Good Leadership is Critical to Boosting Performance

Restaurant industry performance is off to slow start in 2018, with same-store sales and traffic counts down in January and February. At the same time, restaurants are facing recruitment and retention challenges, according to TDn2K’s People Report, which records 12-month rolling turnover rates at restaurant operations. But even in this environment, stronger performance is correlated with solid leadership. The report found that turnover increased among those with the weakest sales performance, while top-performing restaurants experienced a drop in management turnover rates.
I recently sat down with Jim Balis, Managing Director at CapitalSpring, an active institutional investor in the restaurant sector, to discuss key questions related to choosing the right leaders to drive growth. 


What makes a good leader?

It’s critical for all decision-makers in the selection process to be on the same page about the ideal characteristics they are seeking in a leader. Every restaurant has a unique situation, so it’s important to think about the specific goals they will need to achieve and the team they will need to work with to be successful. There isn’t a single answer to the criteria for a good leader, but generally we see a higher success rate among people who possess these characteristics:

  • Effective delegator and developer – someone who places adequate responsibility on lower level managers and employees without micromanaging every detail. This person leverages delegation to develop junior staff members

  • Big picture thinking – someone who keeps the end goals front and center, taking strategic actions to move the company in the right direction 

  • Patience – someone who can remain calm and focused even when things go wrong, and provide the necessary guidance to keep the company on track

  • Team-oriented – someone who inspires others to work with them, not for them, and encourages different points of view 


Where do you find the best candidates?

Sometimes the perfect candidate is right in front of you. Looking inside your existing team for potential leaders has a double benefit: those candidates are already invested in the company’s success, and they are familiar with its intricacies and history; plus, the company has an intimate knowledge of the candidates’ skills and characteristics. Evaluate current employees to determine who might fit the criteria you’ve outlined for a leadership position, or who could get there with a little extra development. If an internal search doesn’t produce the right results, consider using a recruiting company that has a specialized focus on the restaurant space. And spread the word through your peer networks–LinkedIn is a great tool for this.


How can you evaluate and develop an internal pipeline for future leaders?

Investing in resources to groom leaders from within can save companies significant time and money over the long-term. Start by breaking out employees into different performance categories: There should be roughly 30 percent at the top, 60 percent in the middle and 10 percent at the bottom. Identify strategies to recognize and sustain the performance of the top 30 percent, as these are your future leaders and retention should be a high priority. Invest in training the middle 60 percent to try to improve performance. The bottom 10 percent will require active coaching, direction and resource investment to elevate their performance; if there is no change, the company may need to cut its losses.
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