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Smoothie King COO on employee retention amid the labor shortage

Dan Harmon, President and COO of Smoothie King, joins Yahoo Finance to discuss retaining workers amid the ongoing labor shortage for restaurant brands and what workers are looking for in a company.

Video Transcript

ALEXIS CHRISTOFOROUS: Smoothie King is one of the world's largest smoothie brands. And the company is coming off an impressive third quarter, where same store sales jumped 18%. Well, now the president of that company is sharing some fresh ideas on how they were able to keep workers off the sidelines and avoid the labor shortages that have been plaguing much of the restaurant industry throughout this pandemic.

Joining me now is Dan Harmon, COO and president of Smoothie King, and Yahoo Finance's Dani Romero. Thanks so much for joining us, Dan. Good to have you here. So what's the secret sauce? How were you able to retain your workers during this time?

DAN HARMON: Well, thank you for having me. And I appreciate your asking. I don't know that it's secret sauce. I've been in the food industry, retail industry my entire life, my entire career. And it comes down to how you take care of your people. And I'm not going to sit here and tell you that we haven't had opportunities, because we have. But we've been able to minimize that by, what we call, hire them right, train them right, treat them right.

And we want to make sure that we're bringing in the right people because we're a special brand. We believe we're really special. And we're really excited about what it is that we do with helping people with a healthy and active lifestyle. And so we want to attract people that have a passion for that. And so, that's what we're looking for.

And when we find people that are able to do that and they have a passion for that-- and we train them. We have to make sure that they understand our business. They get really excited about being here. And they do a really nice job of taking care of our guests. And so, those are some of the things, as we think about it. It's never easy to bring people on. You're always taking the chance. But you certainly see some bright stars. And many of our managers and some of our franchisees started at the team member level. And so, there's a real nice career path for those that are looking for it.

DANI ROMERO: And Dan, you know, I was reading your blog earlier. And we've seen a lot of companies offer incentives, also bonuses, for employees. What is your take on that? And is it effective?

DAN HARMON: I'll tell you, I've seen some of those bonuses. And they're just-- I mean, they're shocking, what's going on out there. We have had to, in some areas, offer to compete to offer some level of a signing bonus. We like to more and think of it a retention bonus. And so if we can get people to stick around for a period of time, we'll give them a bonus on top of what they're doing. But we're really focused on how do we take care of them and how do we set them up for success and make their jobs easier.

We're not the typical fast food or QSR. We don't have the fryers. We don't have the grease. We are fresh. And we have great products that they can be proud of to serve. And when we find those people, I think, you know, the added bonus of being able-- you know, from a retention bonus or a signing bonus is just, it's good and it's helpful. But I don't think it's the key to getting the right people in the stores.

DANI ROMERO: And so, I guess, my question to that is, how many employees have you been able to retain during the pandemic? And also, what's the feedback that you have received from workers in what they are specifically looking for in a company?

DAN HARMON: So our goal of this year was to reduce our turnover by 20%. We haven't quite hit that goal, but here's what I would tell you. And I just left a meeting with our team members in the Dallas area. And we started talking about what is difficult about their role and responsibility. And people obviously came up. And the things that we're doing, making sure that people are going through the right training, that we're being kind and we're saying please and thank you and we appreciate you.

We do regular performance appraisals so that they have something to look forward to. And so, in doing that, I think that that has set us up and put us ahead. But I'll-- and that's the feedback I'm getting from the team members. It really will come down to the end of the year number and how does it actually work all the way through.

Again, I want to say, we're not perfect. We have our opportunities. We have areas where we need to work on. But I truly believe and I know the team that's working with me, we believe that if we hire them, take care of them, train them, they're going to stick around much longer. And they certainly, when that happens, it makes our guests happier. They see that smiling face coming in the store on a regular basis. We know them by name. And we're really excited to have them. So, again, I don't think it's a secret sauce. I think it's about doing the right thing, is really what it comes down to.

ALEXIS CHRISTOFOROUS: So, Dan, it's my understanding that Smoothie King is a franchised business. So you have franchisees across the country. I'm curious what you've been hearing from them, as they are local small businesses in their communities. Have they had a difficult time staying open? And how are you able to get a handle on quality control when you have these franchisees?

DAN HARMON: Yeah, great question. I'll tell you we have-- you know, first of all, we have 60 stores that were operating. And so we have a real good understanding of what they're going through. And so, because of that, we've been able to share best practices. We've been able to hold webinars and share with them what is working for us and not working.

There are markets where it is definitely much more competitive. And we're all chasing after the same people. And so, we have to be a step above or one more reason why-- give them reasons why they would want to join us. We had franchisees that had to go on limited hours.

And it's not something that we want to do. But if we-- we'll do that for a period of time. I'm really proud to say that that's not something that we've had to employ or use as a tactic across the entire system. And I see that in other QSRs and/or food service establishments, and that's got to be tough.

From a quality perspective, we have a team of folks out there that are working shoulder to shoulder with our franchisees. Their goal and their bonus on how do they help them drive top line sales and their bottom line profitability. And so, they're invested in making sure that they're successful.

And we have a great group of franchisees. I mean, we're successful because of our franchisees and the work that they do. And they're committed to the product that we're serving to our guests as well and want to make sure that it's right. So, yes, there is some that we have to go in there and check. But I'll tell you, I'm really thrilled and proud of our franchised community and how they embrace the brand and what it is that we do.

ALEXIS CHRISTOFOROUS: All right, Dan Harmon, president and COO of Smoothie King. Thanks for making time for us today.

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