Nick Sarillo, owner of Nick’s Pizza & Subs, gave an inside look at how he created a culture of employee engagement that produces strong performance during the Restaurant Franchising and Innovation Summit.

During his closing keynote presentation Thursday in Dallas, Sarillo shared that Nick’s Pizza & Pub has margins that are nearly twice that of an average pizza restaurant and has more than a 75 percent employee retention. Sarillo credits the success to his purpose-driven culture.

After launching his first restaurant in 1995, Sarillo decided he wanted to bring the positive experience he was providing customers to other locations. He realized that to do this, he needed to have systems in place for motivating employees that he could replicate in other locations.

“I knew how to do it in one restaurant, but I didn’t know how to scale and bring it to other restaurants,” he said.

His own father had told him it was not possible to manage more than one restaurant successfully, a belief that was widely held among restaurateurs.

Undeterred, Sarillo moved forward. He spoke to consultants but quickly learned that most wanted to focus on profit-and-loss metrics instead of on employee engagement.

“I wasn’t resonating with anybody,” he said.

While attending a conference, Sarillo met Rudy Miick, a consultant who focuses on purposes guided by values. Miick told him that 98 percent of the people want to do the right thing.

“That was a life change for me,” Sarillo said. “Purpose is how we create meaning at work.”

Where mission and vision are future-focused, purpose is present-focused. Once purpose is created and shared, it can provide a competitive advantage.

The purpose statement of Sarillo’s company is:

“Our dedicated family provides this community an unforgettable place; to connect with your family and friends, to have fun and to feel at home.”

To encourage employees to embrace this purpose, Sarillo developed a culture of engagement.

Culture, he said, refers to the behaviors of people.

“We have an opportunity in our organizations to create the culture we want to create,” he said. By being explicit about the company culture, it is possible to recreate it and scale the business with it.

There are three basic steps:

1. State why you do what you do. “Purpose is how we create meaning with what we do,” Sarillo said.
2. Set people up for success. Employees need to be accepted and supported.
3. Leadership is needed.

“The leadership’s got to reinforce the culture,” he said.

Sarillo developed a culture to encourage team members to solve problems on their own. He wanted people to have fun at work but also treat each other with respect. (After all, 58 percent of managers in the US reported working over 40 hours a week. The only country where people work longer hours is Mexico, where 61 percent said the same.)

Sarillo’s message has significance, given the finding from the Gallup organization that 97 percent of people want to be engaged at work, but only 13 percent say they are.

The results in Sarillo’s organization speak for themselves. In addition to the 75 percent employee retention rate, several of the servers have received outstanding tips. Two have received $1,000 tips, one received a $500 tip at lunch, another got a $1,500 tip at a bar, and one got a $2,500 tip.

These tips are impressive considering the fact that the company’s average check is $35 and most of the restaurants are in blue collar communities.

“It starts with setting our team up to be successful,” Sarillo said.

The company’s training recognizes that each job has a science behind it. But in addition to teaching the science of the job, team members are encouraged to bring their unique selves to the job.

The training process is a three-step process in which employees wear a different colored hat for each of the steps.

The training also emphasizes continuous feedback.

Trainers fill out a form after each training shift for each trainee. The trainee fills out one specific thing they did well for the day, and one specific thing they can do differently in their next shift to enhance performance. The trainer fills out the same information for their own performance.

“People want feedback here and now,” Sarillo said. “It really builds feedback and self-esteem. We’ve actually changed the way people are thinking about themselves in their shift.”

Millennials have particularly high expectations of leaders, Sarillo noted.

“They expect more from our leaders,” he said. “They expect that leaders are actually going to walk the talk.”

“That’s how we build trust in our organization,” he added. “Trust and track instead of command and control.”

Employee management experts are uncovering a new field called emotional intelligence, which is different from the traditional measure of intelligence quotient.

“Look at the results we can get when we develop our emotional intelligence, not just IQ,” Sarillo said.

During the question and answer session, Sarillo was asked how he recruits employees.

“Our best recruiter is our team,” he answered.

Register here for the Restaurant Franchising & Innovation Summit, July 18-20 in London. The 2018 RFIS will be in April in Louisville.