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The National Restaurant Association has cited a 75 percent employee turnover rate in the industry. Considering the costs associated with replacing a single employee average more than $3,000, retention has long been a bane on quick-service restaurants' bottom line.
Many brands have dumped more resources into training and incentives to try and reverse the trend, but these rates remain high.
St. Louis-based Lion's Choice, however, seems to have cracked the code. Of the chain's 275 full-time employees, more than 80 percent have been with the company for 10 years or longer. Jim Tobias, who has been president since 1997 and involved with the company since he was 12 (it was founded by his father and uncle Clint Tobias and Marv Gibbs in 1967), discussed Lion's Choice's low turnover rates, competitive benefits and company culture with QSRweb.com.
QSRWeb.com: What is the culture like at Lion's Choice and how has that helped with low employee retention?
Jim Tobias: It starts with what we expect from management; we have working managers who roll up their sleeves and get dirty. It starts at the top, with myself, and has a trickle down effect with district managers and so forth. If we're in the store, we jump right in. Work isn't looked upon as a task just for the grunts, it's something we all take pride in and our employees really enjoy that.
QSRWeb: Are there other factors at play besides culture?
J.T.: Another big component is that we hire from within. If you're just one of those fast food managers who moves from chain to chain, you're not going to be a good fit. Ambition is great, people who want to rise to the top fast are great, but we want a steady worker who wants to come in and be happy doing their job and who works hard at it. This is also part of our culture. We end up attracting people who value security more than fast advancement. It's hard to find security today, and as long as you manage your part and work hard, we'll take care of you.
QSRWeb: In what ways do you take care of your employees?
J.T.: We offer competitive salaries and benefits not typically found in fast food. Our employees who work 32 or more hours a week qualify for medical and dental insurance. We have a 401K program and match 50 percent, life insurance, family and medical leave and paid vacations.
QSRWeb: How is your company able to afford these types of competitive benefits?
J.T.: There is a big expense associated with high turnover and we save a lot by not having that. With paperwork, time, new uniforms, everything, it all adds up. Also, I'll take one of my long-term $10.50 hourly employees and they can work circles around a new person working minimum wage ($7.25). They (long-term employees) understand the business more, the customers more, and that's all worth it. You want your employees to be representative of your company and when you have long-term employees, they are.
Plus, since we're not publicly held, I don't have to worry about stocks or next quarter and I think it's easier to make good long-term decisions that way. That includes how you treat employees, pay them and what you expect from your managers. I could always put a good bottom line together just by cutting back and laying off people and squeezing more from those still here. But then you go through burnout, people quit, you get new people and have new training. You can't have faith that all of those new hires are representing your company, so that's a big deal for us.
QSRWeb: Even though you're a chain, do you consider the company to be more aligned with the mom-and-pop establishments?
J.T.: We sort of have the best of both worlds. I know 95 percent of all our employees personally and, in that way, it's like a mom-and-pop place and our employees know we care about them. But at the same time, we have bigger-company-type policies many mom-and-pops don't have, and our policies are there for the protection of the employees. By following policies, we can ensure fairness that employees aren't going to be treated differently in similar situations.
QSRWeb: Does the company mandate that franchise operators offer benefit packages?
J.T.: It is not mandated, but they are aware of how well it works for the company and many of them follow. It's not a mandate, but it is a suggestion.
QSRWeb: Many companies have predicted how Obamacare will affect their labor costs when it goes into effect in 2014. Do you have that same concern even though many of your employees are already covered?
J.T.: Am I worried? Of course. But my hope is we can continue to offer everything the way we always have and I am positive and take solace that, since we've already been offering more than everybody else – most others – then whatever becomes the law will cost the others even more than us. It gives me wiggle room and I have a competitive advantage by already offering this.
QSRWeb: Do you have a plan on how to continue maintaining a culture that ensures satisfied employees and a low turnover rate?
J.T.: I know if we want to retain people in the long term, then we have to take care of them, so I imagine we just continue doing what we've been doing. This started as a family business and it's easy to treat people like family when they really are. But through the years, the family members retired and we kept the structure that was already there. I can save a lot of money by cutting health insurance or 401K plans, but I think the morale problem would be bigger. We have to take care of these people because they take care of our product and the brand. If we have happy employees, we have happy customers, it's really simple.
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