Oct. 10, 2018

How to Become an Unshakable Hospitality Business

What Hospitality Entrepreneurs and Leaders Do to Build Remarkable Cultures

Previous been published on HR Rabbit Hole

Searching for the Secret Sauce Ingredients

Why are some hospitality businesses successful year after year, even decades, while so many others either are struggling to survive or fail within their first year of operations?

Why do they consistently attract and retain the best individuals, when others complain of a lack of talent?

Why are they investing in technology and encouraging innovation?

As a child of parents who owned a group of independent restaurants in Denmark and a career working through the ranks in the industry, I have first-hand experience of successful and unsuccessful hospitality businesses. For the last decade, I have paid even closer attention — studying their inner workings of the ones who make it and those that don’t!

I have learnt that there are many factors you need to master to become successful. But a common determinant of success is the entrepreneur’s or leader’s ability to build a strong culture. This makes the business unshakeable and able to better withstand whatever happens in the internal and external environment. Yes, the ‘fluffy-stuff culture’ is your real competitive advantage. It is what we here at Hospitality Mavericks call the special sauce that gives you the edge and sets you apart from the rest of the pack.

What is culture?

Let’s be clear. Building great culture is not about setting up a ping-pong table in the break room or bringing your dog to work and access to meditation on tap. I can’t find a better way to say it than the industry Maverick Danny Meyer does:

“Culture is the way we do things"

At Hospitality Mavericks we also say “Culture is how people act and think” within a business.

Why is culture important?

Culture is not just the soft stuff that doesn’t have any relevance for your hospitality business. It’s actually one of the prime drivers of your business results. In a hospitality business, as in many other industries, there are two critical areas on which a leader needs to focus to achieve strong results and profit — manage your costs and grow your sales.

  1. To manage your costs you need to master a number of commercial skills like marketing, finance, bookkeeping, negotiating etc., but they can all be learnt or outsourced or bought in.
  2. But to build your sales you need to deliver a great employee experience AND a great customer experience. This is determined by great people who serve the customers as well as the systems implemented to support them. Having great people is dependent on the strength of your culture (the special sauce) and how great you are at making your employees feel they are part of something special.

It is a known fact that the main reasons customers leave the restaurant with no intention of returning are often due to bad attitude from staff. An American study claims that it can be up to 70% of your customers will never come back after a bad experience from your staff.

This combined with the industry’s shrinking workforce and lack of talent, high staff turnover and the next generation of hospitality workers who demands more than a place to work, but a place they are proud to work, which then makes culture a top priority to focus on for you as a leader. And as management guru Peter Drucker taught us, “culture will always, EAT strategy”.

What are these hospitality entrepreneurs and leaders doing to build an unshakable business?

A remarkable why and story

From the outset, stories guide how great cultures are created and cultivated. A compelling founder story of the business’ development journey from idea to reality, brought to life with the characters encountered along the way, the challenges and obstacles faced and the triumphs; become a cornerstone of the organisation’s culture. The story resonates with their community.

Employees and customer emotionally connect with it and adopt it as a legend. They keep it alive by retelling and sharing the story; and together with the founders/leaders, they write the next chapters as they help to evolve and grow the business as a community.

A great example of this is the Chipotle story. Here is an excerpt from Founder Steve Ells’ own words:

“When I opened the first Chipotle in Denver, Colorado, back in 1993, I didn’t have any intention of opening more than one restaurant. I just wanted to build a place where people could eat delicious food made from the finest ingredients — quickly and affordable. As it turns out, it was an idea that people could get behind. As Chipotle began to grow, I learned quite a bit about the way most food in the U.S. — and increasingly around the world — is produced, and what I learned was pretty grim. I found animals raised in harsh confinement and fed antibiotics to accelerate their growth; fruits and vegetables are grown without regard for the health of the soil, and synthetic additives used to replace the skills of the trained cook.”

Lead by serving others first

They accept that as a leader, their primary responsibility is to serve — their employees, their customers/guests and the wider community which their business touches. Operating systems and technology are selected to amplify human impact, connection and contribution to the business; not to replace or enslave people.

The clever and wise ones have created their own alchemy. They have cracked the code transforming a movement into a sustainable business without losing the passion that fueled the movement in the early days. Now, they lead a movement with a crystal clear purpose, vision and values that put the human at the heart of the business. From this vantage point, they are able to create environments where people understand what expected, why they are important and how they can make a contribution to the organisation’s success whilst simultaneously serving a higher purpose.

Friska is a UK national café chain with 7 units and more to come. They are on a mission to redefine the way your breakfast and lunch place makes you feel.

One of the founders Griff Holland said this in a recent restaurant leadership talk in London about creating an authentic experience; and the relationship between service and empathy (care) for others.

“We actually think the way it’s served is just as important as the food itself. Truly memorable service doesn’t come from scripts and remember to offer a loyalty card, it comes from people who really care about the way they make others feel and take real pleasure from making someone’s day.”

They have a clear goal of becoming the best employer in the industry. He made it very clear that as founder and leader, his role is to serve and make the team feel safe before anything else. This ethos is the key to building a remarkable organisation and successful business. He is a big believer that you eat last as a leader. For him, that means you pay, develop and make your employees feel empowered before you take care of yourself. If you do that; profit and business impact will come.

Friska’s business model goes beyond serving their people, breakfasts and lunches. They are committed to making a positive social and environmental impact wherever they can. As an example they give 10p per sold water bottle goes toward supporting Frank Water and all of their charitable work around the world.

Put people first

From the outset, they put people before numbers. That does not mean they don’t think profit is important, it’s of secondary importance. They know that employees need to love the company before the customers are going to. A big part of making them love the company is focusing on build trust between the employee and line managers. They understand that no or low trust between management or employees everyone loses. They understand that you don’t leave the company but your manager; and they take action to prevent this.

They have a clear philosophy about having the right people on the bus, and the right people in the key seats. When facing chaos and uncertainty (which will come) — their best “strategy” is to have a “busload” of people who can adapt to and perform brilliantly no matter what comes next.

A great example of this is Union Square Hospitality Group which hospitality maverick Danny Meyer leads on the foundation of “enlightened hospitality” and a motto of “employees first”. Their mission is to nourish individuals, businesses, and communities.

Danny Meyer puts it very well when he talks about their approach to hire people:

“We look for a combination of technical skills and…” what he calls “innate hospitality skills.” “People who thrive when they make others feel better would become our biggest champs”

Invest in Strong and Agile Operations Systems

To support the right people, the leaders implement strong internal operations systems that help make each individual employee feel competent and confident in delivering a great experience for the customers. This means investing in systems that support everything from attracting, hiring, training, and developing great team members as well as serving customers pain-free.

They develop operations systems that make sense for employees, customers and the bottom line — and they measure, evaluate and improve these on an ongoing basis.

Leaders of unshakable hospitality businesses understand that technology is a key ingredient to achieving great experience and productivity when it comes to employees and customers. They focus on automating processes with technology, or what I call doing the heavy lifting for their leaders, so they can spend time on what really matters leading their employees, not managing broken processes and frustrated employees.

Not implementing procedures and rules, but changing habits

How do they create these strong systems which create more time to be human in the whirlwind of day to day operations?

From the outset, they are not mindlessly implementing procedures. They are changing habits within their organisations.

They understand that habits are the backbone of any organisation — good or bad. Habits are also what I call the invisible glue of any team or organisation. It’s what either makes or breaks the organisation. Great leaders spend time and energy in designing and creating the conditions that encourage great employee and customer experience.

In 2008 Starbucks was having challenges as a result of growing fast. In the face of increasing competition, the chain’s popularity was steadily declining, along with its share price.

Founder Howard Schultz was called to step back into the CEO role to turn things around. Schulz began to restructure the company on many fronts, but the core of this turnaround was investing in training in order to boost the right customer service habits of their employees.

On this journey, it became clear to Schulz and his team that great customer service relies on one very unexpected trait: willpower. Starbucks now train self-discipline to achieve better service quality.

Why willpower? According to Charles Duhigg author of the bestselling book, The Power of Habit, many studies identify willpower/ self-control/ self-discipline as the single most important keystone habit for individual success.

The last word on becoming an unshakable business…

There is no doubt culture is complex; and there are and will be many opinions on how you create it. Every company has their own unique way (claimed secret sauce), but one common factor is the leadership ability to set and implement a strong vision that is more important than just making a profit. Putting people first, combined with strong ability lead with heart and operate the business from a set of core values and principles, builds trust inside and outside the business. Applied together you have the makings of a remarkable culture.

Click here to read other blogs articles by the Hospitality Mavericks team or check our podcasts with inspiring talks with great hospitality entrepreneurs and leaders.

Michael is a heart-centred operations pro, who believes and lives by building hospitality and restaurants businesses from the inside out. When your employees love your company, your customers will love you — brand nirvana. He helps leaders and operators to build unique blueprints and business systems that create strong employee and customer experience, which translate into improved sales, profits and positive impact.