Turning Down the Heat How Restaurant Managers Can Reclaim Sanity and Success
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assume leadership. But fast-food restaurants are a revolving door. The idea that you’re going to retain front-line, drive- through employees with stock ownership is disingenuous. I would argue that most employees are not in the job long enough to understand the rules. A real succession plan involves identifying key, high-potential employees whom you really want to succeed you. You might set up an incentive plan and sell the company to them over time. This could make sense for some 100-year-old business that is a union shop with people who have worked there forever and are well- established and can form a governing board. ESOPs have been successful in circumstances like that.
Nobody wants to be a restaurant manager. This is one of the biggest problems restaurant owners face, according to ARROW UP Training, a consulting firm to the hospitality industry. Managing a restaurant can become a lifestyle in addition to a job. Many managers put in 50–80 hours a week and experience high levels of stress. Customers are becoming more difficult and demanding. Employee absences are soaring, not only because of illness but because some workers have a more casual attitude toward their jobs compared with the past. No wonder turnover among restaurant managers is high. Rather than engaging in constant firefighting, managers can benefit from clearing some of the underbrush causing the outbreaks, according to Jason Berkowitz, founder of ARROW UP. Before you can solve a set of problems, you have to track and name them. Every day for a month, list your main trouble spots. Don’t be discouraged if the list gets too long. After a month, start identifying small steps you can take to improve operations. And don’t swing for the fences, Berkowitz says. Hitting singles is fine. If you have been putting off tough conversations with problem employees, have them now. Explain the impact of their inept or inconsiderate behaviors and correct them with empathy. As uncomfortable as this may be, it’s better than the pain you will feel when your top people leave out of frustration over co-workers’ lack of accountability. Consider upgrading your scheduling software. To deal with employee absences, implement a program that sends mass texts to employees, inviting them to fill last-minute vacancies. These information-sharing tools build teamwork and empower employees to pitch in to solve problems. Get organized. If certain problems with your work processes crop up over and over on your firefighting list, set up trackable procedures. Compile checklists or training programs to close gaps. Inviting a star employee to help can motivate that person and help them build skills, creating a potential successor one day. Also, consider trusting employees to manage closing or opening routines, to give you some much-needed rest. Well-maintained cameras and security systems can provide a helpful window on the store from afar. As you improve your operating processes, communicate with your employees about the positive aspects of restaurant management. The stable pay, diverse experience, and advancement potential offered by these jobs can help you retain the ambitious employees you most want to keep.
It’s true that ESOPs are gaining traction in some sectors. The number of privately held companies with ESOPs rose by 1.5% in 2021 to 5,973. One reason is because KKR and other private equity firms have started to use them as a way to motivate employees, who actually do benefit when private equity firms flip their companies for a profit, according to The New York Times. But to succeed, these plans must be accompanied by employee education and a strong chance that the company will rise in value and give employees a clear path to cashing out. In the case of quick-service restaurants, ESOPs more often benefit owners by providing a way to extract money from the business. Getting a valuation on stock transferred to an ESOP enables an owner to get a loan. So if your business is valued at $10 million and you transfer a 49% ownership stake to the ESOP, you can cash out, either by having the ESOP borrow money and pay you $4.9 million for that equity stake, or by receiving a promissory note from the ESOP. Plenty of consultants and bankers who put together financing for these plans have a lot to gain. Before you take the bait, take a hard look at the actual benefits for your employees.
– Nate Riordan
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