Frontline Equals Bottom Line

Walt Disney believed that if he took care of the guest experience and his frontline cast members, the bottom line would follow. In all of my years of consulting, I’ve found so few organizations that truly understand this rather simple formula.

Four Seasons Hotels and Resorts is one organization that gets it. The founder and chairman Isadore Sharp told me that it comes down to one single principle – The Golden Rule – “do unto others as you would have them do unto you.” Isadore believes that The Golden Rule differentiates Four Seasons from the rest in the industry. And it certainly is working. Both Travel & Leisure magazine and the Zagat Survey rank the Four Seasons’ 85 properties among the top luxury hotels worldwide. Four Seasons has also been named as one of Fortune’s “100 Best Companies to Work For” every year since the survey’s inception in 1998.

Some argue that the likes of Disney and Four Seasons can afford to attend to the frontline. They say, “You KNOW the ticket price at Disneyland and what a room at a Four Seasons costs!” To that claim, I respond, “Well then, how ’bout McDonald’s?” What on earth does a fast food restaurant have in common with Disney or Four Seasons?

Last month, I attended an annual fundraising event and had the pleasure of dining with Holland McDonald’s franchise owner Tony Castillo. Tony is the owner of three McDonald’s restaurants and was one of only four McDonald’s owners to be invited to the White House in 2008 in celebration of Hispanic Heritage Month.

My favorite one of Tony’s McDonald’s happens to be across the street from a Wendy’s and right next door to a Burger King. I told Tony that I’ve noticed that his restaurant seems to consistently have two to three times more traffic than his two neighbors. This observation caused me to wonder if on a national level, McDonald’s is really that much more popular than Wendy’s and Burger King. When I Googled the numbers, I discovered that the McDonald’s average store sales are about 22% higher than Burger King but less than 1% greater than Wendy’s.

Recently, I spoke with Tony about his business practices, and he told me that he pays his employees a little more than the minimum wage paid by his local competitors. I asked Tony, “Why would paying higher wages generate more customers?” Tony told me that he is required to review the operating financials with the McDonald’s “bean counters” on a regular basis. Key indicators are coded to indicate whether you are better, worse or just equal to other owners regionally and nationally. Tony said that he scores better both regionally and nationally in volume, sales and profit, but scores worse than average in labor cost. Not only does Tony pay a little more than other restaurant owners, but he also employs more workers per shift to ensure the highest level of service possible.

I believe that paying higher wages and increasing staff levels are only part of the story that led to Tony’s success. When I see him at McDonald’s, he greets his guests at their tables as if he were the owner of a five-star restaurant. Most of all, he’s a leader who believes in his employees, trusts them, and treats them with respect. During the hiring process, Tony doesn’t take the next body off the street. In every interview, he asks the candidate if he or she has a reason for working other than the classic, “my parents told me to get a job.” Even the candidates who give a self-serving reason such as “my mother told me if I want designer clothes, I need to get a job” are reviewed favorably. Tony told me, “That’s OK. They are focused and have a good reason for working.” He often hears heart-touching comments such as, “My father lost his job and I want to help.”

Walt Disney, Isadore Sharp, and Tony Castillo have proven that when you pay close attention to creating the best customer experience and demonstrate respect for your frontline staff, the bottom line will follow. I so admire what Isadore Sharp told me about values: “You can write them on paper, but they are only words. The words have significance only if behaved. The behaviors have significance only if believed.” Clearly, legendary customer service does not come from a polished mission statement or a policy manual…it comes from the heart.