Welcome to our latest edition of Restaurant Innovators. Each month, we sit down with independent operators and chefs to chat about the creative strategies they’re using to solve existing problems in the industry. Follow along to learn from fellow colleagues in the field.
Have you recently tried an innovative solution to tackle a challenge at your own restaurant? If so, we’d love to hear from you. Send us a message at grace@backofhouse.io.
The Restaurant Group:
Rocket Farm Restaurants, made up of 13 concepts and 21 locations, scattered throughout Atlanta, Houston, Nashville, Charlotte, and Cary
The Challenge:
Jobs within the restaurant industry are often viewed as temporary. In many cases, restaurant workers feel a lack of opportunity for advancement, and as a result, don’t view the industry as a place to build a long-term career path. This contributes to high turnover and also high costs required to replace workers.
“We really saw a need to legitimize restaurants as a respectable career path,” says Toby Franklin, partner and COO of Rocket Farm Restaurants.
The Plan:
Rocket Farm Restaurant set out to create a “University” to help staff members learn, grow, and be prepared to step into leadership roles. Today, the University offers 22 classes covering leadership, human resources, finance, accounting, marketing, and beyond. Each class is taught once a month and offered both in-person and virtually. Classes are free and available for all staff.
“We have a director, and her job is literally to shepherd people through this program,” says Franklin. “She connects with every person that comes on board with us, discovers what their passions are, whether they want to grow with us, and then puts them on a development plan.”
The group also established a retirement program, available to all full-time, salaried staff, excluding senior executives. The plan works similarly to a profit-share program. “Up to 10% of employees’ annual income per year goes into the plan, and they can receive those funds as a bonus over time,” says Franklin.
The Results:
Retention: The restaurant group’s level of retention currently doubles the regional average, says Franklin.
Strong leaders, grown from within: The restaurant group rarely needs to look elsewhere to find managerial- or executive-level employees. Its human resources, accounting, and sales and marketing departments are all led and staffed by employees who’ve completed the University program. Those same department heads now also act as instructors for the University. “We have 20 instructors, and they’re also running the different departments,” says Franklin. “Teaching is part of the job.”
The Conversation:
Read on for more on Rocket Farm Restaurants’ University and retirement programs work.
I’d love to learn more about the University experience. What does that look like for staff?
The school has three major legs – culinary, management, and beverage. We started in culinary, and I took inspiration from Auguste Escoffier’s brigade system, creating a curriculum designed to give people the knowledge to progress from dishwasher all the way up to executive chef.
We have 22 classes ranging from leadership to human resources, beverage, culinary, finance, storytelling, accounting, marketing, and PR. Each class is taught once a month, and they’re usually around three hours long. All classes are free and fully optional. However, some classes are required in order to proceed to the next level. If we require a class, we compensate people, so they can do it within their working hours.
We have a director, and her job is literally to shepherd people through this program. The whole idea is to stimulate a dialogue of growth and development through every level of the organization. She connects with everyone who comes on board with us, discovers their passions, and whether they want to grow with us, and then puts them on a development plan.
Are the classes taught in person or remotely?
We have online videos, and in some cases, live streaming. But they’re all offered in person. The bulk of the classes are held in Atlanta, where we have 12 restaurants. People at our restaurants in other markets can take classes online, and everything is managed through our HRIS [human resources information system].
So let’s say someone finishes my class. I assign them a test via HRIS. A link comes to them by email. It’s multiple choice – we want them to be able to do it on their smartphone. But it’s a way for us to identify if they’re retaining information.
Who teaches the classes?
It started largely with just me. As we grew and identified tomorrow’s leaders, we started finding where their passions lay, and then promoting them. So we grew our own human resources department, accounting department, and sales and marketing department – all populated by restaurant leaders that we taught internally or sent to Cornell [University] to finish their knowledge. Now, we have 20 instructors, and they’re also running the different departments. Teaching is part of the job.
What do you see as the primary goals for the University?
Straight up, it’s about retention. The soft cost of turnover is staggering. The cost of replacing a skilled employee is north of $1,200, and at our company I think it’s closer to $2,000.
If we can redirect a portion of that into investing in our people to encourage them to stay, grow, and learn with us, then that is money extremely well spent. So we measure the success of the program and our entire benefit lineup through our retention. Right now, we’re about double the regional average on retention, and we’ve still got work to do.
Do you see this as a viable model for other restaurants to offer?
It’s hard work to put it all together and keep it current. We’re constantly refining and improving the program. But I think anyone can do it. You just have to want to do it because our industry is already time-consuming.
The other thing to be cautious of is that it’s easy for us, with 21 restaurants, to have the bandwidth and ability to invest. When you’re a restaurant just starting out, it can be cost-prohibitive. So you have to build it over time and hopefully reinvest in your people over time.
But if you’re interested in retention, it’s important to understand the two basic motivators for people – knowledge and money. If you’re not providing people with the ability to gain more knowledge and make more money, they’re going to work for someone else.
Rocket Farm Restaurants’ retention efforts now also include a staff retirement program. Can you share what that looks like?
Fundamentally it goes back to the same premise of getting people to think about our industry as a legitimate career path – one where they can retire with you.
A 401(k) just doesn’t work in my mind for the restaurant industry. To be a qualified plan and a tax-deferred benefit by the federal government, you have to have equal participation at the top and bottom of your organization. That’s really hard to pull off in an industry with so much youth and transience.
So ours is a non-qualified plan. It doesn’t meet the requirements for tax deferral by the government. But our investors have allowed us to divert a significant chunk of our profit towards this retirement program, and it works similarly to a profit-share program. Unlike your typical 401(k), in our system, you don’t have to contribute anything from your income. It’s supplemental to wages and bonuses. Up to 10% of employees’ annual income per year goes into the plan, and they can receive those funds as a bonus over time.
Our senior executives aren’t on the plan, but all other full-time salaried individuals are eligible. It’s designed to impact our company's entry and mid-level management sections, and help people decide, “Yes, I want to do this as a career.”
Do you feel like these types of benefits are becoming essential as part of a staffing strategy?
Yes. It’s less about recruitment than retention, and it’s the only way to solve the problem.
At the beginning of 2022, coming out of coronavirus, we were losing as many people as we were hiring. Now we’re net positive of 30 people per week, so the bucket fills back up at some point, but that’s not the issue. The better use of money and time is to prevent the water from coming out of the bottom of the bucket. We're fortunate that our investors have agreed with us and given us the elbow room to invest.
This interview has been edited for length and clarity.
