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Chain LeaderEditorial Archives2005April 15 — Best Places To Work

Competitive Set
Exclusive Chain Leader research reveals recruiting and retention methods of managers from different service industries.

The competition for unit-level staff is not just among other chain restaurants. So Chain Leader asked managers at retail outlets and hotels as well as chains to share their successful methods of finding and keeping quality employees.

Reed Research Group conducted a survey in January of 600 unit managers, evenly distributed among restaurant chains, hotels and retail outlets. Fifty-three percent of the restaurants were quick service; the rest were full service.

In each of the industries, respondents reported far more hourly employees than salaried. Restaurant chains’ staffs are 90 percent hourly; hotels’, 85 percent; and retail operators’, 87 percent. Fifty-two percent of chain respondents’ employees are part time, as are 30 percent of those from hotels and 55 percent of those from retail outlets.

Restaurant chains’ mean turnover was 92 percent, while hotels’ was 57 percent and retailers’, 59 percent. Respondents were removed from calculation if they claimed turnover of 20 percent or less.

Why They Leave

While the respondents agree on the importance of certain factors in their unit-level-hourly turnover rates—citing personal reasons, employee misconduct or negligence, and professional reasons as most important—there are differences among industries. For example, restaurant managers were more apt to stress job dissatisfaction as a contributor. Retail respondents saw poor fit of the employee as less of a factor than did restaurant and hotel operators.

Fully 98 percent of respondents said ensuring a good work environment is one way they cope with hourly turnover. They use several other tactics frequently, such as flexible scheduling, cross-training, recruiting experienced workers, employee-appreciation programs and communication/morale exercises.

Yet there are differences among the industries. Chain restaurants are more likely to use cross-training (99 percent vs. 93 percent of hotels and 91 percent of retailers) and less likely to use thorough screening and background checks (68 percent vs. 84 percent of hotels and 82 percent of retail outlets). More hotel managers said they use employee-appreciation programs (90 percent vs. 82 percent of restaurants and 72 percent of retailers) and communication/ morale exercises (90 percent vs. 78 percent of restaurants and 75 percent of retailers).

When it comes to quickly replacing hourly employees, managers across the three industries said they were most likely to use word-of-mouth referrals, walk-ins and applications they already had on file. Only 18 percent of chain-restaurant respondents have used the Internet to source new staff, while 47 percent of hotel and 28 percent of retail managers have.

Benefits Package

Vacation and paid time off was the most common benefit, with 86 percent of all respondents offering it. Eighty-one percent provide health benefits. More than half of the respondents offer 401(k) plans, holiday-incentive pay and performance bonuses. However, restaurant chains’ figures fall behind. Only the top two benefits are available at more than half of the chains.

On the other hand, chain restaurants offer health benefits to both full- and part-time employees with almost twice the frequency of the other industries: 61 percent vs. 34 percent for the rest of the respondents.

Fully 93 percent of chain restaurants offer dining discounts, 63 percent of hotels offer complimentary rooms, and 38 percent of retail outlets give store credit.


The three industries each have significantly more hourly employees than salaried, but hotels have a far greater percentage of full-time employees than restaurant chains or retailers.

Chain restaurants

Hourly 90%
Salaried 10%
Part-time 52%
Full-time 48%


Hourly 85%
Salaried 15%
Part-time 30%
Full-time 70%


Hourly 87%
Salaried 13%
Part-time 55%
Full-time 45%
Source: Reed Research Group/Chain Leader 2005 Service Industry Employment Study


Managers of chain restaurants, hotels and retail outlets all depend on walk-in applicants to help fill their vacant positions.


Chain restaurants
(often) 86%
(some) 14%
(never) 1%


(often) 63%
(some) 32%
(never) 5%


(often) 82%
(some) 17%
(never) 2%


Chain restaurants

(often) 52%
(some) 40%
(never) 9%


(often) 51%
(some) 44%
(never) 5%


(often) 33%
(some) 58%
(never) 10%


Chain restaurants

(often) 14%
(some) 44%
(never) 43%
(often) 44%
(some) 40%
(never) 17%
(often) 10%
(some) 37%
(never) 54%
Source: Reed Research Group/Chain Leader 2005 Service Industry Employment Study


Most of the respondents in each service industry felt that turnover is part of their industry, but most also thought it wasn’t a problem at their location (% agreeing with the statement).

Turnover is just a part of being in this industry.

Restaurant chains 83%
Hotels 80%
Retail 87%

I do not think turnover is a problem at my location.

Restaurant chains 64%
Hotels 65%
Retail 76%

There are programs that can be implemented to reduce turnover to manageable levels.

Restaurant chains 92%
Hotels 90%
Retail 82%

Source: Reed Research Group/Chain Leader 2005 Service Industry Employment Study


Chain restaurants lag behind the hotel and retail industries in terms of the benefits they offer unit-level hourly employees.

Dining discount

Restaurant chains 93%
Hotels 7%
Retail 0%

Vacation or paid time off

Restaurant chains 76%
Hotels 96%
Retail 88%

Health benefits

Restaurant chains 70%
Hotels 88%
Retail 85%


Restaurant chains 50%
Hotels 66%
Retail 70%

Performance bonuses

Restaurant chains 42%
Hotels 62%
Retail 61%

Tuition reimbursement

Restaurant chains 25%
Hotels 48%
Retail 43%

Holiday incentive pay

Restaurant chains 24%
Hotels 73%
Retail 78%

Profit sharing

Restaurant chains 20%
Hotels 21%
Retail 48%

Holiday pay when the unit is closed

Restaurant chains 14%
Hotels 33%
Retail 59%

Source: Reed Research Group/Chain Leader 2005 Service Industry Employment Study
There are differences among the service industries surveyed in the ways that managers try to retain their hourly employees.


Restaurant 99%
Hotel 93%
Retail 91%

Good work environment

Restaurant 98%
Hotel 99%
Retail 98%

Flexible scheduling

Restaurant 98%
Hotel 89%
Retail 96%

Employee appreciation program

Restaurant 82%
Hotel 90%
Retail 72%

Recruit experienced workers

Restaurant 80%
Hotel 85%
Retail 82%

Performance-based rewards

Restaurant 80%
Hotel 77%
Retail 74%

Communication/morale exercises

Restaurant 78%
Hotel 90%
Retail 75%

Increased wages

Restaurant 71%
Hotel 73%
Retail 71%

Thorough screening/background checks

Restaurant 68%
Hotel 84%
Retail 82%

Employee surveys

Restaurant 51%
Hotel 63%
Retail 45%

Source: Reed Research Group/Chain Leader 2005 Service Industry Employment Study


When asked about the contributing factors in their hourly turnover, unit managers in all three industries answered similarly. However, restaurant chain managers were slightly more apt than average to stress job dissatisfaction, and retail managers less likely to note poor fit of the employee at the location. Respondents rated each reason’s importance on a scale of one to five.

Personal reasons 2.98

Employee misconduct or negligence 2.96

Professional reasons 2.90

Insufficient wages or benefits 2.55

Job dissatisfaction 2.49

Poor fit of employee at location 2.45

Seasonality of work force 2.37

Scheduling difficulties 2.29

Conflict with supervisor/manager 2.17

Source: Reed Research Group/Chain Leader 2005 Service Industry Employment Study

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