Article

Gutting the 'gut feelings' from hiring: 2 restaurant companies' $40M story

Who knew technology could help restaurateurs get the right human touch tableside? Two large restaurant companies tell their highly profitable story.

January 26, 2017 by S.A. Whitehead — Food Editor, Net World Media Group

Who knew that technology could help restaurateurs get the right human touch tableside? Leadership at two large restaurant companies say that is precisely what they've discovered after working with a data-driven talent selection company that takes a high tech, data-driven approach to finding the best-matched employees for an array of foodservice positions with the kind of personalities that will keep them onboard and delivering results long term.  

Restaurant brand, Chili's, and multi-brand restaurant franchisee, American Blue Ribbon Holdings, reported some eye-opening positive results from the their recent collaborations with OutMatch to find and retain topnotch employees. Collectively, the two companies have about 2,200 restaurants worldwide, representing the Chili's, O'Charley's, Nine-nine, Bakers Square and Village Inn brands. 

The bottom-line results from Outmatch's work with the companies include: 
•    $40 million ROI for both companies combined as a result of lower turnover and better customer service, among other factors.
•    Chili's reports substantial employee turnover rate reduction to well below the 61 percent industry average.
•    Generated $5.2 million ROI at O'Charley's through employee-job match improvements.
•    Saved $3.2 million in costs by cutting turnover in 43 states for American Blue Ribbon Holdings brands. 

To produce such results, OutMatch assesses applicants for jobs at the firms involved, which are typically foodservice brands with large distributed workforces. The company's programs assess potential employees for personality traits which research proves produce success and longevity in specific restaurant-related roles, from hourly workers to more highly paid management positions.

"The thought of being able to identify specifically what makes an employee successful, and to predict whether a particular candidate has those traits and will succeed, seemed almost too good to be true. I’ve since learned that not only is it possible, but it’s happening, it’s reliable and it’s a game-changer."

-American Blue Ribbon Holdings Chief People Officer Bill Streitberger 

This website recently got some insight into the analytics and assessment program for finding and retaining employees through an interview with American Blue Ribbon Holdings Chief People Officer Bill Streitberger and OutMatch President and CEO Greg Moran.

Q: Turnover has long been a problem in foodservice, but how big is it really and how does that affect the bottom line? 
 

Moran: Staffing is the number-one challenge facing the restaurant industry today, and the impact of turnover and/or poor hiring choices on a restaurant’s bottom line is, in a word, enormous. … The National Restaurant Association estimates the average turnover in the restaurant industry is 61 percent. However, since that number includes staff positions at chain operators and line managers where the turnover is far lower, the actual number may be far higher – perhaps as high as 110 percent, according to some estimates. … A study done by the Center for Hospitality Research at Cornell University pegs the cost of turnover at nearly $6,000 per employee – or, for the average full-service restaurant operator, nearly $150,000 annually.

Q: Why did American Blue Ribbon Holdings' brands seek this data-driven approach to solving its turnover problems?
Streitberger:(The) assessment platform enabled us to identify best-match candidates for specific job types, including manager and hourly roles, and target key hospitality traits such as guest focus, persuasiveness, turnover risk and more. …The key to the program was the ability … to deliver the data typically missing from the hiring process. With clear, measurable insight into candidates and new hires, our managers could make better hiring decisions, and our HR organization was finally able to measure the impact of hiring on the company. 

Q: How specifically does your company deliver that type of information and help brands use it in the decision-making and hiring process?
Moran:  Informed by our talent solutions experts, OutMatch has determined the characteristics that enable success for an employee in the restaurant industry, developed assessments to determine if candidates possess those traits, and pioneered a data-driven solution to provide the measurement, insight, and impact that organizations need to make better hires and improve their hiring process.

Using an industry-first SaaS+ model that combines technology, services and support, OutMatch … enables restaurants to make the best decisions about job fit. With clear, measurable insight into candidates and new hires, managers make better hiring decisions, and organizations are finally able to measure the impact of hiring on the company. 

For instance, through extensive research of more than 500,000 job applicants conducted by OutMatch I/O experts, we’ve determined the most important traits to look for as restaurants staff front and back of house positions. They are:

1.    Sociability
2.    Accommodation to others
3.    Frustration tolerance
4.    Drive and energy
5.    Integrity
6.    Multi-tasking
7.    Persuasiveness
8.    Pride in work
9.    Teamwork
10.  Safety

Similarly, we’ve determined the top 10 personality characteristics identified specifically for restaurant managers, including how measuring these traits impacts performance and predicts success. They are:
 

1. Championing change
2. Coaching and developing others
3. Customer focus
4. Driving results 
5. Managing others
6. Planning and organizing
7. Policies, processes and procedures
8. Quality focus
9. Resilience
10. Teamwork and collaboration

Knowing the competencies that predict employee success, OutMatch can tailor assessments that generate data to help restaurants determine whether candidates possess those characteristics. 

"A study done by the Center for Hospitality Research at Cornell University pegs the cost of turnover at nearly $6,000 per employee – or, for the average full-service restaurant operator, nearly $150,000 annually."

-OutMatch President and CEO Greg Moran

Q: How has this collaboration ultimately affected the chain both in-store and on the bottom line?

Steitberger: The results have been dramatic. Since implementing assessments through OutMatch in 2014, we have seen a multi-million dollar impact on our bottom line. In the process, we have addressed the two biggest hiring challenges in the restaurant industry: Employee turnover and server selection. Through the use of predictive analytics, we have reduced turnover for manager and hourly roles across all of our properties, resulting in turnover rates that beat industry averages by 10 and 20 percent, respectively. 

We found that employees with high job match scores are better suited for the service industry and more likely to stay longer with the company. Since implementing assessments, ABRH has reduced turnover by 6 to 10 percent across brands, which accounts for more than $3.2 million in annual savings; more than $2.5 million annually for hourly employees, and nearly $800,000 annually for managers. The best part is that these results are not a "one-year wonder." They demonstrate sustained success over a period of several years.

Q: For both of you, what do you feel is the biggest takeaway for other restaurant operators from your collaboration?

Streitberger:  There were two main takeaways. First, we learned it is possible to predict whether or not a candidate is a good match for our company, and whether or not he or she will be successful. With real data to measure and assess candidates, we have added confidence and clarity to our hiring process and evaluating risk.

Secondly, in an industry that operates virtually around-the-clock, it can be tempting to hire someone as quickly as possible to fill an opening, without fully considering whether that person is the right match for the job. Working with OutMatch, we’ve learned that the time spent ensuring the right match pays significant dividends over the long term.

The thought of being able to identify specifically what makes an employee successful, and to predict whether a particular candidate has those traits and will succeed, seemed almost too good to be true. I’ve since learned that not only is it possible, but it’s happening, it’s reliable and it’s a game-changer. Now, I can’t imagine hiring without having data to back us up. 

Moran: The days of hiring by gut feel are over. Predictive analytics work. We know what competencies will make employees successful, and we can determine which candidates have those traits. Using data, you can’t go wrong – and your bottom line will thank you.  

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.