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Training budgets grow as economy improves, companies start hiring again

After keeping a tight rein on labor costs during the recession, Landmark Restaurant Group, a 26-unit IHOP franchisee based in Santa Monica, Calif., is beefing up training budgets for its restaurants this year. 

Some of the money will be for training staff at new store openings, but much of the funds will be dedicated to developing current staff, said Michele Lange, director of training for Landmark. 

“Our mantra right now is getting back to the basics,” Lange said. “We’re looking at training as a way to give our employees the opportunity to perform
better. And now we have more money dedicated to that goal.”

The IHOP franchisee is one of many restaurant operators increasing training dollars after trimming labor costs during the past two years. It’s another sign that the recession is loosening its hold on the industry. According to operators, employee turnover is up and business is improving, forcing them to both hire new employees and improve service as competition heats up. The result is a renewed focus on training.

A February survey by the Council of Hotel & Restaurant Trainers, or CHART, found that the dollars allocated for training are on the rise. In a poll of 140 trainers, 44 percent said their companies planned to increase training budgets this year, 47 percent said training expenses should stay the same as last year, and only 9 percent expected a decrease in spending. That compares with a 2009 CHART survey in which only 19 percent of respondents said training budgets were up, 28 percent said they had stayed the same, and 53 percent said their training budgets decreased. 

The majority of respondents were from casual-dining restaurants, then quick-service and fast-casual eateries, followed by hotels and fine-dining establishments.

“At the very least, people are budgeting the same amount this year, but at the very most, compared to the last couple of years, training and development has increased,” said CHART president Mike Amos, who is also a Salt Lake City-based franchise consultant for Perkins & Marie Callender’s Inc. “That’s terrific for the service industry.” 

Landmark’s Lange also found the survey encouraging. 

“When the economy is down training is often the first thing to go, even though you realize you need training,” she said. “The industry was cutting corners, and the quality of service did go down because people were not properly trained.” 

Ivar’s Inc. also has seen an uptick in training hours, said Patrick Yearout, director of training for the Seattle-based company, which operates three casual-dining restaurants, 20 stadium concessions and 26 Ivar’s Seafood Bars, a quick-service concept. 

The company, which has been tracking training hours at its seafood bars since 2004, saw training hours for new employees and managers drop 60 percent from 2008 to 2009. Training hours remained unchanged through 2010 but now are on the rise, partly because of turnover and partly in preparation for a new store opening this spring — the first one in more than five years, Yearout said.

“In the last four months we’ve used more hours training than we did for the same period one year earlier,” he said. 

Ivar’s has been offering more online training to reinforce skills, Yearout said. Last year the company started using to host its online certification quizzes, allowing managers to quickly test, grade and certify their employees in different workstation responsibilities. More than 500 employees have gone through the training. Ivar’s has also started a six-hour leadership development class for new managers.

Despite the effects of the recession, White Castle opened 60 stores last year and has maintained its level of training for new employees, as well as focused on keeping current workers trained, said John Kelley, chief people officer for the 400-plus-unit, Columbus, Ohio-based quick-service chain.

“Training is one of those things that you have to be able to offer because it’s a point of differentiation between players in the industry,” he said. 

The chain continued to invest in training for staff, despite having the lowest employee turnover levels since it began tracking worker retention, Kelley said. Last year White Castle’s hourly worker turnover was around 45 percent, and management turnover was around 2 percent.

High unemployment in the past two years has contributed to low employee turnover across industries as workers remained in jobs rather than risking being unable to find new employment. For some operators the recession has been a time to focus training on staff development, particularly among supervisors and managers.

“Even if you’re pretty good at it, as a general manager, it helps to have reminders,” Kelley said. “One can always get better at delegating, at communicating with team members.” 

Lower hourly employee turnover made it possible to conduct more development training for managers, he noted. 

“Some of those pressures are relieved, such as constantly interviewing and hiring people like it was in 2004, 2005,” Kelley said. “I find that our managers, for the most part ... love it. They try and take as much as they can.”

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