Being the Boss

Three months ago, college student Megan Dougherty, 20, quit a waitressing job where she felt under-appreciated and unhappy with the "insane" turnover. She moved on to Nick's Pizza & Pub in Crystal Lake, Ill. after hearing great things about the place from another server. "[At Nick's] everyone I met was like, 'I've been here four or seven years. I was like: What!'" she says. Dougherty likes the philosophy at Nick's, including its "grandma test." "If you're picking up your pizza, look at it and make sure it's good enough to serve your grandma," she explains. The emphasis on service is reflected in generous tips, which Dougherty says are twice what she got at her old gig. She also appreciates her un-bossy bosses. "[Owner] Nick [Sarillo] comes and if we're busy, he'll help out," she says. "I see him running food and busing tables. The manager in my other job, if I dared ask anyone for help, he would re-evaluate why was I there."

Small wonder that at the beginning of the summer, 50 people applied for jobs at Nick's in a single weekend. The first step of the process is reading the company's unusually extensive "purpose and values" statement. It begins: "Our dedicated family provides this community an unforgettable place; to connect with your family and friends, to have fun and to feel at home!" "[Some] people who walk in the door to fill out an application actually leave. They think it's too goody-goody, they think it's too hard," says Rudy Miick, founder and owner of Miick & Associates, a Boulder, Colo.-based restaurant and resorts consulting company that Sarillo hired three years ago to help with staffing issues. When Nick's managers interview applicants, they look for a positive attitude because they say it's easier to teach people how to do a task than how to change their personality. We look for "energy, attitude, smile, sparkle and spring in their step," explains Sarillo's business partner Christopher Adams, who is 38.

Once they're hired, all employees go through a mandatory four-day paid orientation. They can ask to see the company's open books or even how much a manager earns. (Adams gets $80,000 a year.) At many restaurants, by contrast, new servers "are told to go follow Susy around," says Douglas Robert Brown, author of "The Restaurant Manager's Handbook." Owners, he says, figure their new hires will quit soon and think, "why should I go through an elaborate training program?" But Miick says he has found the opposite to be true. "If we actually raise the bar of expectations, define for employees what's expected, treat them with respect and train them to reach the expectation, we end up with a waiting line of people trying to get in the door," says Miick, who has helped Sarillo reduce his annual staff turnover by more than half. It is now down to 20 percent.

In June, Sarillo put each worker at his Crystal Lake restaurant through about 35 hours of retraining. "It was a long, expensive process," says Adams. And some veterans were reluctant to go through it. "There was a lot of resistance. Much of the team felt they were being retrained because they weren't good any more," says training director Amy Gustafsson. Not true--though Sarillo would like "comp-store sales" (sales for the month this year vs. last year) to be up five percent rather than just three percent. "Three percent for us is not meeting expectations," he says. Post-training, Sarillo says he is getting more comment cards with "wows" and "thank you's."

The NRA's Mary Adolf agrees that Sarillo's approach is sound. "One of the things that we know retains employees is a commitment to training them," she says. "They feel more confident and competent in their job...If they're floundering around, they're not getting any guidance in how to do their job more effectively, they're not getting any feedback from the people they work for or serve, a lot of times they leave in frustration. It's not the job so much as how they're treated."

Good wages help too. Nick's starts by paying everyone at least a dollar above minimum wage. Veteran servers can make $25 to $30 an hour with tips, says Adams. The restaurant also foots half the health insurance bill for employees who work at least 30 hours a week and reimburses employees for their membership at the local health club if they go to the gym at least eight times a month. And Nick's offers a $1,000 scholarship for high school students who work there for two years and gets a B average or better.

Three years ago, with Miick's help, Sarillo upped benefits further with profit sharing for all 230 employees. It's based on whether each restaurant meets its goals for five criteria: food costs, beverage costs, guest comments, turnover and labor costs. Sarillo considers it a kind of report card. "It's a good thing sometimes when they get less profit sharing because now you're creating questions about why was it only five bucks this period when it was 20 bucks before," he says. "Then you have a conversation--we blew food costs or there was too much waste."

If a restaurant hits its goals on four of the five criteria during each four-week period, employees get 80 percent of the profit-sharing pot; if it hits goals in only one category, they get just 20 percent of it. During the most recent four-week period, workers at Sarillo's new Elgin restaurant each received a $5 profit-sharing check, and those at his original location in Crystal Lake (who only hit the guest comment cards and retention goals) each got $3.50. Sarillo says profit sharing also reduces waste. For example, it makes servers more likely to hand out an "appropriate" number of napkins, not a huge stack, says Sarillo. And, it deters employee theft. "Why not have everyone keep an eye?" he says. "We have 100 eyes." So far Sarillo's formula is working. His two restaurants made a very healthy 22 percent profit.

This spring, both locations rolled out a program to reward high performance and experience. Now employees in the "heart of the house" (the kitchen) get $1 to $1.50 per hour raises--and different colored hats--when they pass "certification" tests that prove they are experts in everything from salad making to pizza cutting. "The guys with the red hats and the black hats are the big players. It's very much like martial arts," says Miick. It makes workers feel important. "It's definitely a sense of accomplishment for yourself, but it's recognized at the peer level, too," says Sarillo. "Even a server walking in the kitchen can see who's the go-to person." (Servers and bartenders don't wear colored hats. "Their performance is regulated by the guests" and rewarded with tips, says Sarillo.) Kitchen workers start out earning $7 an hour, wearing tan hats and making pizzas. Then they can "certify" in eight other positions. The highest paid expert levels are the pizza-cutting station, the pulling station (pulling pizzas out of the oven) and the checking station (making sure the pizza is as ordered). Pulling pizzas out of the six ovens at the perfect time is far trickier than it seems. "We're not using timers. It's knowing when the perfect pizza is ready," says Gustafsson.

Despite all the training, some staff problems are inevitable. Workers sometimes fail to show up, come late, or wear inappropriate clothing. How do managers handle these situations? "The first time, you treat them like an adult," says Adams. "You say: 'No big deal. I notice you didn't show up for work yesterday. I just really want to make sure you're clear on expectations.'" Some teenagers, for example, "may not have work habits yet," he explains. "The second time, you say: 'Hey, what wasn't I clear about the last time we spoke? This can't happen again.'" By the third time, "they already know what's going to happen," says Adams. "I believe that people should fire themselves." In fact, that's what happened with the Crystal Lake manager who quit three weeks ago. "When you have clear expectations, and you're giving them coaching in the moment, they know. They let themselves go," says Sarillo.

To avoid disputes, Nick's managers try to get their workers to be specific with complaints. Instead of a server telling a manager: "I thought that the seating tonight sucked," Sarillo says he suggests that they explain: "Tables 45 and 48 sat open for an hour tonight." "Now we have something we can coach our host on," he adds. "The host can say: 'I had to leave tables 45 and 48 open because that was the only wheelchair accessible table that was left, and I had a guest with a wheelchair that was coming.' With that specific data, the server can say: 'Now I understand.'"

Keeping employees happy has had unforeseen benefits. Nick's controller, Matt Calabrese, 24, started at the restaurant as a bus boy and "bar back" (washing glasses and refilling peanut dishes) when he was a teenager. Later he moved to the kitchen and he came back to work during his breaks from Illinois State University, three hours away in Bloomington-Normal. After Calabrese received his finance degree, he started as a bookkeeper and accountant and quickly became the controller. "Nick is definitely like family to me," he says. "It's how he treats everybody."

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