We’re honored to have the Vice President of Operations at 13th Floor Capital, Greg Reheis, lead this exclusive Workstream Webinar. He’ll be sharing his secrets and experiences on how he modernized hiring for the largest mall-based Cinnabon franchisee in North America.
13th Floor Capital is the private equity arm of 13th Floor Investments, a $2B+ real estate development firm. Their primary focus is the foodservice industry, though we are interested in unique opportunities in managed services where we can leverage our resources, relationships, and experience.
Read on for the full transcript:
Changes in Industry Trends
(00:00 - 01:40)
Lydia: Hi my name is Lydia Fayal Hall. l am at Workstream and today we are joined with Greg who is the VP of operation for Cinnabon as well as many other QSRs including Auntie Anne's. We wanted to chat with you today about what you're doing right now for hiring, how things have changed in the past few months and also just some of your learnings over the 50 years that you've been in the food and beverage industry. So thank you so much for joining us today Greg. To start off, over your long career what have been some of the biggest changes you've seen, what's expected of the operation and managers and sort of what you would have never anticipated what were some of the biggest changes over the last 50 years?
Greg: Oh well you're asking me to go back but it's a completely different environment now, the difference in the generations of people that we hire, each generation has its own idiosyncrasies and the best way to get them to perform. A lot of our employees now are millennials. I happen to really like millennials, I think they're a fantastic group to work with as long as you can build trust with them. When I started as a busboy 50 years ago it was kind of like just do what you're told and shut up and now the employees require a lot more trust building and if you can build that trust with them, they really respond.
Building Trust with Millennial Employees
(01:41 - 03:09)
Lydia: And how do you build that, how do you build trust with millennials?
Greg: You first have to take a genuine interest in them. They can sniff out someone who's not interested and just do it because someone told them to, they can sniff that out very quickly. They're highly intelligent and they really want to learn so if you can build that trust by finding out about them, taking a genuine interest in them, not only on the work side but getting to know them on the personal side, not building a friendship but much more of a mentorship, they are hungry for that real world experience and they respond very well to it. Also they do not like to be talked down to, they like to be talked on the same level even if their experience doesn't match that. They respond very well to a lot of praise and not so much to the criticism that I grew up with which we just figured was the way the world went. So those two things are the most critical is to take a genuine interest, be honest with them and really guide them. Those things really go a long way.
Hire Through Text Messaging
(03:10 - 05:20)
Lydia: The last time we spoke with you, we had the opportunity to chat with you about the text to apply posters and what you're doing with text messaging, how are you seeing that work with the millennial crowd? What has been the response with that and what channels of communication seem to be working best with millennials?
Greg: Well, we had used another platform prior to Workstream and they did not have the text to apply and I really wasn't that interested in switching. I got on a call with Desmond and was more of just being polite and then I was going to kind of say okay thank you and hopefully that would go away but once he started talking about the text to apply feature, that really caught my mind and then I started really listening to what he had to say, so the text to apply has really been something that is been very helpful to us especially when we were open. Being in California, we have no stores open right now but having them be able to walk in before, we had so many ways - some managers had applications handy, some didn't, some wrote it down on a scrap of paper, nothing ever happened. Now, with the text to apply we have a big poster in each of our stores, a picture of someone making Cinnabon it's probably about two by three feet framed, looks real nice, and down at the bottom it says text to apply and so someone walks into the store and looking for a job the managers point him to the sign and then it goes into the queue and the manager can review those applicants when they're looking for it and that simple method seems to be something that really works well especially for millennials who are, as you can tell, far better at using a phone and all these functions than I am.
Attracting New Hires during COVID-19 Reopening
(05:21 - 08:11)
Lydia: No, you're great and since stores have been closed, are there any other methods that you've been considering when you want to reopen where you're going to get new hires from?
Greg: Well that's probably one of the biggest challenges right now because being in California where the standard unemployment benefits were 450 adding with the 600 for the federal that ended last weekend, that was bringing most of them to much more than what they were making. So when we went to reopen, we did have a lot of challenges. We reopened after about three months and we're open for a month only to be shut down again. Well I think it was two or three weeks ago but it was difficult getting a lot of employees back. We had one store that opened and it's our busiest store, and then there was a COVID outbreak amongst one of the employees, one employee got it everyone else was afraid to work so we had to close down for four days so we could re-staff because we only had two people that were willing to work. So one of the other features that really worked with Workstream was the number of job boards that they post to. There's been a few crisis situations over the past year and a quarter that we've used Workstream where if we put an ad on the job board it goes to so many that we get quite a few applicants very quickly. We had one incident over the holidays in one of our stores where unfortunately we had to terminate most of the crew and I think I put an ad in at 8.30 at night and the next morning I had 34 applicants. Screened those and within two days we had eight new people that we were training that got us through that jam. In this case where we had to close down it was normally a store that we had no trouble hiring with but because people were used to getting a lot of money from not working, I had to jump up the starting wage. The starting wage at this store was $13 an hour and I had to bump that up to $15 an hour. I ran and added to $13 an hour and it just got no traction, as soon as I bumped it up to $15 an hour within a couple days I had I think 59 applicants.
Writing Compensation in Job Ads
(08:12 - 09:56)
Lydia: Oh wow. I just want to say and where do you highlight how much you're paying per hour in your ads? Do you put it in the actual post?
Greg: Right, in these cases where I needed someone very quickly I did it right in the header instead of just saying crew member or something like that. I came up with something because Cinnabon is sweet so I said the sweet deal $15 an hour or something like that so that prompted a lot of people to think it was a sweet deal for sweet crew members, $15 an hour but that got a lot of traction. I think because we were one of the people that got the COVID at that store, the store manager, so I screened all of the new applicants on the phone myself. I think I had set up like 15, 16 interviews and we made five new hires plus when some of the other employees found out they wanted to know if I would pay them $15 to come back and I said of course you've been with us a long time, I wouldn't start someone new at more than you're making so we had about five or six of them come back because now $15 instead of $13 they miraculously were cured and were not afraid anymore and so we were able to open within reopen within four days. I think we closed down on a Monday. We were open Friday only to be closed again four days later on Monday when the governor reclosed California so it's been a real battle.
Managing Internal Communications
(09:57 - 14:33)
Lydia: It's a roller coaster and when you have to navigate that with your staff, the reopening and closing, how do you decide between furloughing, how do you communicate what your expectations are for people coming back and stay in touch with employees?
Greg: We use another like a group communication platform; it's GroupMe. I'm sure people heard of that before where we post only positive things. We've used that for years and so people were used to seeing that even while we were closed, I used to forbid any personal stuff on there, while we were closed I said let's get to know each other, what are you doing right now, what are your hobbies, take some pictures. So we had a lot of people staying in touch via that so that went a long way to keeping the team intact. We have 14 locations and they kind of run the gamut in California from Santa Rosa down to El Centro which is 650 miles in between the northern and southernmost stores so this has always kind of kept us together as a group. When anyone does anything good or get some recognition we always put it on there with pictures so someone in Santa Rosa will know if someone that way down in El Centro happened to do something well and so that worked well for us. So communicating via that method and then staying in touch while we were closed for three months helped keep people wanting to be part of the team so when we reopened, it really was easier than I thought it was going to be to get people who are willing to come back. We did have, like I mentioned, some problems around that, some people were reluctant because they were making more on unemployment not working than they were working but I was surprised at the number that actually did come back and these people came back with a whole new situation they had to face because there was tons of new things that they had to be trained on especially around PPE, how do you what are new sanitation requirements, what changes in the stores were being made so especially to the service end having only one register open instead of two, trying to maintain social distancing, sanitizing efforts throughout the shifts end of the day, all the malls also had reduced operating hours. As you know Cinnabon and Auntie Anne's are all basically mall based so there were three hours a day less operations - instead of 10 to 9 it was 11 to 7 in all the malls. So it was really challenging on a lot of fronts and I have to say the people overall, our staff, they did pretty well. I think they came back with a little bit of reluctance but I think they were sad when the state closed down again. Just announcing that 600 is gone and now they're just existing on nothing.
Lydia: Yeah it's hard they don't even get the free Cinnabon, I mean that alone would keep me going. So with employees having to decide between unemployment benefits there and coming back and getting paid, what would you say was the easiest way to reach out and communicate with them about why you wanted to rehire them or talk to them? Were you using the messaging app directly, text message, were you calling people?
Greg: Yeah in most cases it was the managers who were getting on the phone with their employees and what we found was that the managers who stayed in touch with their employees either personally or on the GroupMe were the ones that had the least trouble getting people back. The ones that kind of just had forgotten about their employees, they had the most trouble. So that personal touch of staying in contact with people during the time we were closed really proved to be very beneficial.
(14:34 - 16:11)
Lydia: And you talk a lot about the retraining and all the additional sort of protocols you had to implement. What percent of your employees do you think were able to just get it on day one and keep going versus those that need to do a lot more training, a lot more reminders. What percent were able to pick up the new training quickly?
Greg: The training part they picked up quickly. The ability or the desire to put it into place and to practice it varied from location to location. The stores that have our better managers in it, they had the least amount of trouble getting people onboard with it.
Lydia: So it really comes down to the managers, I love the saying where there’s no bad employees, they are just bad hires and bad managers.
Greg: That's very true, the managers and we've gone through since the four years that I've been with Cinnabon in the Cinnabon family, two different owners have proved to be so so very true. The personal touch is much more important than it was when I was first coming up 50 years ago. Even back then, it worked but it wasn't expected. Now it's expected if you're not doing that you're going to have a tough time motivating people.
Adding a Personal Touch to the Application Process
(16:12 - 20:09)
Lydia: Yeah and how do you incorporate the personal touch into the actual application process when you think about the follow-up messages and what you're doing there?
Greg: That has been something that has worked well in other stores. Again, when you have the better managers they will follow through, follow up and once they make the hire, get the person in to fill out all the necessary paperwork which is done online through our payroll service. Not a lot of managers but the ones who aren't as on top of it and cognizant of this fact would need some people, they'd call them up and the person might never hear from them, they keep bugging them and then they would say oh go to this place and apply and the applicant’s potential employee would really get frustrated and the hire wasn't made. So again, it's that personal touch showing the person even the applicant who's not an employee yet that you care. I don't know how you do it without it these days, that's where most of my coaching with our managers has come into place and with my district managers, that's where all that has really gone to. When I see that that's not being done, I have some other managers who have no trouble and I can use them as an example and this person has an easy life compared to your life because of the way that they are really treating their employees and prospective employees.
Lydia: Yeah makes a lot of sense. We had a question come in. Do you do anything to build your proactive hiring pipeline?
Greg: We were. Before this started, we were doing a lot and using one of the features in Workstream. I don't know most of the people on here are customers of Workstream or not but I can go in and part of my weekly routine was to go in once a week and I can pull up and see who is using Workstream and see if there's a manager who the crew is fairly stable or they're reluctant to be proactive. I can see if they think they have a staff that's set and in place, and I pull it up and they haven't even gone into Workstream for two weeks. So I can quickly get on the phone either personally or through my DMs and have them coach on how to use it so number one they know that I'm looking, and the ones who are actively involved with this process where I can go in and see they've gone in two days ago and they're looking for people, these stores have the better staff and they're never understaffed. The ones who only go into Workstream and check when they need an employee are the ones that are always in a bind with keeping their staff at an adequate level so that feature has been really really helpful to me in pushing them to maintain a proactive approach to their hiring practices if they say oh no my crew is set and then I look at different things such as their customer comments and the different reports that we have that Cinnabon provides for us and I can quickly show them your stamp isn't as good as you think. You need to really start recruiting for more.
Measuring Staff Performance
(20:10 - 20:56)
Lydia: How do you measure staff performance and is there any way that you do that as far as an ROI with financials and the impact there for staffing?
Greg: We don't, it’s one of the things that has been on my to-do list. We had an ownership change about a little over two years ago and we've had so many different changes. I used to measure that pretty religiously but that just hasn't been something that I've been able to get back in and measure as far as what your return is. All that I know is that high turnover is expensive just from that standpoint alone, not to mention the ancillary effects of those are not the best running stores and not the most profitable stores.
Job Board Usage
(20:57 - 22:06)
Lydia: Makes a lot of sense another question that came in, are you relying on job postings to fill your full and short-term shifts?
Greg: We change up our posts about four times a year unless there's a need and some of those emergency situations we've had to turn one off and put a new one on. We typically gear up for more hiring to start around the end of September, first of October for the holiday period. Being mall based, I think some stores have about 40% of our business during the holiday periods. So our busiest store will go from 26,000 a week to almost 65,000 a week, so it's just a huge amount of difference so we have to do quite a bit of hiring so we switch those up about four times a year depending on the season unless we have a specific need to really do some emergency hires.
Interview Questions to Assess Candidates
(22:07 - 26:44)
Lydia: Well another question that came in, are there any interview questions you've used past or present that you feel are absolutely essential in helping your hiring managers assess a candidate?
Greg: We have built the questions into the application process and those are very simple questions: what is your availability and then it lists the seven days and they can click on each day they're available. Obviously in our business, nights and weekends and holidays are critical so if they're putting down 9-5 Monday through Friday, they get rejected right away. We do have one piece of equipment where you have to be over 18 by California law to operate so we want to make sure we have a good mix of legal adults that can operate some of the machinery and they're not limited to what they can do. We do hire some under 18 that can just serve as other functions mostly around customer service and cleaning and stuff like that, obviously the standard question are you legally allowed to work. So those questions really pare down the selection pool right away but it gets us to more people that we know are going to be available when we need them and then once we've chosen to do a phone screen, the phone screen is really very quick and it's mainly to see that those questions are correct and to make sure that they're available on those times and then we ask a couple questions like how do you think you're going to get to work, real quick questions but the main purpose of the phone screen is how does this person sound, does this person have an energy to them, does their voice have an energy, do they sound like they're dead, how are they responding to me personally on the phone or whoever's calling them. And then we'll set up the in-person interview. These are entry-level jobs so we're not hiring for a six-figure income so the in-person interview is not that long. We ask them a few questions especially if they had previous work experience based around specifics, train the managers to ask about specific instances rather than ask general questions or questions that they can give you a textbook answer to and you can really kind of get a feel for a person by how they relate to you during that interview period. The store we recently had to do hiring at, I live in Southern California and this was in Central California, so I drove up to do the interviews myself because we just didn't have the people ready to reopen and they were busy with those production and service type functions. So I haven't done that for a while, so I had to reach way back in but just really quickly ask them some specific questions and this prevents them from giving you textbook answers or just yes and no answers or answers they think that you want to hear. A lot of times when I ask them specifics, you can see them go oh they had to think if this is their first job, you ask them if they're in any organizations in their school, they're playing sports, tell me about a specific time you had problem with one of your teammates things like that so those questions can give me a good idea if they're the right person to hire and that's how I instruct the managers to do the interviews and that's worked fairly well for us.
Handling Ghosting During Interviews
(26:45 - 30:41)
Lydia: Yeah and I realized you aren't doing most of the hiring interviews yourself, you have managers to do that but you talked about before Workstream you were using something else and you've been in this business a long time, what would you say were the standard no show and no answer rates before you were using Workstream to schedule things? Like when you called or were trying to get them to show up, what percentage of people just flaked or never answered their phone?
Greg: It was probably about 65% to 70% that didn't answer or flaked. Right now, the most recent ones, it was probably about only 40% who didn't answer or if they didn't answer, I left a voicemail to tell them if they're interested please call me and I had quite a few people that didn't answer their phone but did call back. I was very glad we made the change to Workstream and the staff there was very helpful in helping us get started on it. Aaron was just super.
Lydia: Oh Aaron's the best. So another question came in, how has Workstream helped with reducing in-person ghosting? So if people are actually scheduled to come in for an interview what percent of people used to flake and what percent of people still flake? I guess separate from what's going on with COVID, what would you say were like before Workstream and now using Workstream to send the automated reminders and whatnot?
Greg: That really varies a lot by store and geographic location, we still have a problem with people actually showing up for the interview and I don't remember how many but it was quite a few who didn't show up before and we probably have about 70% to 75% of the people who actually schedule interview and show up but we do have some locations where maybe only about 20% show up. Those have always been tough places to hire in.
Lydia: What makes them tough places to hire?
Greg: I think mostly it's demographics. We have some in very affluent areas where maybe mom or dad is on their case to get a job and they just tell their parents oh you know there's just nothing out there and the parents believe them. Both those areas are on opposite ends of the spectrum but it's the same on both. If you have a very low economic area it's more like they really don't want to work and so they do anything they can not to. And in the affluent areas, it's pretty much the same thing, they have a good life and they don't see any need to go to work. The primarily blue collar areas that we're located in have always been the easiest places to hire and where we get some really some really decent people.
How Workstream Compares with Other Methods of Hiring
(30:42 - 33:06)
Lydia: Well I appreciate people with good work ethics. My first job was bussing tables so I feel like it's a necessity to start in the restaurant business and roll up your sleeves and get your hands dirty. A question that came in, could you clarify what's different regarding people responding when you're using Workstream versus other methods that they come in through?
Greg: I think the main thing is the way that the Workstream platform works. It kind of guides the manager along and I can see where they're at. When I can go into review, I can see how many people have applied, how many people have actually been contacted, sometimes the manager doesn't move them along in the steps and then if I say you had all these people applying you haven't contacted any it's like oh yeah i contacted these people. Well you didn't move them along then or you didn't reject them. So it's more of an awareness issue that I have a tool that I can follow up on and keep that at the top of mind awareness that we always need to be recruiting and just that continued emphasis on it. A lot of people in not only this business but other businesses, they think that just because they proclaim something, it's going to happen magically and it doesn't. It's only through constant repetition and constant follow-up does it really impact an organization. So the managers have gotten more clear now that they need to continually be recruiting and the place where Workstream comes in is that it makes it much easier and quicker for me to go in and spot check so that then I can address issues right on the spot with a phone call from myself or from the DM as to what is the issue here. If I have a real problem obviously a phone call from myself gets their attention a lot quicker.
(33:07 - 35:06)
Lydia: Well you're an important person so that makes sense. Pre-COVID, I know Panera Bread's CFO was on CNBC and he said like the industry turnover standard is 130% and they were proud that they were at 100%, what do you think a lot of mall based QSRs like Cinnabon and Auntie Anne's, what are the turnover rates being calculated with if you need 10 people to operate this location how many people are you hiring every year? So if you have to hire 20 people in a given year like that would be a 200% turnover rate. What would you say that the turnover rate is for these mall based locations?
Greg: Again, that's so dependent on the area and even more so on the manager.
Lydia: Which is the highest and lowest?
Greg: I would say that I have two stores where the turnover rate is continually between 25% and 30% and then I have other stores where it has been as high as 200%.So it's really indicative of of the manager it just goes back to the premise that today's managers have to be much more employee-centered rather than just a dictator or someone who's going to sit in the office. They have to be right in there with them. Where we have managers that show genuine concern for their employees is where we have low turnover rates and it has some to do with the pay but it has more to do with how they're treated.
Sourcing and Interviewing Great Managers
Lydia: And how do you look for managers who are going to treat employees really well? Are there any questions that you ask in the interview or back channeling to understand this is somebody who's going to make my life easier because they're going to be a good manager?
Greg: One of the things I like to ask the manager is you probably had one or two employees who kind of sticks in your mind, tell me why they stick in your mind and usually that'll lead well. I promoted them to crew leader and then to assistant and now they're running this store or what. I would ask them a follow-up question, so what specifically did you do to help with this person's success and if I get a real unspecific answer, I know it's probably not a strong part of theirs but if they can give me a real specific answer and that's almost like bragging about this employee, then I know this person has some experience in this and probably is more likely to be successful at this than someone who takes a while to answer the question.
Lydia: Yes sir I always like that, the STAR, the situation task action result.
Greg: I don't even remember when in my career but that's one of the things that stuck with me. Like some things are true then and they don't change.
Promoting Diversity and Creating Opportunities for Advancement
(36:54 - 39:37)
Lydia: They really don't. One thing that's been talked about a lot in the news and somebody asked this in the chat is, what are you guys doing in your own business to promote diversity and create opportunities for advancement? I think this is something a lot of QSRs are talking about right now.
Greg: In Southern California we get quite a few applicants, just because of the general ethnic makeup of California, we get quite a few hispanics that apply and trying to diversify the workforce is not as easy as it sounds, but we do make an effort to make sure that we can be more inclusive now especially within the last few months it becomes more and more important to have a more diverse workforce. That's a challenge right now to diversify the workforce when you have a work population that is very highly in one ethnic group. So we are really pushing especially based on what the overall demographics of each individual geographic location is to have a workforce that more mirrors the general population of the area but that's not as easy as it sounds but we're trying to make big inroads into that area. We have one location that's not in an amusement park but it's in a mall related to the amusement park where we get people from all over the world and I've always wanted to have like a mini United Nations employed there. Never quite got to that but that would be my dream so that anybody from any place in the world could come in and feel comfortable. One of the funnest stores to work at, I have a kick working there because I get to meet people from all over and talk to them about where they're from and why they're here so that's a lot of fun.
Lydia: Which park is it?
Greg: Universal Studios in Hollywood. There's a mall out front called the Universal City Walk and it's kind of a fun place.
(39:38 - 42:03)
Lydia: That sounds awesome. We have a few more questions. I feel like we're over time but I just want to knock out the questions that people have submitted. One of them you kind of touched on this earlier but what aspects of hiring have become more difficult as a result of the pandemic? Is there anything aside from what you discussed earlier about the unemployment benefits being higher? You have a text-to-apply poster but you have less traffic, does that make it more difficult are there any other things you've had to change?
Greg: Even though there's been less foot traffic, the number that have come in through text-to-apply hasn't proportionately really changed so we still have a good amount to come in through there but having to place new ads has really been something we've had to do especially in certain locations where we need to do a lot of emergency hiring.
Lydia: Is it harder to hire when all the businesses in your area are trying to reopen at the same time?
Greg: I thought it would be, it's not as hard as I thought it was going to be. There's all these people who are opening, looking for people but it hasn't been that difficult especially since we've had those emergency situations where we've had to do a lot of quick hiring but we did offer more money so that might have helped. No one likes to increase their cost, but in California the minimum wage is 13, there's so many municipalities and counties where they've upped that and even in areas where it's not mandated to pay higher, there's a local area that might be paying higher where they could go a few miles and make more. So our overall average hourly rate in our stores is about $16.35. Because we're having to pay more even though the minimum wage is not that high we've had to pay more to really attract the quality person and to get a steady stream of applicants coming in.
Employee Referral to Boost Hiring
(42:04 - 42:47)
Lydia: Another question that came in, for hard to fill positions, I suppose like managers where you just aren't getting enough good applicants, do you ever use temp agencies or sign-on bonuses?
Greg: No we have an employee referral plan it's quite generous, where if an employee hires someone and we hire them through that employee referral, they will get $100 after 30 days and if the employee stays around 90 days, they get another $200 so that's $300 they can make from referring someone who's going to stick with us and is good.
War for Talent Among Franchises
(42:48 - 47:01)
Lydia: In the news, there was a lot of big splash, maybe this was six months ago, of Taco Bell announcing that it was going to pay its managers $100,000 and In and Out coming out saying like oh we already do that.
Greg: In and Out has paid their people very well. They've always been amongst the highest even in what they pay their hourly people.
Lydia: When Taco Bell came out with that, as far as their hundred thousand dollar managers were shocked by that, what do you think that's a reflection of? I suppose is it that hard to hire for a company like Taco Bell and you come not just from Cinnabon but also from KFC, how have you seen these sort of different franchises struggle for certain types of talent?
Greg: I think to get someone in, you have to have an attractive package for them. I'm not sure where we rate our average general manager, probably around 50,000 base but we have implemented a bonus program where managers can earn more and I'm sure that the numbers Taco Bell are bragging about is a base plus bonus incentive and those numbers where they're talking about 100,000, I'm sure are more with their higher volume units. So we've really been looking at that a lot. Another thing that's very important too is, managers have to have some kind of quality of life and that was something that when I was a store manager years ago, we were just expecting to work all the time. It doesn't change for me, I'm old, I can't change but I have to really be cognizant when i'm looking for new people is what is this person looking for and if I think this person is really good and even with my existing managers, my DMs, I want them to take Sundays off because they need to be in the stores when it's busy on weekends but they don't have to be on Sunday so I try to encourage them to take Sundays off so they have some time when maybe their family is more likely to be off too and even with the store managers, it used to be nope you don't take weekends off. Now it's like, if you need a weekend off, I just got to know ahead of time and we review the schedules every week but I would like to be able to give the managers at least one weekend off a week and in stores where they're staffing as well they have adequate backup - their management staff, the system manager and the crew leaders is there. I encourage those managers to take a three-day weekend every month so that they have that time with whatever family situation they might be involved with. It's much more important now for that quality of life issue is becoming very important, we used to mandate that the managers work when the store is busy at night and that's not as big a thing with me anymore because if they can develop their key people, their assistant managers and their crew leaders then that's fine with me.
(47:02 - 49:01)
Lydia: Yeah that's great! I think it's just building trust across all the different types of people you work with, so I want to knock out the last few questions since we're over time. One of the questions is since you have a lot of shops in malls, how do you stay informed when they are going to open and close? How fast does it take you to ramp up your store when you know they're going to reopen?
Greg: Yeah that's really been tricky because sometimes we got a day's notice that the mall was opening. We can ramp up in about two days depending on when our main delivery is so we need supplies, a lot of spoilage during the three-month closure where we had to make sure we had enough and stores that might be near the distribution center could always do a call but you can only transport so much in a car, so it depends. We could open it as quick as two days and sometimes it took like three or four just depending on the delivery schedule. So it's not really the mall’s fault because a lot of times they don't even know when they're going to open so much depends on when they're allowed to open and then these malls all have corporate offices. So by the time the GM finds out, he might be oh we're opening on it's Monday we're opening Wednesday. Right now the state of California is publishing they have what they call a watch list by county where they have specific criteria to when they will allow whether to consider allowing a county to open back up. So right now I'm monitoring that weekly so I get a good idea of when the possibility, how far out are we from opening back up and last week the numbers started showing improvement and this week they just took another dive so I was originally projecting maybe a three-week closure after they closed us but we're already in week three, I'm looking at another three to four weeks of being closed i think.
Sales During Reopening
(49:02 - 52:20)
Lydia: Oh gosh and when you did reopen even though it's just for a few days, what were sales like in comparison to what they were same time last year?
Greg: Oh sales were surprising, they were very good.
Lydia: People are excited to be able to go back and like sick of mac and cheese at home, I know I was.
Greg: Another thing that fueled it is if you're out in the mall shopping, you buy one Cinnabon then that's kind of what you're doing, a lot of places have a little place either right in the store or in a nearby food court or someplace to sit down all those have been closed. So we saw a big increase in the number of packs we were selling six packs and 15 packs of the mini bons which are higher priced so that fueled a lot of the growth there plus six months prior to the shutdown, we had put a big push on third-party deliveries Grubhub and Ubereats Postmates DoorDash those things and we had gotten to where we had built up all four of those platforms were in operations in the stores so we were doing 3.5% to 4% of sales overall, all of a sudden that shoots up to 11% to 12% of sales so we had quite an upsurge from the third party delivery platforms. One store was crazy because we charged high commission rates, one store had 37% of their sales through delivery, that's amazing. Unbelievable and those prices are crazy but that and the pack sales. Transactions were down but not down as much as I thought because we're operating on about 27% less hours being open and those hours between 7-9 previously when people are off working can go to malls were critical times for us, those were our two busiest hours of the day and all of a sudden those are gone so I'm not surprised that transactions were down but they weren't down as much as I thought, think maybe 14% 15% if I remember correct from before when we were just reopened but sales were up in some of the places like 15% to 30%.
Lydia: Oh wow that's great.
Greg: And some of the stores that opened first, we didn't open them all at once because everything opened up a little bit gradually and we had to kind of stage it but after about a two week period, we opened them all up and so some of the stores that were open first started to show some decline in those crazy numbers but it was still pretty healthy so the sales really weren't the issue the transactions was concerning but given all the considerations it was kind of expected but they weren't down as much as I thought but our sales were doing very well.
Evaluating Third Party Delivery Partners
(52:21 - 53:05)
Lydia: And when you think about the different delivery partners, do you happen to know offhand which have the best margins or service for you?
Greg: I think they're all pretty high, usually around 23%. I think Postmates was the least expensive, which I think was 19%.
Lydia: So that means like 19% of the order goes to Postmates for doing the delivery?
Greg: Yeah so we charge a premium for those third-party deliveries. It's about 15%, I forget the exact number, we came about a little over 15% more than what we charged in the store.
Hiring Via Video Interviews
(53:06 - 53:45)
Lydia: Got it, makes sense and I'm just going to knock out these last two questions. What are your thoughts on hiring via video interviews?
Greg: That's something I haven't done but some of my managers have done it because they're much, obviously from the amount of time it took me to get set up, you can see they're much better at this and they started doing that. I don't have any results yet on that, they seem to be able to do it but as far as any definitive numbers or anything it's kind of been so new to us but something definitely that once everything settles down we're going to pursue.
Staying Updated with Useful Publications
(53:46 - 56:27)
Lydia: That's awesome and final question, where do you stay up to date on industry news? Like where do you go to for magazines newsletters podcasts forums like how do you stay up to date like this is what you know is trending right now for QSRs or in your own brands?
Greg: Before the shutdown I really didn't have much time to stay up on that. We had so many things going and so many initiatives in the store especially around marketing and local marketing and marketing within the malls. We've done quite a bit on that and really focusing on the service end of it and we saw some remarkable improvement in our service rankings because of those initiatives so I hadn't had as much time as I have recently because there's now a plethora of webinars available and most of them are selling something but I have done most of that through webinars. In the old days, there was really just basically one for our industry QSR magazine and that was a free subscription so you got that every month and you read through it and you kept up to date with that but right now it's been mainly online stuff webinars and I don't know how they all get my name but somebody's giving it to them because i get a ton of them so during those three months we were off I did watch a lot of webinars.
Lydia: Were there any that stuck out to you as being really helpful? We can definitely improve.
Greg: I think there was a couple that I remember. It wasn't a lot of new stuff it was basically people rehashing the same old stuff that have always been the basics of our industry. There's a lot of people that are touting technology and this and that and most of the stuff. In my early days when tech stuff was quite new back in the 80s, I was very much on the forefront of that and now it's just kind of gone faster than my feeble brain can grasp it so luckily I have some sharp people that I've mentored and they kind of tell me what's going on.
Lydia: Well I think you're doing great but anyway this has been really wonderful thank you so much for your time and it's been incredible just to learn from you and understand sort of how you're able to juggle all of these changes across hundreds of miles that you need to cover for your different businesses.
Developing People Relationships
(56:28 - 59:14)
Greg: I have a couple of people who when I first started four years ago and they showed some promise and I've worked with them and developed them and they've been very responsive, and we're talking people that when I started with them they were making $13 an hour and now I'm paying them $60,000 a year but they've been really the people that have allowed me to do it. They're the ones that I rely on and it just goes back to really being able to develop some kind of relationship with your key members.
Lydia: Yeah something that's something that always sticks with me when chatting with owners. operators and people like VP of operations who like yourself. They say like they're not in the food business they're in the people business.
Greg: So true. I once saw in one of my flights Southwest which I think is a great airline. I like to read the CEO's article when I get on a plane and he says we're in the people business we just happen to fly airplanes.
Lydia: Yeah i love it! Well do you want to give a shout out to the people who have been key just as a way to wrap this up?
Greg: Well the my right hand guy is operations, Gus, he's been with me through anything and usually whenever I call Gus and his two questions are where do you need me and at what time and then my right hand gal, Kyra, she's just started out in operations and now she handles so much administratively for me and she's so quick with a lot of things that I'm not quick with anymore. A couple managers who are coming up, my gal Karen who's just been a real go-getter and it's just phenomenal and then an old-timer named Adriana who continues to just run one of our best stores.
Lydia: Well thank you so much Greg this has been incredible and thank you to his extended team for sharing you for an hour to chat about this stuff. This is Lydia from Workstream and this has been another great Wednesday webinar so thank you everyone for tuning in and see you next time.
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Lydia Fayal Hall is Head of Marketing at Workstream. She previously held leadership roles at OneSignal and Chalkup, acquired by Microsoft. Lydia has written for publications including The Wall Street Journal and Forbes. She is an alum of UPenn, Johns Hopkins, and YCombinator IK12. Originally from Stonington, CT, Lydia now resides in San Francisco, CA with her Australian Shepherd, Indy.