Clapping and shouting, the spectators come to their feet as they focus on the gigantic screen before them. They’re ready to cheer or boo at a moment’s notice. But they’re not watching the Super Bowl or the World Series. They’re in a training seminar at the Cheesecake Factory, a formidable player in the restaurant industry with annual revenue of $1.2 billion and more than 112 restaurants and 27,000 employees nationwide.
With its new upscale chain, Grand Lux Cafes, the Cheesecake Factory has cemented its place as one of the most lucrative concept restaurant companies in the country. Last year it netted $87.5 million, a 28 percent increase from 2004. Expansion is going at a breakneck pace. In the next five years, the company expects to more than double its number of restaurants and employees.
Workforce training and development initiatives are ubiquitous in the restaurant industry. But there are only a handful of programs that can rival the breadth and depth of those that are offered by the company, says Mike Hampton, president of the Council of Hotel and Restaurant Trainers and dean at Lynn University’s
College of Hospitality Management in Boca Raton, Florida. The Cheesecake Factory is in the league of Houston’s Restaurants and Buca di Beppo, which enjoy sterling reputations throughout the industry for innovative workforce development programs, he says.
The firm spends an average of $2,000 on training per hourly worker each year. Everyone within the organization benefits from training and development initiatives. Servers get two weeks of on-the-job training. Candidates vying for a managerial position receive 12-week development courses. Even dishwashers are included in training initiatives.
One way the company measures its return on investment is by examining turnover rates, which are about 15 percent below the industry average of 106 percent. Workforce development programs also contribute to high consumer satisfaction rates, loyalty and repeat visits.
Beyond monetary rewards, the training and development initiatives also honor the legacy of Oscar and Evelyn Overton, founders of the company. Tradition is something of a religion at the Cheesecake Factory, and Oscar and Evelyn are the central figures. The heart of their philosophy is doing anything and everything to guarantee satisfaction and exceed guest expectations. Since the Overtons started the business with one of Evelyn’s crowd-pleasing cheesecake recipes in Detroit during the 1940s, the menu has expanded to more than 200 items. Customers can dig into some 40 varieties of cheesecakes.
With expansion, the company is going to great lengths to adhere to its fundamental values, but the speed of change could pose a threat. “One of our biggest challenges is the notion of how to get big, but remain small” in spirit, says Chuck Wensing, vice president of performance and development. If not handled properly, the high level of service that customers have come to expect could be eroded, he says.
With this in mind, Wensing and his team have been refining more sophisticated workforce development programs to ensure that the quality of service lives up to Oscar and Evelyn’s ideals.
Since Wensing joined the firm nine years ago, human resources has evolved from being a function-oriented department to being more strategy-driven. The company has studied the HR tactics of such premier service providers as retailer Nordstrom and Ritz-Carlton Hotels. The transformation has paved the path for more formalized training initiatives.
Relative to its peers, the Cheesecake Factory’s training and development programs are quite extensive, says Bryan Elliot, analyst at Raymond James & Associates. With more than 200 dishes on one of the most complex menus in the industry, in-depth training is a necessity. Corporate culture also plays a crucial role. And that culture is shaped by CEO David Overton, son of Oscar and Evelyn.
“The CEO made a commitment to people development from Day One,” Elliot says.
Wensing believes that getting support and approval for workforce training is fairly easy because the CEO values employee development. The strategy appears to have paid off. Elliot says the Cheesecake Factory has sales of $1,000 per square foot, more than twice the industry average. Employees receive individualized training related to their job responsibilities. There are three distinct training categories—kitchen, front desk and general management. The company uses a variety of educational tools, including coaching, interactive games, role-playing and on-the-job training.
Every employee, from executives to dishwashers, benefits from the generous training initiatives. The company recently adopted an interactive training program, designed by LeapFrog, to help dishwashers master English as a second language. The learning tool, which costs about $325 per employee, is being tested with 15 dishwashers in California. The Cheesecake Factory employs 2,000 dishwashers.
Much of the company’s training efforts, as one might expect, center on its serving staff. “Servers are on the front line. They are our public face,” Wensing says. Servers are a key component in the “Cheesecake Factory experience”—the hassle-free, friendly and fun dining that Oscar and Evelyn Overton envisioned. And since servers make up 40 percent of the total workforce, the company takes their training seriously. A typical restaurant unit has 11 managers and about 100 servers, split evenly between the day and night shifts.
Since servers make up 40 percent of the total workforce, the company takes their training seriously. Each candidate must go through a rigorous two-week certification process before becoming a full-fledged server. Thirty days later, they receive follow-up classes, as well as biannual training to coincide with the changing of the menu. Servers also must complete a recertification process once a year.
At the end of the two weeks, candidates are given examinations and are required to attain a letter grade of A. They are given two attempts to qualify, and if they can’t get that A, they’re not hired. Once accepted, their training and development continues. Thirty days after becoming servers, employees receive follow-up classes. Servers also receive biannual training to coincide with the changing of the menu. To maintain strict quality control, servers go through a recertification process once a year, Wensing says.
The company provides standardized training tools and development programs across its entire workforce. This ensures that customers will receive consistent service, whether they are dining at a Cheesecake Factory in the flagship Beverly Hills location or in Birmingham, Alabama.
Connecting with the employees
Because many of the company’s workers do not hold predictable 9-to-5 schedules, creating deep, long-lasting company ties can be a tricky undertaking. With this in mind, the Cheesecake Factory gathers employees every day for a formal meeting—a ritual long practiced by Ritz-Carlton. The sessions serve as a platform for talking about a variety of issues—from the best ways to keep the stores clean to safety tips to celebrating special events. Everyone at the Cheesecake Factory gets acknowledgments for birthdays and anniversaries.
“We like to mix business with pleasure to make it a fun environment for everyone,” Wensing says. One example is the training seminar that brought the crowd to its feet. It was a session on legal issues in the workplace. Done wrong, it’s a topic that can be a real sleep-inducer. Instead, the company presented serious issues in a fast-paced answer-and-question format: “Law Jeopardy.”
The company is generous when it comes to extending rewards and recognition for a job well done. Incentives include free meals and increased scheduling flexibility. It also offers monetary prizes like the opportunity to earn $3,000 for helping to open a new restaurant. Many of the incentives are offered through quarterly company drawings. An employee from Kansas City recently won an all-expenses-paid trip for two to Hawaii. The names of the winners are announced at the daily meetings.
In its attempt to cement strong ties with workers and bolster retention, the company gives its new hires career road maps for professional advancement. Top servers are cross-trained in various disciplines to become certified serving trainers, which yields higher pay. On average, 25 percent of serving staffers at any given restaurant must be at the certified trainer level.
The Cheesecake Factory is a big believer in promoting from within. At least 25 percent of restaurant managers come from internal ranks. This year, 800 new managing positions will be filled. Promoting internally on a frequent basis can have a positive effect on the morale of workers and can be instrumental in reducing turnover, says Teresa Siriani, president of People Report, a provider of workforce metrics for the food service industry.
Companies that fill 25 percent or less of managerial positions using internal candidates have average turnover rates of 105 percent. By contrast, turnover rates for those that fill 25 percent to 50 percent of managerial slots with internal candidates average 102 percent. Considering that each percentage point represents an annual savings of about $190,000, the numbers aren’t insignificant.
“The volume of workers and workload in the restaurant industry are such that every percentage point counts,” Siriani says.
Cheesecake Factory employees receive above-industry-average pay and a benefits package that includes health insurance—even for hourly workers, so long as they average more than 25 hours per week each quarter. The waiting time for health insurance is six months. General managers, who run all aspects of a restaurant, receive a new BMW their first day on the job. Salaries for general managers can be in the six-figure range, according to Wensing—from $150,000 to $200,000, by some accounts. There are 113 general managers.
The company also tries to help employees balance their work and life. There are strict guidelines barring restaurant managers from working more than 55 hours per week. Cheesecake Factory employees take advantage of flexible scheduling policies to pursue other goals, like earning a college degree. “Many of our workers are students or aspiring artists. We try hard to accommodate their scheduling needs,” Wensing says.
In 1997, the company decided to decentralize its management training program, which had required a three-month stay in Southern California. For certain workers who lived in other parts of the country, this meant being away from a spouse or children for an extended period.
“Some employees were turning down opportunities for professional advancement because they did not want to be away from their families for so long,” Wensing says. The Cheesecake Factory responded by creating training restaurants throughout the country, which makes it possible for employees to pursue managerial positions without being away from their families.
Still, the company faces challenges. Turnover rates at the Cheesecake are in the 80 percent to 95 percent range, which, although lower than the 106 percent average for the restaurant industry, is still worrisome.
During Wensing’s tenure, the Cheesecake Factory has worked to sharpen its training and development programs. Now that the company is on firm ground with its educational initiatives, it is increasingly turning its attention to recruitment.
“Selection is where it all begins,” Wensing says. The company is being influenced by the practices of former General Electric CEO Jack Welch andGood to Great author Jim Collins, who emphasize the importance of finding workers with the right fit. Going forward, being hardworking and efficient will not necessarily guarantee being hired by the company; candidates will also need to have the right Cheesecake Factory attitude and mind-set.
“We can teach people how to set the tableware, but we have realized that we can’t teach them to smile and to be upbeat,” Wensing notes.
The company has partnered with vendors like TalentPlus to help with its recruitment efforts. Hiring the right people is not just a tool for ensuring a particular level of performance at the restaurants, but also a way to potentially reduce turnover. The firm is in the process of identifying the traits that make a good Cheesecake Factory employee—someone who would not only thrive in the company environment, but also stay with the organization.
In spite of bumps in the road, the Cheesecake Factory’s strategy has been paying off. On average, each restaurant serves 3,000 customers per day and enjoys annual sales of more than $10.5 million.
But Wensing and members of his team don’t rest on their laurels. “We are never satisfied and are always looking for ways to improve,” Wensing says. “Oscar and Evelyn were relentless in striving for better performance.”
Workforce Management, April 24, 2006, p. 1, 22-29 — Subscribe Now!