Designing Culture in the Restaurant Industry: Reducing Turnover Cost

Masses and masses of people and companies are migrating to San Francisco in a way that rivals the gold rush. Even BlueCart's headquarters is moving to west! This influx of new people is putting a strain on food industry employees- leading to more turnover. BlueCart reduces employee turnover by cutting down ordering time, reducing errors and making sure what you order is what you get.

Interested in more ways? Check out this great post from our friends at Culture Lab and discover more ways to reduce turnover cost in your restaurant!

Plan

San Francisco is known for a bustling food culture. The strong economy has driven new restaurant openings almost every week, chefs are becoming restaurateurs, and others are establishing restaurant empires. There is no shortage of places to eat, however, restaurants are finding one thing in short supply: people to serve and cook the food. The last five months design strategist Franzi Sessler, Ismar Mahmutovic and Tony Gui have worked with a restaurant group (for purposes of privacy they will be referred to as SF Restaurant Group) in San Francisco who currently operate three restaurants and will grow to five in early 2016. One of SF Restaurant Group's growth challenge includes staffing their restaurants in order to maintain excellent food and service quality while reducing current turnover.

The factors behind the labor shortage are influenced by competition from other restaurants, new business models (such as food trucks) and the technology sector. The sheer number of restaurants in San Francisco can influence turnover as employees are drawn to restaurants with a reputable culture and high monetary benefits. Emerging business models disrupting the food industry are providing new opportunities for potential talent to create a meal experience beyond the walls of the restaurants. The unique technology sector in San Francisco offers an attractive work environment, where potential restaurant employees are being lured by a better work-life balance and amazing benefits. This unique competitive landscape is forcing restaurant owners in San Francisco to innovate new pay structures and develop company culture to promote retention. Using human-centered design and business strategy, we explored the opportunities in reducing employee turnover costs and building a scalable company culture which connects new employees to the SF Restaurant Group. This is a story of how we managed to save over $100,000 annually on turnover cost:

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Benefits and 401K plans are not long-term solutions

The SF Restaurant Group had hypothesized the reason they were losing staff to large technology companies like Google and Twitter was because of the incentives offered and regular hours. The SFR Group currently offers a very good health plan their employees are happy with as table stakes but nothing more. Our first initiative was to validate or negate the client's hypothesis that a 401K plan will reduce employee turnover cost.

Our user research included 20+ interviews from the current staff pool (front-of-house, back-of-house, managers and stewards). We learned most employees love the idea of additional benefits, however, it would not change their minds whether they stayed or not. Others were concerned over the cost a 401K plan would be subtracted from their current paychecks. The majority was not sure what a 401K plan did exactly, but having heard from friends and family is was a good thing to do.

In addition, we consulted with accountants and financial advisors in the industry to understand the benefits and pitfalls of the 401K plans. What we found was, due to quick turnover rate, most employees will not benefit from a 401K plan. If an employee quits they will be removed from the plan, resulting in greater costs than projected by the plan management company. There was also a consideration that the plan would become “heavy” as the top earners would contribute more than 60%, resulting in penalties. All these considerations and more lead us to recommend that a 401K may not be a viable option for them. Instead, we chose to focus on building company culture by using other benefits as touch points to reinforce the SFR Group's goals to grow the company.

Learn what your employees really care about

In our initial deep dive, we discovered that the SF Restaurant Group employees are not driven by 401K plans and superficial benefits. We asked them what do they really care about? Why did they get into the restaurant industry? Why are they working for the SF Restaurant Group? What makes a job a dream? These themes were uncovered from our qualitative research:

  • Value of Time: More flexible schedules, vacation plans and more recreational time were mentioned over and over again.
  • Growth: A high percentage of employees expressed a desire to grow and reach personal goals. The ambitions varied from small personal goals, such as mastering a specific task or earning a certificate, to opening their own restaurant someday.
  • Community: More interactions with employees across different restaurants, acknowledgment for recommending a potential new employee.

After the employee needs were communicated to the SF Restaurant Group management, our next initiative was to iterate their current benefits. The aim is to give employees the opportunity to customize their benefits plan (up to $100/month) according to their own personal needs.

Co-create with your current employees

The SF Restaurant Group really values their employees, although they realized benefits were not the reason for employees to stay. They were dedicated to making the time at the company both an amazing experience and a place where employees can grow within the industry.

Employees would now be able to their own benefits (up to $100/month) from a list of offerings, which includes educational classes, certifications, dining credits, travel credits and fitness memberships. In our interviews, we discovered some employees were not interested in any of the offerings, as a result, we designed the option for a $1,200 lump sum bonus at the end year to satisfy that need.

To satisfy the personal growth opportunities, the SF Restaurant Group offers additional company-wide benefits, which includes business classes, culinary classes, wine & beer tours and social gatherings.

The SF Restaurant Group has a strong internal culture. As they grow from 37 employees within their three restaurants to 70 employees, the SF Restaurant Group needs to meaningfully scale their culture.

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Invest into your culture

A great culture provides the context for people to deliver their best work. Culture happens regardless if we plan it or not. The SF Restaurant Group's hiring has primarily been through word of mouth referrals within the industry, this strategy is conducive to a higher probability for the right culture fit. As the company grows from 37 to 70 employees, they need to actively design touch points to sustain and improve the current culture.

Our team consulted culture expert Josh Levine, the founder of Great Monday and Culture Labx. Using the Culture Labx Six Components to Culture framework, we designed a workshop for the five partners to facilitate a space for the first iteration of their vision statement, mission statement, and six components to culture.

  • Purpose: Why should employees work here? What are we doing differently from other competitors? What do we want to do that we aren't currently doing?
  • Values: What are our beliefs of what's important and what's not?
  • Behaviors: What are examples of behaviors that support our values?
  • Recognition: Who in our company is modeling the behaviors? How might we show and not tell? How might we reward those behaviors?
  • Rituals: How might we design benefits, supporting the repeated behaviors we want?
  • Cues: How might we show what we are able visually and verbally?

The outcome of our interactive workshop included:

  1. Where the SF Restaurant Group envisions themselves in five year
  2. First iteration of the vision statement
  3. First iteration of the mission statement
  4. Aligning the purpose of working for the SF Restaurant Group
  5. First iteration of their three core values
  6. Behaviors and Recognitions to support the values beyond benefits (some examples include celebration of employees before shifts begin, including employees in decision-making processes, and allowing employees to lead small projects)

Visually communicate the culture

To support the SF Restaurant Group's challenge in scaling culture, we designed a poster to serve as a visual cue to remind the employees the vision, mission, and values of the company.

As new employees are hired, both the employee onboarding package experience is a crucial opportunity to communicate the company's culture. The original onboarding package was very dull and lacks engagement – employees were even unaware of the vacation time they had. Our final initiative was to redesign the employee onboarding package.

The employees are the touch points between a customer having a great service and food experience. Restaurants in San Francisco need to invest in designing a culture to meet the needs of their employees beyond monetary incentives in order to reduce turnover rates and to attract new employees for growth.

Insights brought to you by,

Franzi Sessler, Ismar Mahmutovic, and Tony Gui

If you are interested in culture recommendations for your restaurant please contact either Josh Levine (josh@greatmondy.co) or Tony Gui (tony@tonygui.com).

CULTURE LABX


CULTURE LABX

This post is by Tony Gui at CULTURE LABX. Culture labx is a global community of founders, designers, and practitioners who curate conversations, connect communities, and experiment with the future of work.

This article is by Tony Gui from culturelabx.com.