How Macaroni Grill Invested In Its Employees To Revitalize Its Brand

Fast food restaurants have a 150% turnover rate right now.

Casual dining chains don’t have it much better, and everyone in the restaurant industry is buzzing about how fast things are changing, how to keep struggling businesses afloat, and how to keep hourly employees from leaving in an economy where unhappy workers can have their pick of jobs.

Not too long ago, Romano’s Macaroni Grill was experiencing a similar crisis. It filed for Chapter 11 bankruptcy in October 2017. But if you fast forward to now, the brand is back to financial solvency and has started acquiring other restaurant companies.

How did it happen?

The answer is simple: The new CEO invested in his people.

I spoke with Nishant Machado about the simple solutions he’s implemented, and am frankly amazed that more businesses haven’t come to the same conclusions he has:

How’s everything going at Macaroni Grill?

You know 2018 was a great year for us. We outperformed the industry from a sales standpoint significantly. We’ve had a dramatic improvement with margins across the board, and most importantly, we did what we committed to do when we built out our turnaround plan, which was to really build a platform; a platform being defined as people, systems, and process. We were able to then leverage that platform and make an acquisition, which we did at the end of September when we took over Sullivan’s Steakhouse, which was a carveout from Del Frisco’s. So, things have been going incredibly well. We’ve had a record year relative to where we’ve been and we’re very focused on what we have ahead in 2019.

So, tell me about where the company was when you stepped in as CEO?

Sure, so when I stepped in the company’s margins had declined significantly. We had unprofitable stores, and we really didn’t have a very clear vision and strategy. My role with the management team was to understand the strengths of the brand and how we could leverage those strengths to reverse these negative trends. We inherited an incredible brand with significant potential that had lost its way over the years, and our goal was to put it back on track.

In respect to restaurant labor, what changes did you make?

From my perspective, our greatest asset is our people. Any great business is built on the backs of a great team and to build a great team I think you have to provide individuals with a couple of different things. One is that you have to be able to give your team members financial opportunities. You have to be able to provide them with career growth and development opportunities. We focused on being able to do all of those things. Any one by itself doesn’t work…

From a financial stability standpoint, we’ve implemented a management incentive program whereby everyone from our Assistant Managers to General Managers to our Catering Managers to regional Vice Presidents, they all get to participate in the value they create. I’m a firm believer in the fact that the people who help create the product deserve to participate in the upsides of what they create… These team members, they work day in, day out. It’s not an easy job. They get paid their salaries. They get paid their bonus. But there has to be more. We’re asking to work hard, and we want to make sure that we have a plan in place that gives our employees the opportunities for this job to be a life-changing event.

How do you think the turnover rate has gotten this intense?

The turnover rate is the result of a few different things. We know unemployment’s at historic lows. We know the work environment is changing. Employees have a lot more options even five or seven years ago. And frankly, I think the restaurant industry is demanding. People have other opportunities and they explore those options… but any great business is built on the backs of great teams. And that means having the right culture within your organization. We’re all about developing our managers into business leaders. I think if you do that, and you have the right brand, and the right vision, and the right team, strategy, you’ll be successful.

Well, it seems like Nishant’s vision is working. Who knows, if he keeps improving his corporate culture and paying his people so well, he might just inspire an entire industry.