I have seen two approaches to placing a new manager into a restaurant. The first angle is train them fast, throw them in the deep end of the pool and they either drown or they tread water long enough to find the edge of the pool and get out safely, learning never to be allowed to be thrown in the pool again, but it takes a lot of time and money to get them out of the pool. Some drown and don’t make it. The second approach is train them effectively, put them in a learning environment, and foster their leadership and skill set until they can effectively get in the pool and start swimming on their own.

Note: Either way cost a lot of money, one costs more, and ultimately their return on investment begins sooner.

Fact: A new manager will cost you a lot of money no matter which method you use.
Fact: A new manager is an investment that has to be calculated in dollars.
Fact: A new manager is a direct reflection of you and your restaurant whether they have been there one day or one year

Worried yet?

No matter what you do, here is what you can expect to see over the life cycle of your new well trained manager and I emphasize the WELL TRAINED part!

0-3 months
It should only be training during this time frame…never on their own, never in front of a guest unsupervised, never performing a task without your best right next to them. Cost based on $45,000 per year manager for three months - $11,250 – no ROI here.

3-6 months
They are fresh out of training…trying things for the first time on their own. Forgetting things in cost areas, missing table reads, hiring mistakes, getting a feel for the land. Cost to you? Hard to gauge but if you are doing $35,000 a week in sales, $5,000 per day…it wouldn’t be out of the question to have them make $200 per day in mistakes in missed cost, guest impact, staff awareness, sales, and follow up. Your cost at $200 per day, 5 days per week, 20 days per month - $4,000/$12,000 for the three months….effective profit lost plus their salary again of $11,250. Might as well add that cost to your bottom line because they haven’t even been able to generate any additional sales or profit impact
The tally so far…. $34,500

6-9 months
Starting to get their feet underneath them now. Beginning to understand their job description. Picking up on the nuances of the flow of business and actually holding their own. Mistakes are dropping off, guests are getting to know them, employees are beginning to get it but they still make mistakes….but maybe only $100 per day instead of $200 per day. Yep, another $2,000 in cost or sales lost per month. Tack on their losses at $6,000 this quarter compared to $12,000 last quarter, their salary of another $11,250 and your 9 month cost for your bright business leader…. $51,750

9-12 months
Finally starting to get it. The training is starting to pay off. Beginning to make effective labor decisions, catching waste and quality control issues, improving service, engaging guest and getting them to return, driving the staff to achieve, the mistakes still happen, they always do, but now a high performing manager that probably balances out their losses with their improvements. Whew! The good news, they only cost you $11,250 this quarter, simply their salary.

Total first year cost for your new manager - $63,000
Salary - $45,000
Cost - $18,000 (what would you do with another $18k? That’s 3.5 days of sales gone)
And let me emphasize again, a well trained manager…..

A poorly trained manager….the cost is only higher…haven’t you spent enough already?

Train well, your bottom line depends on it.

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Tags: ROI, Swingley, cost, manager, new, training


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Comment by Andy Swingley on March 29, 2010 at 6:53pm
Thanks Anthony....I rthink the lifecycle of a new GM in an internal promotion to GM or even an external hire extends to 18 months and the DM extends to almost 2 years and again that is with good training. It's longer with bad training or training by osmosis.

Thanks for your comment about my blogs! It means a lot to me.

Comment by Anthony on March 29, 2010 at 3:32pm
I have been in both scenarios and would go with the "train them effectively" one every time....the sink or swim method or "trial by fire" ends up hurting the managers overall knowledge of the business in the long run and you lose that ROI anyway ....i would be interested to see if the Life Cycle of a new GM or DM reads the same. I am a huge fan of your blogs they have all sorts of great pointers for those of us that are 'up and comers' in this business....i guess you had pretty good pointers when you were my DM as well......
Comment by Andy Swingley on March 22, 2010 at 6:44pm
Thanks Mike....Turnover...another whole blog on the cost there!
@Bill - great advice and another way to look at keeping people "in"
Kyle - I think owners do know this but they take the path of least resistance....they think better the evil you know...
@David....so true...year two is the bang for the buck...the best have patience and understand that!!

Thanks everyone for your comments and participation,
Comment by David Rose on March 22, 2010 at 4:46pm
Great framing of this topic, Andy. Companies do have a lot of up front risk. Selecting the right candidate for your opportunity is where it begins, followed by strong orientation, on-boarding and training, and it's not until year 2 before you see the benefit of a great hire.
Comment by Bill Baumgartner on March 16, 2010 at 7:11pm

Your post reminded me of a passage from Norman Vincent Peale, from his book Enthusiasm Makes the Difference.
An employer was going to fire a man out of the business.
He asked, "Why not fire him into the business? Get him to try enthusiasm on the job."
He was fired all right, but it was not out.
Enthusiasm fired him to new participation in his job.
He became a new personality: successful, happy, creative.
The result was amazing.
Comment by Kyle Moyer on March 16, 2010 at 5:01pm
If more owners could see and understand this, perhaps the turnover could be far lower. To have an effective management, you must train them effectively and find ways to keep them around. Otherwise, all you did was train another restaurant's manager at your cost.
Comment by Mike Baldwin on March 16, 2010 at 5:21am
Correct, could not have said it better. Toss in 70% manager turnover and your dollars begin to leak out faster than you can pull them in. Effective training is the key, the more one on one time with the training GM - the less time it will take to get your ROI!
Comment by Andy Swingley on March 15, 2010 at 9:28pm
Of course Joe! Thanks for asking and great to hear from you!

Comment by Joe Archuleta on March 15, 2010 at 9:27pm
Excellent material Andy! May i use it and discuss with my collegues!




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