Is Your Location Maximizing Sales?
As CEO of PFSbrands, I know our company is only as good as the team we’ve built. That’s why we have witnessed such explosive growth in the foodservice industry. It’s because we have put together a highly-skilled, experienced, and ambitious team that aligns with our core values. How did we do this?
Just as Jim Collins discusses in Good to Great, you need the right people on the bus and in the right seats. Not only do you need the right people doing the right jobs but you need to recruit for a mindset similar to your company culture! It doesn’t make much sense to hire the best worker in the world if they hate their job and continually bring others down, right? Or if your corporate culture is energetic and fast paced, why would you hire someone who doesn’t embody that? Hire for talent and recruit for the right mindset. If you don’t, it’s going to cost you way more in cash and revenue.
Bad Employees Burn Your Cash
You may have started your own business because you wanted to be your own boss, help the local community, or be passionate about your work. However, I bet you did not start your own company to carelessly blow your money. By hiring bad employees that is exactly what you are doing. If you hire employees that don’t care about their job, don’t want to be there, and have no ambition to improve, it is going to lead to high employee turnover. So what? Recruiting (which you may not be doing), hiring, and training new employees every week kills your bottom-line especially when your business is a revolving door of bad employees!
Get this, a CAP (Center for American Progress) study found that the average turnover cost for low-paying, high-turnover jobs (typical of the foodservice industry) was 16% of the annual salary. So an employee that makes $9/hr will cost you roughly $2,995 in unforeseen costs (check out this simple turnover calculator which will give you a rough idea of how costly it really is). That’s quite a chunk of change. Think about losing 5+ quality employees a year… Pretty daunting! But it’s just not straight cash they are costing you, they are also costing you revenue.
Bad Employees are Customer Killers
If you are in the foodservice industry (or any industry with customer interaction) bad employees are killing your sales. I’m talking about reducing your number of loyal, returning customers and therefore your store sales. Bad, unmotivated employees do not keep the store clean, food fresh, and their interactions with customers are borderline embarrassing. I bet you’ve experienced it firsthand before: some individual behind the cash register that couldn’t care less if you ordered anything… What a great, welcoming feeling, right?
You could have the best store, decked out with the best equipment, and you might even have the tastiest food in town but if your service is terrible then you’re sunk! We aren’t the only ones seeing it either, the 2016 Progressive Grocer’s survey of supermarket executives found that engaged associates were the most influential at securing strong daily deli sales (84.8%). So if you want stronger sales, then get better employees! But this can be quite a struggle, with the survey also finding that recruiting effective employees was the biggest problem deli departments faced (8.0 on a scale of 1-10). So, that begs the question, “What can you do to recruit and retain quality employees in the foodservice industry?”
Recruiting and Retaining Quality Employees
One effective method is to increase entry level pay and reward those quality employees each subsequent year. A recent CSNews.com article, depicted how Ricker’s (800+ employees) has worked to employ enthusiastic and dependable people that share their core values. Last summer they increased all entry-level wages $1.75 higher than minimum wage and even more for their third shift employees. After one-year of employment, their pay automatically increases another $1 per hour.
Before rejecting this notion, think of how this can improve your bottom-line. Lower employee turnover results in less money spent on hiring and less money spent on the costly training process. Likewise, happier employees are likely to engage your customers more effectively and thus increase your store sales and the number of loyal, raving customers. Simply put, with less turnover and improved store sales, your bottom-line can only go up! It’s definitely some food for thought!
Another effective method to recruit and retain quality employees is to embrace an open-book management system along with a profit distribution plan. When you educate your staff on the financial challenges of operating a foodservice outlet, you teach them what really matters, AND you provide them a stake in the outcome, they will naturally produce better results. If you incentivize them on the NET PROFIT how can it not be a WIN-WIN scenario?
Do Your Employees Understand Business?
The one thing that every business owner needs to know is that most employees don’t understand the challenges of business or what it takes to be successful. Think of your business like a game and understand that all of your employees don’t know the “rules of the game”. How could they possibly help your team win if they don’t know the rules and they don’t even know what winning is? Would you put a group of kids out on the soccer field without them knowing what the object of the game is? Even more frustrating, imagine playing a game and never seeing the score.
The majority of business owners hide the numbers from their staff. The biggest mistake business owners make, including me in the early years, is that they ASSUME everyone understands business thus they don’t provide visibility to employees. Therefore, a very small percentage of employees truly have any clue what winning in business looks like.
Foodservice is demanding work, requires a customer oriented personality, and produces a solid gross profit opportunity. If you own a supermarket or convenience store, why wouldn’t the foodservice/deli area be one of your highest paying jobs? Consider making the foodservice/deli department an advancement opportunity for the “best of the best”. If you commit to getting the right people in these areas, and if you teach them about the expectations, your sales and profits will soar.
Matching of the Mindsets
Now that we have wages figured out, it’s time to recruit and hire effective, loyal employees. Study the Topgrading techniques and look for “A” players that will help your business grow. Spend some extra time to find the right person and create a mindset of continuous recruitment. Always have potential candidates on your “bench” so you have a pipeline of potential employees.
You may be saying to yourself that your location has such high turnover it really doesn’t matter who works there as long as someone is there. If you don’t care about your customers or your bottom-line, go ahead and keep this mindset. However, hire employees with the right mindset, reward them, help them advance their career, and recognize their victories. If you do those things, you will find that your employee retention is better, your customer service is better, and your revenue is higher!
Improve Your Employees, Improve Your Store
Cash is King, so why are you wasting it on bad, ineffective employees? It all comes down to your recruiting and hiring process which can help improve your revenue and decrease your employee turnover. While you may think you are doing your bottom-line a favor and skimping on hiring/wages, in reality you are missing the extra gross sales that are critical to your success in foodservice. Like most businesses, in foodservice great top line sales volume cures a lot of things. The business world is not getting any easier. To be successful you will need to take hiring and retention of quality employees seriously in order for your business to grow!
For techniques to find quality employees and retention them, check out our informative business communication series over on PFSbrands.com.
Copyright © 2018 Shawn Burcham. All Rights Reserved.