Welcome to the Experience Economy!
61% of adults say they would rather spend money on an experience, such as a restaurant or other activity, compared to purchasing an item from a store. (Source)
We want to have unique experiences and we want them to feel good. Our experiences become a part of our identity. Americans are figuring out that experiences are the only things we can buy that make us richer. If we want something we’ve never had, we have to go do something we’ve never done.
“Experiences are the only things we can buy that make us richer.”
Millions of People and New Jobs in Restaurant & Hospitality
There are 14.7 million employees in the restaurant industry. (Source)
There will be 16.3 million jobs in the restaurant industry by 2027. (Source)
Employment in leisure and hospitality continued to trend up in July 2018 by adding 40,000 jobs. (Source)
In July 2018, employment continued to trend up in food services and drinking places (+26,000). Over the first half of the year, this industry has added 203,000 jobs. (Source)
Leisure and hospitality industry projected new jobs from 2016 to 2026 is 1,319,000 (3rd with only health care and business with higher projections of all major industries). (Source)
Excessive Employee Turnover
The average tenure of a restaurant employee is one month and 26 days, with managers lasting an average of four months and four days and hosts lasting only an average of one month and nine days. (Source)
Many in the industry are at a risk for high turnover rates. In fact, last year, the turnover rate in the hospitality sector exceeded 70 percent for the second consecutive year.
Not only does turnover create hiring and training costs, but it puts a restaurant at risk of providing subpar service when staffers are at different levels of proficiency. (Source)
When staff leaves, this costs restaurants $2,171 per front of house employee, $2,809 per back of house employee, and $15,521 per manager. (Source)
40% of employees who receive poor job training leave their positions within the first year. (Source)
59% of restaurant operators name staffing as a top challenge to success, 33% say attracting and retaining customers is a top challenge. (Source)
Widespread Lack of Training
28% of restaurateurs do not offer an employee handbook to new hires, 43% do not offer a training manual, and 52% offer no safety training. (Source)
86% of hospitality businesses offer less than 10 hours of ongoing training. (Source)
87% of millennials say training and development is crucial to a job. (Source)
What Does 2018 Data Reveal?
- The rapid growth-rate continues, and millions of new people are working in the industry.
- High turnover is costing money and lowering performance.
- Most new hires will not receive adequate training materials or on-the job training.
- Staffing remains a top challenge across the industry.
When high turnover combines with inadequate training it results in each employee having a different level of proficiency. It perpetuates inconsistency. This is especially true with guest experiences in a restaurant, nightclub, or hotel where the employee is playing the largest role in guest satisfaction.
Simply put, a well-trained employee is more prepared to generate sales and build marketing relationships. Success in sales and marketing requires a very confident and engaging approach. Too often those golden opportunities go missing because the employee is merely reacting and taking orders rather than engaging and selling.
What will determine success in the future?
The value customers are seeking is in the hands of the people who create their experiences. With staffing being a top-challenge we look to training and coaching as key elements that will determine how successful this massive growth in the industry will be.
Organizations who are investing in their people and focusing on their development will have the best chance to thrive in the experience economy.
“Education is the best economic policy there is.” – Tony Blair
Training Reduces Costs
Training reduces turnover and saves thousands of dollars per year while improving performance. It maximizes the impact of each dollar invested in people by investing in their knowledge and abilities. Better trained people produce greater results while minimizing mistakes and avoiding unnecessary losses. Training creates a culture of learning that leads to internal promotions and more longevity for talented people while cross-training allows for tighter control of labor costs.
Even a small amount of training makes a significant difference. Hospitality businesses that spent 5% or more of their budget on training in 2015 experienced 23% less staff turnover. (Source)
People are less likely to leave businesses that provide extensive orientation training. Hospitality businesses that offered more than four hours of orientation training had 20% less turnover. (Source)
Training Increases Sales and Revenue
Training informs staff what they need to know about a product and teaches them how to talk about it. Anyone can write down orders but only a confident and knowledgeable person with a successful approach can consistently create sales opportunities and produce results. Training increases product sales by teaching staff how to utilize personalized recommendations and selling points to sell the highest quality products to the people who will enjoy them the most.
The Harvard Business Review quantified the value of the customer experience and the results clearly showed that customer experience is a major driver of future revenue. (Source)
78% of restaurateurs check their sales data & metrics daily – a 70% increase from 2015. (Source)
Training Elevates Service and Hospitality Experiences
Training empowers people with the exact tools, techniques and methods they need to execute great service as a team in all scenarios. It helps people learn the proper language, etiquette, and behaviors that enhance a guest’s perception of their experience. It builds the confidence people need to engage their guests in all levels of service, sales and marketing. Training is the best place to develop the ideas and concepts that will deliver wonderful experiences over and over again. All this leads to higher online reviews and return rates as guests start taking away an experience they don’t get elsewhere.
Training Cashes-in on Marketing Opportunities
Training maximizes the impact of marketing dollars. It is expensive to get a new customer in the door through advertising and that only buys one chance to deliver an experience that will open their wallet and bring them back again.
- Acquiring a new customer typically costs 6-7 times more than retaining an existing one.
- Loyal customers are likely to spend more on subsequent purchases than on their first order.
- There’s a 60-70% chance that an existing customer will buy from you again while you only have a 5-20% chance in converting a new prospect. (Source)
Engaging hospitality is the front door to marketing success because it requires showing an interest in people and actively seeking to understand their needs. The best marketing results come to those who can articulate and sell the full potential of the experience a business is offering.
Ads and marketing campaigns are great but it’s what happens when they arrive that determines whether they will open their wallet, and more importantly, come back again to spend even more money.
“Engaging hospitality is the front door to marketing success.”
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I work directly with owners and management teams to create customized standards and training programs for venues including Restaurants, Nightclubs, and Hotels. My mission is to help everyone who strives to build a stronger team and deliver a better guest experience.
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