TGI Fridays is Paying Managers to Go On Vacation

It’s one of the oldest adages in restaurant speak: You’re only as good as your worst general manager. And when COVID began to force layoffs and extensive disruption into the hourly picture, operators raced to hold onto store-level managers as best as they could.

TGI Fridays CEO Ray Blanchette says sector employees were, in truth, first responders in those early days, even if they weren’t classified that way by officials. They ran food. Served as community pillars. Clocked massive hours and held together skeleton crews in an effort to feed people and keep the lights on.

“And all that hard work landed on our general managers’ shoulders,” he says.

As this pandemic tale has progressed, the labor angle evolved—from the front-lines to PPP to the “Great Resignation,” and into a dynamic where recruitment has taken a bit of a backseat to retention of late.

The latest data from the Bureau of Labor Statistics showed restaurant and bars remained 824,000 people down from pre-COVID levels. The unemployment rate for leisure and hospitality clocked in at 6.6 percent—2.5 percent higher than the economy-wide rate. Since February 2020, employment in the sector was 1.5 million under, or 9 percent.

Over the past year, leisure and hospitality wages hiked by roughly $59.01 on a weekly basis as well, a 13.4 percent increase during that period.

Blanchette says TGI Fridays’ executive team understood the task. “How do we make that job more special?” he says of GMs, a position that can cost $14,689 to replace, per Black Box Intelligence, “and really isolate and single out those key contributions in the business. Essentially, put our money where our mouth is.”

The answer came back to the present climate. Per Black Box, full-service restaurants in June, versus 2019, were operating with 6.2 fewer employees in the front of the house, on average (2.8 for the back). Total compensation for GMs was 5.1 percent higher to $90,129. In that, the number of companies polled the said they now offered flexible scheduling jumped from 31 percent in 2019 to 50 percent. Financial planning upped from 23 to 36 percent and family/elder care leave climbed off the bottom from 2 to 32 percent.

But how could TGI Fridays go a step further?

“To reduce stress and improve work-life balance” for GMs, the company created a program to offer paid vacations. Yet this wasn’t your common PTO arrangement. TGI Fridays is literally writing a check for GMs to take off from work.

The $2,500 reimbursement covers hotels, meals, and everything else, Blanchette says. GMs can use it for multiple trips or all at once. The only requirement is that it’s deployed for a rest-related activity. “Personal enjoyment time away from work; time with their families,” he says. “That’s the spirit here, and the intent.”

Blanchette says TGI Fridays didn’t consider competitors or how it could stand out when coming up with the perk. Frankly, he adds, if everyone in casual dining followed suit he’d consider it a win for the sector and its broader perception battle. “I think we have a special industry, and I think it’s a great place for young people to build a career,” he says. “For us, I think anything we can do to retain people holistically is helpful.”

Rolling turnover for full-serves in Q2 2021 was 105.7 percent, according to Black Box. It was 33.9 percent at the management level. The figures compared to 101.5 and 36.7 percent, respectively, in the 2019 comp period.

So, while slight, hourly and management turnover puled in opposite directions last year. It’s likely a sign of restaurants’ efforts to strengthen one proposition while fighting a multi-front war on the other. the no. 1 reason workers gave Black Box for why they were headed to other industries was higher pay (28 percent), followed by consistent schedule/income (23 percent), lack of professional development and promotion (17 percent), work hours (16 percent) , and work environment/company culture (15 percent).

Less granular, a lot of employees laid off during COVID furloughs found work elsewhere, or grew wary of returning. They might have tapped expanded unemployment benefits, too.

Blanchette says the most important thing TGI Fridays, and restaurants in general, can do for employees going forward is provide them with “interesting learning chasms to cross on a regular basis.”

Blanchette himself started with the company as a manager in training 33 years ago in Philadelphia. He held roles as vice president of USA Franchise Operations, vice president of operations for the company’s East Division, and executive director of its International Division serving Europe, Africa, and the Middle East.

“It seemed like every two to three years, there was a new, interesting learning chasm to cross,” he says.

“I think our company has always focused on moving people forward. We look at it—I tell people all the time—you have an obligation to grow, not an opportunity to grow. We’re a growing company and we need and want homegrown talent. We want people who bleed red and white.”

Constantly challenging employees and meeting them where they are—that’s where this conversation is headed, Blanchette believes.

“I’ve never really seen a standardized manpower plan that works,” he says. “You’ve got to manage individuals individually, and build plans for each individual person based on what their goals are. Not everybody wants to be senior executives. But it doesn’t mean they don’t have real aspirations and real expectations of the company.”

In 2021, TGI Fridays pasted “getting staffed” to the top of its whiteboard objectives. When the company first started tracking, it was about three-quarters staffed compared to pre-COVID levels, “which is pretty scary,” Blanchette says.

As brands continue to lament, pent-up demand is one thing; actually serving it is another. So TGI Fridays set a goal. It incentivized GMs and put a “big bonus” out there to go and get 95 percent staffed (or higher).

By October, TGI Fridays had paid those bonuses to 80 percent of its GMs. “And we’ve been able to maintain that ever since,” he says of the 95 percent mark.

Importantly, it enabled the casual brand to go back to normal hours of operation even as many competitors had to close as staffing dictated. Before, TGI Fridays was closing early “most nights,” Blanchette says. And then, it wasn’t. “So when you look at our industry performance, I point to that one decision—getting staffed, getting trained, investing in talent—as the most important investment we made in 2021,” he says.

According Knapp-Track, TGI Fridays hasn’t dropped out of the top 5 in its category, in terms of same-store sales, over the past year, Blanchette says.

Benchmarking on a two-year basis, the brand has been “either No. 2 or 3” through most of the fall and into this calendar. “When you think about those folks that are leading, there’s some really terrific brands out there that I think do a hell of a job and we’re proud to be in that mix,” he says.

Last year, TGI Fridays’ same-store sales rose 2.4 percent against 2019. The brand earned $73.2 million in average monthly volume, up from $50.8 million in 2020 and $72.5 million in 2019. Since the pandemic began, the company said the ICR Conference in January, it’s permanently shut close to 150 stores systemwide.

There are 154 franchised stores in the US in 25 states, led by franchisees with an average tenure of 15 years. The locations earn $2.7 million in AUV and saw double-digit same-store sales growth in the back half of 2021 against 2019, the company said. Meanwhile, there are 157 corporate units in 14 states with an AUV of $3 million.

It’s been a significant climb. When COVID arrived, sales dropped 80 percent.

But like much of the field, business outside the four walls transformed TGI Fridays’ trajectory. US off-premises mix reached 30.6 percent in 2021 compared to 37.8 percent in 2020 and 9.8 percent before the virus. Delivery accounted for 17–20 percent of sales in 2021, an increase from 5–6 percent two years ago.

The chain generated $20.4 million in average monthly off-premises sales last year versus $15.7 million in 2020 and $6.5 million in 2019. Forty percent of those sales come from TGI Fridays’ native web and app.

And the company is working on a 2,500-square-foot to-go focused concept called “Fridays on the Fly,” growing with REEF Kitchens (300 delivery concepts over the next four years, and exploring virtual brands with digital kitchen operator C3.

Overall, Blanchette says TGI Fridays is “incredibly bullish” on the state of full-service restaurants and where it fits into the recovery. “There’s been some meaningful rationalization,” he says. “There were a lot of closures through the pandemic unfortunately. But that coupled with the pent-up demand of people just craving connection and the ability to connect over food and drink [is exciting]†

TGI Fridays added air exchangers to purify the air and will continue to make its dining rooms as safe as possible, Blanchette adds. Considering the company’s global scale (internationally, TGI Fridays operates 379 stores in 53 countries, and Blanchette said previously there’s opportunity to return to 30 opening per year and more than double the footprint, with much white space in Europe and Asia) there is a case study to draw from.

The SARS outbreak, from 2002–2004, although two decades ago, provides a benchmark to model against, Blanchette says. “The data is getting a little stale because that was 20 years ago, but we kind of know and understand how a consumer behaves once the real threat of infection subsides,” he says. “There’s a robust recovery on the backside.”

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