The Keg: You Gotta Have Friends

Using referrals to recruit, The Keg expands into the U.S. and reduces turnover.

By Margaret Littman, Contributing Editor -- Chain Leader, 4/15/2004

Chuck Flach hadn’t been looking for a new job. But his close friend Bret King kept encouraging him to apply for a job at The Keg Steakhouse & Bar, the Fort Worth, Texas, restaurant where he was a bartender. Flach ate at The Keg one night and liked what he saw and tasted, so he gave his résumé to King. A week or two later, Flach left his job at Bennigan’s to become a dining-room manager at The Keg, where he has worked since November.

“This is the best restaurant company I have ever worked for,” says Flach. He now passes his business card to excellent servers at other restaurants, encouraging them to apply for jobs at The Keg.

The Right Fit
As director of human resources for the Richmond, British Columbia-based The Keg Restaurants Ltd., Dean Sockett has seen 85 percent of managerial hires come through referrals from current employees. Although the company doesn’t track the number of hourlies hired via referrals, “It is by far the No. 1 source of recruitment,” he says.

“People rarely lose jobs because of lack of skill. It is usually culture, fit and personality. If our employees refer those people who they think will fit with our culture, then we don’t have to reinvent the wheel,” says Sockett. The numbers support him: The Keg’s voluntary management turnover comes in at 14 percent. Turnover for hourly employees is 65 percent.

“There is a snowball effect,” Sockett says. “If hourly employees like us as an employer, then when they are ready for a career opportunity, ready to settle down, they look to us. They see that our managers have a good time and stay with us. This may be people who in the past may have thought the restaurant business was not for them.”

It’s Not About the Money
The Keg does not give employees bonuses for referrals or hires made from referrals. The company wants associates to make referrals for their own sake rather than monetary awards.

To assure that workers continue to refer their friends for employment at The Keg, the company conducts surveys twice a year, with 12 to 14 basic questions. But Sockett says the really important question is, “Would you recommend this place to a friend?” The average response has been six out of a seven-point scale.

The results have been so positive that the company doesn’t keep track of what it costs to bring on new employees. “We don’t calculate a cost per hire. I’m surprised when I see those stats [at other chains]. It is a non-issue for us.”

The system has worked well south of the border, too. While the 33-year-old chain is almost ubiquitous in Canada—its unaided awareness is close to 95 percent—it is almost unknown in the United States. Yet of the 34 managers hired at its first six U.S. locations, just four were hired through a recruiter.

Quips Sockett: “The day we need recruiters is the day we’re doing something wrong.”