Employee Benefits Cut Turnover For Chattanooga Steak 'N Shake Franchise

Debbie Richman offered health insurance for her full-time restaurant employees long before people talked about Obamacare.

When the recession hit and sales declined at her chain of five Steak 'n Shake restaurants, she took out loans to keep the benefits.

She didn't just provide health insurance. She offered workers 401(k) plans for retirement, dental, life and disability insurance benefits and vacation pay.

While other Steak 'n Shake franchise owners weren't offering such benefits, she did. Now most everyone in the chain is preparing to provide health care by 2014 under requirements of the new health reform law.

Many would expect the extra costs of such employee benefits might drain her business, Debo's Diners Inc. But surprisingly, she said it strengthened the business.

The lessons of the economic downturn most widely discussed involve trimming and belt tightening. Everyone is learning to do more with less. But Richman, who runs Debo's Diners Inc. with the help of her two sons, Michael, 23, and Matthew, 28, said she's learned something else.

Employees treated right help grow a healthy business, she said.

"It has always been about people, not profits," said Matthew Richman, who left Christian ministry work to help his mother's business.

For years, her Gunbarrel Road Steak 'n Shake location was ranked as the No. 5 store in the country for sales and service.

Now two of her stores are in the top five in the country. This year she was named the best franchise owner in the country because of her scores on cleanliness, customer complaints and sales.

In years past, employee turnover has been as high as 300 percent a year. Now it is closer to 75 percent.

And they did all of this with price cuts in place. Steak 'n Shake redesigned menus and its price points. It started offering half-price milk shakes and drinks during certain times a day. Kids can eat free on Saturday and Sunday. Still, guest counts increased by double digits over the last few years, said Debbie Richman.

"We are in a good place now," she said. "It is interesting because there are companies out there that try to cut costs in every way possible. We know of individuals who run restaurants that way. While we are growing, they aren't. If profits are your first priority, they may not be there." Matthew Richman said his mom's business decisions have always made him think of business differently. His mother started working as a Steak 'n Shake waitress in Indianapolis at age 15.

In 1994, she moved her family to Chattanooga to start new restaurants. She employs 350 people at her five restaurants, including 150 full-time workers.

In the next year, Matthew Richman said they expect to hire even more. Debbie Richman had thought about selling the business, but decided to keep it when her sons got involved.

They also want to begin offering financial incentives for employees who participate in community work.

"I saw my mom and how she was making an impact on the people's lives that worked for her. I want to help develop this business and find ways to give back," Matthew Richman said.

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