Serving Up Success: The Magic Behind Happy Employees in Restaurants and Hotels

As I move forward in my career toward retirement, I often reflect on my early and formative days. I find myself looking back at those lessons taught and learned that I adopted as part of my leadership style. I ask myself if those lessons served me well, did they serve my team (all my team), and are they relevant in today’s world.

One of those lessons I was just thinking about today I learned during my days working at a major fast-food chain, okay it was Jack in the Box Inc. I was introduced to a concept that has since become the cornerstone of my approach to business – the Service Profit Chain. This framework emphasizes the interconnectedness of employee satisfaction, customer loyalty, and financial success.

Today, as I reflect on the ever-evolving landscape of the restaurant and hotel industry in our new reality, I find myself pondering whether this concept still holds its ground as a viable strategy. I took a look, and here are my thoughts on whether the Service Profit Chain is relevant in today's business environment, and what we need to do to bring it to life or adapt if necessary.

The Service Profit Chain in Brief

For those unfamiliar with the Service Profit Chain, it is a theory that suggests that happy and engaged employees lead to satisfied customers, who in turn generate higher revenues and profits for a business. At the time, I was told this was a philosophy brought to light by the Sears Corporation (if only they had stuck to it). It's a virtuous cycle that posits that by investing in employees' well-being and development, you can create a positive ripple effect throughout your organization. Makes sense right!?!?!

Is it STILL Relevant?

One might question whether the Service Profit Chain still holds water today. The entire world has been turned upside down these past few years, so can we really stick to the Service Profit Chain? The short answer is YES, it remains relevant, but with some necessary adaptations.

1. Employee Satisfaction Matters More Than Ever

In the era of social media and online reviews, employees are your brand ambassadors and have always been; though we in the industry have not really done a great job here. How do I know this is true? Check out all the TikTok and Facebook posts that show the dark side of the industry. One that I have followed is “Veronica” who posts on TikTok all the time. Her latest video that I watched (https://bit.ly/3LWPh7f) was about an amazing supervisor that “cared” about her employees. You have to watch it as it proves the following point... It is a fact that happy employees provide excellent service, which leads to positive customer reviews. This word-of-mouth marketing can be a game-changer in the restaurant and hotel industry.

2. Customer Expectations Are Higher

Customer expectations have evolved, and not always in a realistic way. They not only expect great food and a comfortable stay, but also exceptional experiences. Employees who are genuinely engaged in their work are more likely to go the extra mile to exceed these expectations. That said, not all customers express themselves in a way that respects our team members. In that same “Veronica” TikTok, the way the manager responds to the “difficult customer” is on point.

3. Sustainability and Responsibility are Key

Our customers also care about a business's social and environmental responsibility. Companies that invest in their employees are often better positioned to demonstrate corporate social responsibility and sustainability, which can attract a socially conscious customer base.

4. Data-driven Decision Making Informs Strategy

Today, it is all about “Big Data” and customer feedback tools. These tools can help us identify areas where employee satisfaction and customer experience need improvement, allowing us to make more informed decisions in real-time. A word of caution though...make sure you don’t just look at numbers but find out the story behind the numbers. The best thing you can do is “Ask” your team members, though when you do, you need to be transparent about actions you will or cannot take as a result. Remember that the Service Profit Chain starts with the Employees. Trust the connection of employee satisfaction to making money.

Bringing the Service Profit Chain to Life

So, if the Service Profit Chain is still relevant, what can we do daily to ensure its success in our restaurants and hotels?

1. Hire Right

Start by hiring individuals who align with your company's values and culture. Employees who share your vision are more likely to become engaged and satisfied. Check out my blog on “Culture Add Versus Culture Fit” for some timely insights about culture. Oh, and while you are at it, I also have a blog on interviewing and hiring that reduces or eliminates bias in the process.

2. Invest in Training and Development

Continuously invest in employee training and development programs. Equip your team with the skills and knowledge they need to excel in their roles. When you are proposing training and development initiatives, look at the per person cost, not just the entire cost. Think of it as an investment which will result in a return. The discussion we see on social media between the CEO and the CFO is:

• CFO – What if we spend money on the training and they leave?
• CEO – What if we don’t spend money on the training and they stay?

3. Foster a Positive Work Environment

Create a workplace where employees feel valued and appreciated. Recognize and reward their efforts regularly. Check out Part 2 of “Veronica” - https://bit.ly/46GV4Ga.

4. Listen to Feedback

As was stated earlier, actively solicit feedback from both employees and customers. Use this feedback to identify areas for improvement and make necessary changes promptly.

5. Empower Employees

Give your employees the autonomy to make decisions that enhance the customer experience. Trust is a critical component of the Service Profit Chain. It is also a huge challenge in our low-margin environment, as errors can be costly. That being said, I think that our ability to trust and empower our employees comes from the previous four items shared.

So, from where I sit, the Service Profit Chain is still a relevant and powerful concept in today's restaurant and hotel industry. However, it requires adaptation and a commitment to meeting evolving customer expectations. Moreso, it requires a fundamental belief on the part of leadership. By investing in employee satisfaction and engagement, fostering a positive work environment, and leveraging modern tools for data-driven decision-making, we can continue to reap the benefits of this valuable strategy. In doing so, we not only ensure the success of our businesses but also create lasting experiences that resonate with our customers and guests.