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Growing up in the Midwest in Southern Illinois, Steak ‘N Shake restaurants were a weekly staple of my diet.

So you can imagine the heartbreak of reading about the Billings location going out of business after only three years?

As a student of business, I know there are a variety of reasons why one franchise in one location thrives and another does not.

It’s not easy to pick out that final straw that broke the camel's back.

Here are a few things we do know as reported in a July 18, 2016 article in the Billings Gazette.

“Owner Spencer Erwin said Monday that he had struggled to keep employees since he opened in December 2013, and he felt the restaurant at 4002 Montana Sapphire Drive lacked community support.

The restaurant was never profitable, and Erwin estimated he hired 275 different people during his short tenure — a rate of six to 10 a month to maintain a staff of about 25.

“You just can’t get any traction with the customers, the community, when you’re constantly taking one step forward and two steps back,” said Erwin, a Gallatin Gateway resident.”

Entry Level Jobs

Fast food restaurants usually pay their employee’s minimum wage or slightly higher depending on the quality of people applying for work.

Hiring at a rate of 6 to 10 people a month is a red flag and would suggest several things.

Before delving into those, it should be noted that I have no firsthand knowledge of this location or their specific business or hiring practices, so I will be speaking in generalities.

I will not be addressing this specific business, its ownership or its employees.

Franchises Work

Usually a substantial number of franchises succeed because they have a business model that works when it’s applied in the right way, at the right place, with the right ownership.

They have worked out all the kinks while growing the franchise.

Franchises don’t partner with just anyone who’s willing to write them a check. They too have major skin in the game.

Owners who apply are always vetted on business knowledge and experience and if training is needed the franchise will decide if that owner is a good investment.

If it’s a good fit for the company, then and only then, is a franchise awarded.

That’s not to say that franchises never fail; many do.

Employees

Right now we’re experiencing the “safe zone” generation. There's a growing faction of young workers who feel they are entitled to high pay, benefits and perks with no additional effort provided on their part.

This poor work ethic is not conducive to future success. If you enter into an agreement with someone to provide your labor for a certain price then that’s a contract that should be honored on both sides.

There are probably several people reading this whose first job experience was in fast food.

You learned how systems work, how to work with others, teamwork, responsibility, and customer service.

All quality skills that would serve you well as you advance up the economic earning ladder to future employment.

The lower the pay the higher the turnover is a general rule.

As much as employers would like to pay more, the gross sales will not allow that and still keep the doors open.

Management

High turnover can also mean poor management. Spotting and hiring good people is an art that is usually learned over time.

I have worked with a variety of managers over my working lifetime, many good and many bad.

Poor people management or poor people skills can also be a reason for high turnover.

I worked with one manager that told me that for every “cold prickly” he gave an employee it had to be accompanied by two “warm fuzzies.”

Some Final Thoughts

Businesses are never guaranteed a place at the economic table. Circuit City Electronics once did a billion dollars more than the nearest competitor. Today they are out of business.

Businesses succeed and fail everyday due to too many reasons to mention here.

It’s still sad to lose a business you grew up with, whatever the reasons.

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