Restaurant Industry Insights

Following in Successful Footprints: How a Restaurant Brand Incentivizes GMs

In the restaurant industry, you will hear ad infinitum how important a general manager (GM) is to the business’s success. One of the top brands in the industry, Portillo’s, stressed the importance of this role during the ICR Conference in Orlando, Florida. 

The Road to Incredible Success

Portillo’s started from humble beginnings. In 1964, Dick Portillo took $1,100 destined for a first home and, instead, purchased a 6-foot x 12-foot trailer. 

Today, Portillo’s is one of four restaurant chains that made it to the top 100 by annual sales while having fewer than 100 locations. The others are Capital Grille, Cooper’s Hawk, and Miller’s Ale House, according to Datassential. While pulling off $8.5 million in average unit volume (AUV), they want more. 

Their current goal is $10 million, an impressive store-level benchmark. According to the CEO, Michael Osanloo, as reported by Restaurant Dive, it’s a goal that requires strong management. To put that figure into perspective, Osanloo shared, “$10 million means $200,000 a week, which means $40,000 on Friday and Saturday, which means $6,000 per hour.” 

The Importance of a GM

When Osanloo, a former P.F. Chang’s executive, looked at underperforming restaurants, one commonality stood out: A new GM in a new market that didn’t know the ropes. So, where do they find these GMs that are making their brand one of the most successful in the industry? 

They consider their restaurants the training ground, with 80% to 90% of their GMs coming from their labor force and working their way up the ladder. Today, they undergo a year of online and in-person training before sending them to a well-performing restaurant for one year. Only then do they head to a new market and take the helm of a new restaurant.

One of the programs they’ve developed to help create great leaders is Ignite. This program is centered around leadership skills, including good coaching skills and how to have tough conversations. Their goal? To help people become the best versions of themselves. In essence, they care. During the pandemic, they provided paid leave and created a meal plan so employees could take food home to their families. Over 18 months, they raised over $400,000 to help workers experiencing setbacks.

An Employee-First Brand

It takes, on average, at least 120 people to run one Portillo’s restaurant, a significantly greater number than average. It’s a company that knows the importance of their employees. Osanloo shared with QSR, “The first war you win as Portillo’s when you go to new states, is the war for talent.”

What do they look for in new talent? First and foremost, they want them to love the food. Yes, that comes before experience. How do they find new workers in a tight market? One way is via their Beef Bus. They drive around areas, discussing their culture and values. 

Of course, not every operator has their own Beef Bus. That’s where Target Workforce comes in. This proprietary technology helps operators find the highest quality, trained staff at the lowest recruiting costs. Once you find your ideal staff, you’ll need to provide them with the incentive to stay.

Go to Portillo’s career page, and you’ll see they’ve hit all the points important to today’s workforce. They offer flexible scheduling, free shift meals, paid vacation, financial support, health insurance, rewards and recognition, and limitless opportunities. Each month, restaurants receive $250 to celebrate employees. Their employees also receive referral bonuses.

Portillo’s GMs earn, on average, $128,000 plus stock units, amounting to over $150,000 a year. The third quarter of 2023 saw revenue increase by 10.4% to $166.8 million year-over-year. They believe growth is a key driver of their value creation. The third quarter saw two new Portillo’s, one in Arizona and another in Texas, bringing their total to 78 restaurants.

How Restaurants Can Adopt a Successful GM Strategy

So, how can independent restaurants on a much smaller scale recruit and retain the right person for this all-important role? Following the playbook of a successful brand leads one to believe they are already part of your workforce, waiting to be trained and set upon a path to success for themselves and your establishment.

Those with extensive experience in the industry suggest one of the most important GM skills is the ability to create a positive culture that makes people want to perform their best. They’re engaged and empathetic, which translates to higher retention rates and reduced turnovers. Like Portillo’s, they care about the restaurant and the employees and have a positive outlook regardless of their challenges. 

Internally, they require integrity and trustworthiness. Externally, they need to know the skills inherent to the position, such as taking inventory, scheduling, benchmarks, number crunching, and marketing.

Retaining the Best GMs

While wages weigh heavily in retaining your prized GM, compensation that includes bonuses and equity is based on their success, giving them some skin in the game. It provides an incentive as well as a sense of ownership.

The other challenge is creating a better work-life balance, something all employees are striving for. One consideration is trying to give them one weekend off each month, a worthy challenge that also comes with rewards. 

While the tasks are many in the restaurant industry, finding a worthy and reliable GM is worth the time and energy. Following the lead of those who have succeeded can result in a general manager who takes the reigns, providing peace of mind and increased profits. 

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