sealPurdue News

November 2000

Dining out? Good service or low prices - Choose one

WEST LAFAYETTE, Ind. – Surveys show that consumers overwhelmingly think food service – whether from chains or independent restaurants – has crept to an all-time low.

There is an alternative to shoddy service, say three Purdue University professors who recently completed an extensive survey of food-service managers. But consumers probably aren't going to like it because they'll be paying higher prices.

In an economy where jobs outnumber job seekers, it all comes down to manager turnover, says Richard F. Ghiselli, an assistant professor in Purdue's Department of Hospitality and Tourism Management.

Ghiselli says that "the number of managers who are not very satisfied with their lives, of which a job is a major component, is 30 percent greater than it was two decades ago.

"There's a disconnection for the manager between hours and pay and the perception of value," he says. "But in a time of labor shortage, the employer is up against the wall to get sufficient return on investment."

For restaurants to get this return, managers are not only being required to work more hours but also to spend more time in mundane tasks left begging by the 200 percent to 300 percent annual turnover of hourly employees. Manager turnover is 67 percent annually, according to the survey. Upscale establishments are the exception.

The conventional wisdom, according to Ghiselli, is that John Q. Consumer is price sensitive, so bottom-line oriented corporations increase the hours of their current managers, which is less expensive than hiring new managers.

"The natural solution is to increase wages and to reduce managers' hours," Ghiselli concludes. "But to maintain current profit levels and quality, prices would have to increase." The $64 question is how the customer would vote with his teeth on the increased cost of dining out.

The survey indicates that restaurant managers currently average a 55-hour work week, compared to the 43.3 hours a week the average full-time American employee clocks. The long hours, in turn, may be what are increasingly driving older managers (45 years and older) out of the industry completely, Ghiselli says.

"This is a loss because in an ideal world, older, experienced workers bring quality, consistency and even an association with the community that is good for business," Ghiselli says.

Established relationships between managers and consumers in the restaurant business are more concentrated in independent establishments than in chains, according to Ghiselli. Independents' market share is about level, even though total restaurant sales "are slowly shifting to the chains as the percentage of food eaten away from home goes up," he says.

As eating out increasingly becomes more in, the independents won't disappear from the culinary landscape. "Good independents are going to continue to do well," Ghiselli says.

On the chain-restaurant business side, "corporations have to make long-term, concerted efforts to come to terms with management turnover," Ghiselli says. What will that cost? Ghiselli intends to find out with new research.

For the study, Ghiselli and his colleagues sent a questionnaire to 1,209 unit-level managers of eight companies. They received 438 responses, or 36.2 percent. Ghiselli will present the results of his and his colleagues' research at the International Council on Hotel, Restaurant and Institutional Education Conference in New Orleans in July. Consolidated Products Inc., the restaurant holding company that runs Steak n Shake and Colorado Steakhouse restaurants, sponsored the research.

Sources: Richard F. Ghiselli, (765) 494-8292, ghiselli@purdue.eduS

Joseph M. LaLopa, (765) 494-6218,

Writer: Mike Lillich, (765) 494-2077,

Purdue News Service: (765) 494-2096;



Job Satisfaction and Intent to Turnover
by Food Service Managers
Richard F. Ghiselli, Joseph M. LaLopa and Billy Bai

Intrinsic satisfaction seems to be more important in the short-term, and extrinsic satisfaction more important in the long-run. This suggests that initially managers may find their jobs intrinsically rewarding, but over time may seek greater external recognition for their efforts. As a result, companies will have to manage the reinforcement factors associated with managerial positions as the length of service increases, and as managers mature. While almost all of the managers considered themselves good at their jobs, there were a surprising number who indicated they were not happy, and not very satisfied with their lives at the current time. Close to one-fifth of the managers considered their lives more boring than interesting, and feelings of loneliness and disappointment were expressed. While having some respondents experience these feelings should not be unexpected, the frequency that they occurred is troubling; in many instances the percentage of respondents was two to three times greater than that found in the general population. Moreover, even though the data from the comparison group is rather old, there was a striking – perhaps disturbing – difference in the percentage of individuals who indicated they were either not too happy or determined that the way they were spending their lives was not very satisfying. Unfortunately, over half of those who indicated an intent to leave were considering leaving the industry altogether. Considering the age distribution and (potential) turnover rates found in this study – as well as turnover levels industry-wide – there seems to be prevalent a short-term approach/mentality.

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