisfaction, reduced business, exit expenses, recruiting, interviewing, hiring, training and orientation; the long list of turnover costs has been drilled into our heads for decades. Cost estimates of losing an employee range from 30% of annual salary for entry level to 400% for executive level. I have written about and preached the value of solid retention programs often over the years. During tight talent pool periods we all focus on retention. The truth is turnover can be good, very good in fact, for performance driven companies. A workforce filled with under-performers and stale managers is far costlier than the expense associated with the recruitment and training of fresh, ambitious individuals.
Rather than a general drive to minimize turnover, we are well served to retain our top performers, strengthen our mediocre performers and oust our weakest performers. We must create innovative retention systems. Do not reward managers for keeping turnover low but only for keeping it low for the top and middle level performers. There should be no retention goal set for the bottom 20%.
by John A. Gordon, Principal and Founder, Pacific Management Consulting Group
WHAT'S IN A NUMBER OR A CALENDAR VIEW?
Plenty. We restaurant types live and die by numbers all the time. For example, in the restaurant M&A business, the calendar and numbers matter a lot in plotting the attractiveness of a transaction. In 2020-2021, QSR brands in particular were coming off of an early 2020 sales recovery, run-up of average ticket per transaction, closed dining rooms, higher drive through, and higher digital (think: higher average ticket as a result). Food and labor inflation had not yet hit.
Contrast to now, where restaurant level margins (of both QSR and sit-down restaurants) continue to be hit by rising food, paper, and labor rates. Restaurant operators everywhere are griping about margins 400-500 bpts lower than last year. Since the current year EBITDA base (adjusted or not) is now down, operators are finding their businesses are worth less, using the traditional earnings multiples and the current year EBITDA dollar base. That has caused selling to freeze up. Some small acquisitions have been noted. IPOs and the really big acquisitions are affected by interest rate declines, fear of a recession, prior deals, and intraday stock volatility.
by Sheila Bennett, Executive Director, CORE Inc.: Children of Restaurant Employees
Operators – CORE: Children of Restaurant Employees is a national non profit that serves our industry. They provide financial grants to employees with children when either the employee that works in your operation, their spouse or child faces a health crisis, death or natural disaster. At a time where we all seek ways to provide benefits and resources for the employees that bring our brands to life – CORE is here to serve you. They were founded and funded in the early years by suppliers in the beverage industry who wanted to help our industry’s children.
Check out the National Restaurant Association's latest report on the Economy from the perspectives of Restaurant Operators
Although job growth remained healthy in recent months, restaurant operators are growing more pessimistic about the economy.
Employment in both the restaurant industry and overall economy continued to rise at a steady pace in June. Eating and drinking places* added a net 40,800 jobs in June on a seasonally-adjusted basis, according to preliminary data from the Bureau of Labor Statistics.