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Restaurants can find chance to lead by cultivating diversity

Restaurants can find chance to lead by cultivating diversity

This is part of “State of the Industry: Diversity,” a special report brought to you by Nation’s Restaurant News in partnership with business intelligence firm TDn2K and diversity advocate Multicultural Foodservice & Hospitality Alliance.

Karim Webb, a three-unit Buffalo Wild Wings franchisee in the Los Angeles area, has captured some of the chain’s top sales awards demonstrating the benefits of diversity in hiring and promotions.

Webb, the 40-year-old owner of the Los Angeles-based PCF Restaurant Management LLC, opened his first Buffalo Wild Wings unit in 2009, early in the Minneapolis-based company’s growth in California, and set about developing minority business leaders in his restaurants.
And that effort has paid off.

Karim Webb, owner, PCF Restaurant Management LLC

So far this year, sales at Webb’s nearly 4-year-old restaurant in the heavily minority Baldwin Hills-Crenshaw district of South Los Angeles are up 35 percent year to date. And in 2013, sales at that unit were up 22 percent over the prior year.

“I’m passionate about diversity,” Webb said. “In urban areas, Hispanics and African-Americans make up the majority of young people. … If I go into a restaurant in a community that I know is diverse and I don’t see people that look like my kids, I take note of that.”

The restaurant industry is known to exhibit diversity in front-line hourly positions, offering many a first foray into the workforce or a supplemental second income. But it is also clear that the multicultural nature of the industry drops considerably with store-level managers and precipitously among corporate-level managers and executives. This current state of the industry’s diversity and inclusion has been measured in a new, comprehensive report from People Report, a TDn2K company, and the Multicultural Foodservice and Hospitality Alliance, or MFHA. Nation’s Restaurant News served as the exclusive media partner for the report.  

The findings are based on a survey of 60 foodservice companies, operating 90 restaurant brands, conducted online between November 2013 and April 2014.

The report, “State of the Foodservice Industry Diversity Report 2014,” found whites occupied about 50 percent of restaurant hourly positions but 92 percent of executive positions. The study shows 29 percent of all hourly employees are Hispanic and 16 percent of all hourly employees are African-American. However, only 5 percent of executives are Hispanic and 2 percent are African-American.

“There’s a lot of diversity at the bottom but not a lot at the top,” said Gerry Fernandez, who founded the MFHA in 1997 and serves as president of the nonprofit organization.

“We can’t say we’ve made progress, but we can say it’s a wake-up call,” Fernandez said. “We have to figure out where we can play to get the best and brightest of talent so we are positioned to communicate that our brands are focused on people like them.”

Victor Fernandez, executive director of insights and knowledge at Dallas-based TDn2K, said the study found about half of larger restaurant companies, or those with annual systemwide sales of more than $500 million, said they have a diversity strategy outside of the Equal Employment Opportunity Commission efforts.

“The industry is attracting a large population of minorities from the ethnic/racial standpoint as well as hiring a lot of women at the hourly level — more than the general workplace,” Fernandez said. “How do you harness that? How do you engage them and make sure they are going up the ranks?”

Who's leading diversity efforts

(Continued from page 1)

The study found diversity statements in place at 67 percent of large companies (systemwide sales of $500 million or more), 44 percent of medium companies (systemwide sales of $50 million to $500 million) and 24 percent of small companies (systemwide sales of $50 million or less). Limited-service concepts had the highest number of companies with diversity statements, with 57 percent, while 37 percent of full-service companies had such statements in place.

TDn2K’s Fernandez said People Report, which tracks hourly and management turnover, found that companies with corporate diversity statements reported an average restaurant hourly turnover 19 percent lower than those that don’t have statements. Restaurant management turnover was 7 percent lower for those companies that had a corporate diversity statement.

TDn2K data saw similar trends for companies that had a specific corporate diversity strategy, with those firms showing a 17-percent lower restaurant hourly turnover than those who don’t. People Report says the cost of replacing a single hourly worker averages $700, while replacing a restaurant manager can cost about $11,000.

“In this new marketplace, in which declining guest counts and flat same-store sales are the norm, any investment that provides an advantage should be pursued relentlessly by any competitive organization,” Fernandez said in the report.

Where’s the ownership?

The 2014 study found 37 percent of all companies reported having a single executive specifically leading diversity efforts.

One such leader is James Fripp, senior director of global diversity and inclusion for Louisville, Ky.-based Yum! Brands Inc., parent to KFC, Pizza Hut and Taco Bell. Fripp said the findings in the State of Foodservice Diversity Report are noteworthy, especially the disparity in the makeup of restaurant-level and corporate-level employees.

“Companies will continue to work against that,” Fripp said. “I know in our organization that is something we are going to continue to focus on and make sure we make headway on because we know that it’s important to the business overall.”

In 2013, Yum reported that minorities and women made up 65 percent of its external management hires and 71 percent of internal management promotions.

Yum has specific programs in place to develop minority leaders, Fripp said. “Our action has become more intentional around continuing to develop diverse talent and going after diverse talent for corporate roles, junior manager ranks and moving them up through leadership ranks,” he said.

Fripp said efforts include mentorship, ongoing development and emerging talent programs. The emerging talent program can have 15 to 25 management candidates each year, and development opportunities include travel with senior executives to international markets, like India, for example.

“The way demographics are changing,” Fripp said, “if we don’t engage those demographics the way that they want to be engaged, it puts … sales dollars at risk.”

Fripp noted a Selig Center for Economic Growth study in 2013 that projected buying power increases of 25 percent for blacks and 47 percent for multiracial groups into 2018, with all groups’ growth exceeding that of whites.

“People, when they go out to shop and eat, feel more comfortable when they see folks who represent them in some way, shape or form, whether it’s background, experience, ethnicity or gender,” Fripp said.

Millennials and other younger generations “not only want to see more diversity,” Fripp said, “but they expect to see more diversity in their workplace and the society.”

“For us in the restaurant industry, the more we can represent that, the more business for us,” Fripp said.

Developing diversity among owners

(Continued from page 2)

Other companies are working to develop a more diverse base of restaurant owners.

Martha Tomas Flynn, senior director of global development services at Canton, Mass.-based Dunkin’ Brands Inc., said the parent company to Dunkin’ Donuts and Baskin-Robbins has partnered with the National Association for the Advancement of Colored People to increase the number of minority franchise owners.

Dunkin’s “Diversity Franchising Initiative” is aimed at increasing the number of African-American owned franchises. Flynn said the two groups will collaborate to offer people of color in-depth franchising education and training as well as addressing some of the financial challenges.

The National Restaurant Association notes that its studies have found a third of restaurant owners are minorities and half of all restaurants are owned or co-owned by women. It also said a third of restaurant managers are minorities and two-fifths of restaurant managers are women. The National Restaurant Association has 40,000 members representing nearly 500,000 foodservice establishments.

The People Report-MFHA 2014 study found the majority, or 52 percent, of all hourly employees in restaurants were women — “a considerably larger percentage than the 47 percent of women that make up the overall U.S. labor force, according to the Bureau of Labor Statistics,” the study’s authors wrote.

However, the study found the percentage of women running restaurants at the general manager level dropped to 29 percent. The corporate level found a similar pattern, with women representing only 31 percent of corporate directors, 23 percent of corporate executives and 17 percent of corporate board members.

Development of minority leaders is an opportunity for the industry, said Webb, the Buffalo Wild Wings franchisee in Los Angeles. “We are in a unique position to be able to train and develop people,” he said.

“It’s about leadership development,” Webb said. “You have to identify people who are culturally competent in the areas in which you do business. It’s not a quota or race thing; it’s about choosing employees who can be community-connected.”

Contact Ron Ruggless at [email protected].
Follow him on Twitter: @RonRuggless

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