It's hard to find good people these days – particularly if you're a restaurant owner. While many young people start their working lives by washing dishes or busing tables, few carry on to the ranks of upper management.
Vancouver-based Joey Restaurant Group has come up with an innovative solution to this problem: offer ownership stakes to recruit and retain up-and-coming management talent.
In January 2011, Joey's senior staff managers (head chefs, general managers, head office staff) were given the opportunity to buy shares in a trust that holds a pool of Joey locations nationwide. Every quarter, the trust distributes cash to owners based on profit from those locations.
Would-be investors were required to ante up a minimum of $50,000 to join the trust. To date, more than 30 employees have participated in the program, with a median investment of $104,000.
Deni Kennedy is one of them. The 31-year-old started as a table setter at Joey Kelowna 13 years ago. In 2009, she became the general manager of Joey's Burrard Street location near Robson, leading a team of more than 100.
When first approached about becoming an owner in the company she works for, Kennedy had a good feeling about the opportunity.
"I was excited to get on board," she said. "I decided that this was the best investment for me, because it was the place where I could directly see returns sooner [rather] than later."
Beyond the profit potential, Kennedy was drawn by the idea of investing in a business she knew inside out. "Not only do I understand the business, [I understand] the people that are responsible [for it]," she said. "I know them very well and trust them."
As far as performance goes, Kennedy said, "I've been very happy with it. It's a healthy double-digit [return]."
The company seems to be enjoying a healthy return, too.
"What the company has done, showing their commitment to us long term, I feel really cared about and valued as an employee," Kennedy said. "I do see myself with Joey long term, definitely."
Ian Tostenson, president and CEO of the BC Restaurant & Food-
services Association, gives Joey top marks for addressing staff turnover in an innovative way.
"There are not a lot of [companies] that have done this," he said.
As Tostenson explains, restaurants are typically operated by either sole proprietors, who generally retain all ownership, or publicly traded chains, which offer ownership to everyone. Joey has found a middle ground, offering a meaningful business stake to key people while keeping the ownership group small.
"I think it's a brilliant model, I really do," he said, adding that the key to a financially successful restaurant is delivering a consistent dining experience. "I think ownership is a very novel way to create that consistency.
"I think a lot of operators that have that economic size will be taking a look at this to see if it works for them."
Tostenson believes the difference between owners and employees comes down to attitude. As an owner, you care deeply about issues such as cost control and customer service; it directly affects your bottom line.
"If I'm an employee, I'm going: 'Well, I can't control all these things' or 'Management doesn't listen to me' or 'I don't have input.' So you get a little bit of complacency that way."
Geordie Aitken, owner of Aitken Leadership Group, believes Joey is on the right track when it comes to keeping young talent who might be inclined to move on from their first jobs.
"The young whippersnappers are less shy about asking for what they think they're worth, because they've been taught to expect it and really demand it," he said.
Aitken adds that dividends and distributions are only one piece of the puzzle when it comes to attracting and retaining Gen Y.
"More important is the quality of assignments they get, in the sense of challenge, autonomy and ultimately mastery," he said. "The sense of greater or higher purpose is a really important piece to remember."
To that end, ownership plans and profit-sharing schemes need to have a value that goes beyond dollars and cents.
"A sense of ownership of the work product is what's important here," said Aitken. "To get a young person to feel 'This is my company. This is my place' is worth more than the money at the end of the month."
