In an employee-intensive industry, say fastfood, getting the most out of each worker is crucial. Sure, under most state and federal laws, part-time workers aren’t owed health insurance and neither are they collecting 401(k) matches and the like. But each body carries with it a cost, and hiring and training are among the big ones in a business with wretched turnover.
So it’s instructive to see – and comforting if you’re a Starbucks (SBUX) shareholder – the revenue-per-employee figures for the leading fast food operators, including Yum (YUM), McDonald’s (MCD) and Chipotle (CMG).
Those baristas really are productive, eh? Yes, yes, we’re comparing apples to burritos and lattes here, I realize. Full-time-equivalents would be more meaningful, though sadly that isn’t a stat public companies are required to cough up, while total employees, blessedly, is. Yum has many workers in China and they’re likely less-expensive to employ that those stateside, and thus a lower sales-per-employee count isn’t as ruinous as it might seem.
McDonald’s profit margin, by the way, is higher in large part because it franchises so many of its outlets, getting royalty fees from franchisees, which fall harder to the bottom line, than sales of hamburgers with all the attendant costs.
We’ve recently added employee counts – and ratios built off of them – as YCharts metrics and not a moment too soon. As the economy continues to slowly recover and companies add workers, you’ll have the opportunity to assess the return on investment these additional workers represent over time.
We’ve always been a fan of the revenue-per-employee metric, writing about Amazon’s (AMZN) surprising decline in this area, as the online retailer continues its hiring binge. We’ve also used the metric to help explain the gruesome management task at worker-heavy companies like R.R. Donnelley & Sons (RRD).
Starbucks has been impressive in recent years as it makes each outlet more productive, and that has shown up in compounded increases in same-store sales. A broader product lineup helps, and there are undoubtedly a few more baristas and other workers behind each counter. But the back-to-basics management approach adopted by CEO Howard Schultz when he returned to run the company, which is straight out of the playbook of former McDonald’s CEO Jim Skinner, is most certainly making each worker more productive. Notice impressive rise in the first chart for Starbucks?