HR Strategies for Growth for Aspiring Restaurant Entrepreneurs

The hospitality industry remains one of the backbones of the economy in the Middle East, and the food and beverage (F&B) sector is certainly contributing its fair share. In the past, many regional businesses opted for an internationally recognised concept, but, nowadays, the market has matured and witnessed diversification. The UAE, in particular, has become a foodie destination in its own right and there is a notable appetite – from investors, developers and the consumers – for home-grown concepts. Not surprisingly, new outlets have sprung up (from ‘Cougley,’ to ‘Cocoville,’ to other home-grown start-ups such as Folly, Hikina, Matto Italian Restaurant, Publique or Ruya). The list is endless.

The sector is thriving – yet, so is the competition within it. Competing against established players, let alone successfully establishing a business from scratch, is not an easy thing to do for entrepreneurs in the best of times. More often than not, the roadmap to success hinges on the people behind the business, i.e., the ‘talent.’ Here, then, are some thoughts on the HR strategies for growth (as published by Catering News Middle East, 17th May 2017).

Transforming a start-up into a thriving business
Many of Aethos’ restaurant client entrepreneurs have not necessarily set out to create a recognised ‘brand’ from the get-go – instead, given solid performance and having found the right market niche, they might have been approached by opportunistic investors to operate a second or third outlet. Over time, what was never meant to be a branded F&B business suddenly becomes a brand and complex operation. Others grow organically over time or have bigger plans from the get-go, striving for nationwide and/or international expansion. Whatever the circumstances, restaurant entrepreneurs, when faced with the opportunity to expand, should ask themselves:

• WHY do I want to grow in the first place? Growth for growth sake is never the right strategy. Before committing resources to expand the business, entrepreneurs should re-evaluate their plans to grow and understand what specifically the desired outcome would be, then define a business and HR strategy that suits their goals and develop a timeline as to when which type of skill set and action is needed to execute on the expansion plan.
• WHAT is needed to set up a brand and WHO is the best person to drive the business going forward? At times, business founders can be clouded in their leadership directives by their own ideas. Whilst their initial involvement is often crucial to the success of the firm – providing a clear vision and pushing employees in the right direction ¬– it can subsequently, given lack of experience and/or focus on tactics rather than strategies, become an obstacle to success. Entrepreneurs should thus investigate where their own and their team’s current shortcomings are. Recognising such limitations and getting people and business leaders on board with a complimentary skill set is crucial. At times, thinking outside the box and securing a Non-Executive Director during the early stages of the business, instead of a full-blown (and costly) Chief Executive Officer can help gain access to know-how and expertise whilst keeping costs down.
• HOW do I best structure the organisation? Getting it right from the get-go is a lot easier than having to ‘re-wire’ an entire organisation. Crucially, this is where start-ups have the edge over well-established players – entrepreneurs would be wise in focusing on the ‘trifactor’ of (1) culture, (2) rewards and (3) development. The culture of the firm should guide and direct the firm’s talent strategy. Increasingly focusing in the recruitment and selection process on character traits and emotional intelligence, and promoting engagement as well as flatter organisational structures that foster empowerment, are hereby ‘safe bets’ to attract and retain talent. The culture should then trigger down to the way entrepreneurs reward individuals. Here, it will be important to think of both monetary and non-monetary rewards and to keep in mind the different stakeholders at both entry-level and mid-management as well as company leadership. Often, for example, start-ups cannot afford “the big hitters” coming from the corporate world, who are used to healthy, short-term and long-term incentive schemes. To overcome this, start-ups may want to consider shadow equity schemes/phantom share options, for example, tied to value creation and the execution of a specific long-term strategy. Having defined the culture, and put in place a reward system to attract and retain individuals, entrepreneurs should then focus their attention to talent development and critical succession planning. Providing internal development opportunities, fostering cross-exposure, will help keep turnover low and retain staff whilst succession planning can lower replacement costs.

Aethos’ engagement with restaurant start-ups often evolves around helping them attract and retain talent and business leaders, defining and building corporate cultures and/or devising sustainable strategies to scale businesses by ensuring alignment between business and people practices. Yes, it is true that when it comes to attracting and retaining talent, one might think that the bigger, more established restaurant chains have it easier; they have tried and tested systems and benefit schemes as well as talent management programs in place that can help gain access to and keep talent. However, start-ups and/or smaller brands are often ‘sexier’ and more appealing to the next generation of leaders, the millennials. They want to avoid being a small cog in a big machine – restaurant entrepreneurs should not forget that and, on the base of this, turn one of their perceived weaknesses, their size, into a strength. In a highly competitive market environment such as the Middle East, and a people-driven industry, it is the above steps that can help pave the way to success.