The 32-Day Pay Off: Restaurant Employee Retention

A new hire costs you money until day 32.

For a manager, 72 days.

Here's something most restaurant operators never calculate.

So what happens when someone quits before they pay off?

We asked the National Restaurant Association's chief

economist, Dr. Chad Moutray, how restaurants keep their best people

long enough to matter and why the answer starts in those first 90 days.

Stick around and watch the full episode to learn how!

Welcome back to season two of the Data Blades Podcast, part of

the Retail Razor Podcast Network, where we cut through the noise and get to the

numbers that move your business forward.

I'm Ricardo Belmar.

And I'm Casey Golden.

Welcome to episode 11, part two of our three-part hiring and staffing miniseries.

If you caught episode one, you know the labor market's shifting,

and an empty shift gets expensive fast.

So today we flip it.

Once you've got great people, how do you keep them?

Back with us today is Dr. Chad Moutray, chief economist

and senior vice president of industry research and knowledge at the

National Restaurant Association.

This episode is all about engagement and retention,

and a number that surprised us and will almost certainly surprise all

of you in our audience, how long a new hire actually takes to pay off.

So before we bring Chad in, a quick word about the folks who make this

show and the Retail Razor Podcast Network possible, RetailClub.

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All right.

With that out of the way, let's get into it.

Here's part two of our deep dive into how to keep and engage your

recently hired staff with Dr. Chad Moutray, Chief Economist and SVP of

Industry Research and Knowledge at the National Restaurant Association.

Chad Mutray, welcome back to the Data Blades Podcast.

We're thrilled to have you back with us today for the second in our

three-part series on hiring and staffing in restaurants based on your recent

research insight report, Hiring and Staffing: How Onboarding, Managers,

and Technology Drive Restaurant ROI.

Today we're tackling an important challenge for restaurant

operators, keeping your employees engaged and retaining them.

Because once you get them, the cost of turning them over is too high,

and you really wanna keep them.

Maybe not for a 20-year career, but they gotta last a week.

So Chad, last episode you gave us the rundown on your role at the National

Restaurant Association as chief economist, and head of industry research.

So rather than ask you a repeat of everything we've already covered, why

don't we just dive into today's topic?

That, that works

The report introduces this idea of a new hire becoming net positive.

What does a new hire becoming net positive mean?

Can you walk us through, why it matters to the bottom line, and how do we do that?

Well, think of all that it takes when you're

hiring a new employee, right?

You- you've gotta go out and post the position.

Maybe you're having to pay In- Indeed or one of those job posting services, right?

You gotta do the interview process.

That's a lot of manager time, right?

To go through all of the interviews and the screening and all that stuff.

Then once you find the right candidate, there's, your orientation

and some kind of, overall process, and there's training, right?

And that can vary from company to company, right?

Maybe there's a lot of mentoring you're doing with other employees or doing some

type of training in general where maybe they're learning different stations.

But you're not… On day one, you're not adding to the bottom line, right?

That's really what this net pro- positive, comment means, right?

You've put a lot of dollars into that overall process.

And so at what point, does that new employee start having that marginal

dollar adding to the bottom line, right?

At what point do they start becoming productive, right?

and the thinking there is, if you lose someone before that point, they were

a quote-unquote, "bad hire," right?

You lost money on them, right?

So when do you start actually making money on that hire, right?

and, that's really this, this understanding or thinking

that, we wanna make sure we at least get them to that point.

I used to ca- I used to call this the magic number, right?

When did-- when is it that someone starts… if it-- You know

they're gonna be golden, right?

They're gonna stick around.

But also, when are they adding to the bottom line?

I think that's really what we mean by net positive.

So the report suggests an hourly hits net positive at 31.8 days,

Yeah

managers at 72.2 days.

that's not bad

And I heard that, again, we did a lot-- We married in, for this

survey, we married a lot of survey data with a lot of, with interviews, right?

And I heard that pretty consistently.

It obviously varied, but roughly a month, and I would even call

that the magic number as well.

If you s- if you can make it around a month, you're probably

gonna stick around, right?

And so that's a, a nice sweet spot.

Maybe it's two weeks, maybe it's a month, but that's really where, what

I heard from a lot of operators.

For managers, though, it takes a lot more time, right?

They've got… You've gotta make sure you're doing a lot of investment.

Again, varying from operator to operator, some of them really, fly the-- from the,

the mount to work with another manager for a while or, it depends on whether

they're coming internal or external.

But really it's more, I heard two to three months, right?

And that's really what that average can suggests.

Sometimes it's even longer than that.

but, again, so that means if a manager leaves you,

Yeah, what happens then?

after 30 days, you've lost money on them.

You've got to go out and hire another manager.

That's a whole-- starts the whole process all over again, right?

And I think that's really what we're getting to with this notion

Yeah.

Yeah, and I'm, imagining, with that investment, if it, if your average is

taking you two months to get, that payback from hiring a new manager, if you lose

them before that, even after a month, then that's gotta be a much kinda harsher

pain to take, to have to recover from than just having lost one of your regular

staff members, after a couple weeks.

And you have to remember the importance of a manager in general, right?

A manager is key, right?

If you're thinking about restaurants that are really humming along, they're

hitting everything out of the park, right?

It's really a strong manager that's in that lead, right?

And the employees follow them, right?

If

Right

have a really weak manager and you've hired the wrong manager,

that can have larger implications for your, even your hourly employees that

are saying, "Okay, this is… I'm out. This is not working for me," right?

And so I think that also speaks to, on the manager side, that you could have

some larger domino effects, I think, from some of your other staff as well.

Yeah, no, somebody only lasting two or three weeks be hard

pressed to quit on a great manager,

Yeah,

and th- I'd say that's a critical point

Yeah

And if you have a good manager, one, one thing that

came out, people follow them, right?

So in, in many of these, restaurants, maybe you're seeing down the road

that particular restaurant store, is having problems, so they'll

move the manager over there.

then if I work for that person, I want to follow them, right?

So you got to follow… You ha- really good managers

have a huge following, right?

So that's the other part of that.

Yeah.

Yeah.

What are you finding is the average, tenure for a manager versus

your standard hourly employee?

This, managers typically stick around for, at

least one or two years, right?

I think that's, that, that was the typical that I often heard.

Sometimes even longer than that to your 20-year comment

that you made earlier , right?

but largely they're sticking around a few years.

I think that, that's the key, right?

Yeah, be a bartender at the airport.

Yeah,

You're raking it in.

All they need is a couple delayed flights.

the report flags the first 30 to 90 days as the highest turnover risk window.

What's actually working to keep new people engaged through that stretch?

The key here, and this is true of all retention, so this is not

necessarily even restaurant specific, you've got to have a great manager.

They've got to communicate, right?

I think, i- making sure that you- you're feeling heard, right?

You-- if you have suggestions or you're having some issue that you're feeling

heard early on in the process, hopefully you were clearly told about what your

expectations are in this role, right?

I think some of that attention comes that maybe you were sold something

as far as what the job was going to entail, and then you get in there and

it's a little different than that.

but I think it, it really comes down to, to that.

It also comes down to maybe training, cross-training so that,

again, you can fill in other places where, so again, that makes you

feel more needed and more useful.

So I think a lot of it comes down to just what you would think of as

retention strategies for anything.

I used to be chief economist at the National Association of Manufacturers,

and very similar kind of storylines came out, when you think about retention

and how you can improve retention.

it all comes down to some of those really basics.

you often hear that you don't quit the job, you quit your manager, right?

So again, that co- that collaboration I think is key there, and really making

sure that, again, if I'm working for them, I'm gonna enjoy the experience, work--

enjoy working with my co- colleagues and enjoy working with the manager.

Even if it's a stressful position, I think that they're gonna-- you're gonna

get the kind of benefits from that.

Yeah.

Yeah.

Just staying on this theme of the importance of that, that manager and the,

and kind of the, those, skills and traits that you want that manager to have to help

build that culture, and to lead that team.

what are you finding are some of those leadership qualities that matter so

much that, that really impact retention specifically from the manager?

I think it all comes down to communication and setting expectations,

but also helping to really strengthen those, your strongest employees, right?

Nurturing them.

If you think about where managers come from, they often come from working

their way up from, maybe you hear stories about CEOs of restaurant chains

that started as a dishwasher, right?

What is that path, right?

To make sure that I can continue to move up in, in the system, right?

and so I think nurturing those stronger employees, finding new avenues for

them to also have some leadership roles to really work with other employees,

I think those are all helpful.

Strong communication skills, right?

Being able to work under pressure, right?

The last thing you want to do is get into that rush hour and your

manager's kind of losing it, right?

And so I think all of those things are key.

Strong managers also look really at all the numbers, right?

And I think, again, when you're looking at different restaurants, in terms of

the ones that are knocking it out of the park, those managers are hitting on

all of those, all of those key metrics of operations and making sure they're

hitting their sales targets and retention targets and all that kind of stuff.

And I think that, having that holistic view, but also that

personal touch, I think is key.

Yeah.

Yeah, and I think there's a, a, a line in the report that mentions

how with the-- with good managers, oftentimes y- you hear that, they make

the restaurant environment feel calm when they're not there, which I think

is an interesting one to me because that kind of speaks to the effect they

have even when they're not in the room.

Oh, yeah.

Yeah.

y- you want the manager out there, talking to customers, making sure the

customers are happy and doing that.

You don't really… If they're back in the kitchen, it's because

you aren't doing your job.

Maybe.

Yeah.

It might be right.

It might vary.

speaks to what we talked about last episode about this

being a high-touch environment, right?

But, this is a high-touch world where you want to make sure your

customers are happy, and I think when you have really great employees in the

b- in the kitchen and doing customer service, the manager can really focus

on just the big picture and making sure customers are happy and everything's

coming out timely and in a great quality.

Yeah.

So if you're an operator and your budget might be tight, w- where would you tell me

is the highest return place to invest in?

Is it in around retention?

Is it in onboarding, mentoring, scheduling to provide consistency to the team

members or creating a development path?

Can I say all the above?

Um, uh,

They're all important, right?

They're all important

I think number one, investing in some of those

tools early on, I think ori- that orientation, that overall process

and those, what does that look like?

I would often ask operators, "What does your orientation look like," right?

and there's a lot of them that have really great ideas like, going around

and doing some cross-training or, or some things along those lines.

But I think just in general, how are you making sure that your employees

are really scaling up, becoming productive pretty quickly, getting

to know their various colleagues?

and I think all of those strategies that I-- even the ones I talked about earlier

are key to that overall conversation.

Super discussion, Chad, on how to keep those hard-to-find

hires on your staff engaged.

and really retention isn't easy, but it pays off in the long run, and a little

bit of extra focus to your managers might be your first door to open.

Yeah.

Where you get the best

The word I was searching for a second ago was scavenger hunt.

there was an operator who had a scavenger hunt, and that's how they

introduced new employees to various parts of the operations, was they

Oh, interesting.

over and talk to certain people or find certain things.

And, anyway, that was the example.

My mind

No, it's a great, it's a great way of gamifying the whole,

it

experience, right?

No, it's super interesting.

Chad, if anyone wants to dig deeper into the data from the report, and

learn more, what's the best way for them to reach out and do that?

You can look at the National Restaurant Association's

website, which is www.restaurant.org.

You can always follow me on LinkedIn or X, I should say X instead of Twitter,

It's always Twitter.

or wherever else, 'cause we do a good job of kind

of putting a lot of this stuff up.

All right, perfect.

So we'll also have links to the report in the show notes.

So next time we're gonna be closing the series out with, what might be the

big one to close out with, and that's how technology is really reshaping

the way restaurants hire and train.

We've hinted, I think a, a few times at where that fits in, but, particularly

how it can speed up the process.

But never really replacing that human touch element that is

what makes hospitality work.

I can't wait for this one.

Ricardo, I'd say that this episode is a wrap

It is

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I'm Casey Golden.

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For transcripts and guest info, visit retailrazor.com.

I'm Ricardo Belmar.

Thanks for joining us on the Retail Razor Data Blades, part

of the Retail Razor Podcast Network.

Until next time, stay sharp, be data-driven, and harness AI.

This is the Retail Razor Data Blades!