It’s a subject that comes up more and more with restaurant leaders in public comments on their companies’ performance: Success runs through one specific role employed across their system.
“The manager role in our restaurants is the most important role we have — especially the general manager or the managing partner,” said Rick Cardenas, CEO and president of Darden, in a call to report earnings for the quarter ending Feb. 26. “Being fully staffed … gives them more time to spend with their team and train their team, develop them and make them stronger and spend that time forecasting their business and spending time with guests.”
Indeed, GMs have one of the widest-ranging positions in an entire restaurant company, one that impacts both guests and crew members. And in today’s climate of economic turmoil and a shallow labor pool, restaurants must pay close attention to recruiting strong leaders and retaining them through ongoing development.
General managers excel first and foremost by forming connections with the often disparate cadre of people working for them, who in turn drive the success of the restaurant, experts say.
At a time when the industry is facing a challenging labor environment, the ability of a GM to create a culture that makes people want to perform well is essential, said Victor Fernandez, VP of insight and knowledge at Black Box Intelligence.
“We are firm believers that the general manager is the critical role within any restaurant company,” he said. “There are many reasons for that, but first of all, what a good manager does — and we see this in the results — is engage their workforce and create higher levels of retention.”
Finding and retaining managers who have these skill sets may require operators to dig deeper in their own pockets, however, and to innovate in areas such as scheduling to create a better work environment for their GMs.
General managers that have longer tenure at the restaurants where they work also tend to have longer-tenured non-salaried workers, according to Black Box research. The opposite was also true, the research found: Higher turnover among GMs correlated with higher turnover among workers.
Restaurants with less employee churn tended to have better same-store sales and drive more traffic, the research found. Better employee retention also correlates with better perceptions among customers, Fernandez said, citing higher customer sentiment scores for food, service and ambiance. In some cases, lower employee turnover even correlates with better value perception, he said.
“Those restaurants are performing at a level that’s providing a much better experience, and it’s translating into better results,” he said.
Although he conceded that several factors contribute to employee retention, the right GM can have a big influence on this important metric.
“We continue to believe that the manager who is there for a while, who is engaged in their work, who cares about the brand and the restaurant itself, will create a culture and an environment in which employees will want to stay longer and be better,” said Fernandez.
Jay Bandy, president of Goliath Consulting Group, said people skills, stemming from what he described as “emotional intelligence,” are key qualities of successful restaurant GMs.
“In today's world, emotional intelligence and having empathy for employees is a critical behavior skillset to have,” he said. “You have to be a person that is willing to listen to others and is willing to empathize with them, understand where they stand, and then from there, be able to work together for the business.”
Young managers in particular sometimes have not yet developed those skills, Bandy said, and even experienced GMs sometimes struggle to maintain a connection with their workers that drives better performance.
“If a worker tells you that they don’t want to take out the trash, it’s typically not because they don’t want to take out the trash; it’s that the manager hasn’t connected with them on some level,” he said. “I think emotional intelligence has a lot to do with that.”
Positive attitude required
Bandy said one of the first things he looks for in a GM candidate is a positive outlook, or what he calls a “yes and how” attitude. This manifests itself as the ability to tackle problems as they arise by finding solutions.
“If you ask them questions and it sounds like they’re looking for direction rather than finding solutions, that’s one of the first things that filters people out for me,” he said.
This positive attitude can be detected during the screening process by talking about their experience and asking questions about real-world challenges they might face when managing a restaurant — for example, what they would do if an employee exhibits negative behavior, or when a customer is difficult to deal with, or when critical equipment breaks down.
“You can get a feel for how they attack problem solving, because a lot of your day as the general manager is problem solving,” Bandy said.
A good GM candidate exhibits signs of a positive attitude during interviews through signals such as their posture, whether or not they smile, and how they talk about their experiences, according to Bandy. If they complain about the challenges of operating a restaurant, that’s a strong indication they don’t have a positive attitude, he said.
Other qualities Bandy said he looks for are what he called “the obvious ones” — characteristics such as integrity and trustworthiness, which he said often readily reveal themselves through conversation.
He also stressed the importance of ensuring that GM candidates have acquired the basic skills they will need to perform their jobs, even if they appear to have extensive experience.
“A lot of people slip through the ranks without the skillset,” he said. “Do they actually know how inventory works, and what it means? There’s a lot of depth of knowledge involved in inventory and food costs. Do they really understand those things? It's surprising how many people in the industry say they know what those things mean, and they only know them superficially.”
Compensation key to retention
Once a restaurant operator has found the right manager, retaining them is the next challenge operators face, and it has become especially difficult amid the tight labor market and the difficult environment the industry has weathered since the beginning of the pandemic.
When Black Box surveyed restaurants last year about why general managers were leaving, the top reasons were higher compensation offered at another company and a poor work-life balance at the job they were leaving.
Many operators said they were offering larger pay increases to drive GM retention, Fernandez said, but some operators also cited more frequent increases. He suggested that rather than annual raises, restaurants should consider implementing a semi-annual raise regimen instead, for example.
Part of the problem, Fernandez said, is that GM salaries have not risen as much as those of other workers. As operators have raised pay for hourly staff to compete with an abundance of other employment opportunities, they appear to have been slower to do so for their unit management. When adjusted for inflation, the median restaurant GM take-home pay declined by 10% from 2019 to 2022, in both the limited-service and full-service segments, Fernandez said.
“We're asking them to do more, there’s a lot more pressure, there are a lot of challenges, and yet inflation is taking away any gains they’re making,” he said. “That creates an environment that makes it easy for them to think about other options.”
The Black Box research showed that compensation is directly related to GM retention, across industry segments. Differences between segments were evident, however, when base pay and bonuses were considered separately. In the casual-dining segment, bonuses became a much more significant factor in driving retention, Fernandez said.
Creative solutions for work-life balance
Creating a better work-life balance for GMs can be difficult for restaurant operators, given the demanding schedules that often include working in the evenings and on weekends and holidays.
“We believe in really trying to be creative around this area,” said Fernandez. “We’ve seen some efforts, such as a four-day work week — it’s had mixed results, but it's an idea out there.”
Other companies are providing managers with not only paid time off for vacations but also providing additional funding for managers when they do go on vacation, he said.
Bandy suggested operators consider trying to create a schedule in which managers get one weekend per month off from work.
“That's a benefit that doesn’t cost anything. It just takes work and planning,” he said.
Understaffing has been pervasive in the industry since the pandemic, but this has placed tremendous pressure on GMs and made their jobs more difficult, Fernandez said.
While the average full-service restaurant was operating with five managers in 2019, this fell to about 4.5 managers in 2022, as many restaurants appear to be operating with one less manager to save costs, he said.
“You need better staffing throughout the restaurant for them to feel supported and be able to execute at a high level,” he said.
Investing in career development
The third most popular reason general managers are leaving, after compensation and work-life balance, was the opportunity for immediate promotion at another company, according to Black Box research. Most restaurant companies are likely to have limited opportunities for advancement beyond the GM level, Fernandez pointed out, which means they need to be able to maintain a level of motivation among their GMs.
Restaurants surveyed by Black Box said they were investing in providing professional development and career pathing for their GMs as retention tools. Even if a GM isn’t likely to be promoted in the near future, they could still be motivated by the opportunity to develop new skills and perhaps be rewarded for taking on some additional responsibilities so they feel they are moving forward in their career, Fernandez said.
Bandy added that in addition to compensation, being transparent with GMs about the challenges and opportunities of the job from the start can play an important role in the retention of GMs.
“The old school stuff still works,” he said. “For one thing, you have to be honest with them when you hire them — meaning that you have to be honest about the job description, honest about the pay, honest about the bonus and honest about the hours they're going to work.”
In addition, he cited the importance of providing sufficient onboarding and training for new GMs. Giving them too much responsibility too quickly is a recipe for high turnover, he said.
Beyond the training and onboarding, restaurants also need to ensure that they are providing the resources that GMs need to perform effectively on an ongoing basis. Equipment needs to be maintained in working order, for example, and goals for maintaining labor costs need to be set at reasonable levels.
Ultimately, the culture of the organization as a whole plays a big role in retention, he said.
“Does your organization nurture and grow people, or does it beat them up and churn them? Those are the extremes, but I find that culture overcomes a lot of flaws,” Bandy said. “If you have a good, positive culture, and people work well together and respect each other, you just don't see the turnover.”