On a recent Monday, Thomas Crosby demonstrated for an employee the best way to get French fries to stand up straight in a bag. Crosby is CEO of Pal's Sudden Service, a drive-thru dog-and-burger chain based in Kingsport, Tennessee, with 26 restaurants; and the fry demonstration was part of his mentoring duties. Each day the CEO and every other company leader--general-manager level and above--spends 10 percent of his or her time helping a promising employee develop a skill or aptitude. "Every single day, everybody has to have a name and a subject they plan to work with them on," says Crosby. "We ask 'Who are you working with today?' It's shorthand around here."

No one eats at a fast-food joint for haute cuisine. And no one works at a fast-food joint to develop the skills and character that will prepare them for the most-demanding professions. The exception is Pal's Sudden Service, whose dedication to training and employee development was among those qualities recognized by the Malcolm Baldrige National Quality Award, placing it in the ranks of Ritz-Carlton, Cadillac, and Federal Express, among others.

"We realized that we are in the education business, just like any school or university," says Crosby, who has been with Pal's since 1981 and became CEO in 1999. (Fred "Pal" Barger who founded the company in 1956 remains active in the business.) "Schools are usually satisfied with having a valedictorian in each class, a range of people they graduate, and those that don't make the grade," says Crosby. "We want everybody that we hire to be the equivalent of a valedictorian if we are going to beat the competition."

To earn an interview for an entry-level position at Pal's, candidates must first take a 60-question psychometric test online. Interviewers then dig deep into responses that run counter to the company's quality-obsessed, customer-centric culture. Training includes everything from how to iron the Pal's uniform to how to do statistical process control. Employees are certified for each skill: cooking hamburgers, working the shake machine, serving customers. (Pal's eschews dehumanizing speaker systems in favor of face-to-face interactions.) Every shift, a computer spits out at random the names of two to four employees at each restaurant to be recertified on a skill. "It's our belief that human beings, just like machines, need to be recalibrated," says Crosby. "If they are not 100 percent then their certification goes away and they are no longer eligible to work at that particular station."

Employees who have scored 100 percent on four re-certifications are eligible to become coaches within their restaurants: helping their colleagues stay on-standard. "We are looking to get people to this mastery level," says Crosby.

Turnover at the assistant manager level is 1.4 percent: Pal's has lost just seven general managers in 33 years. At the front lines, turnover is 32 percent, roughly a third of the post-recession industry level. "We want the experience here to be that, for your entire life, when you're a doctor or a chemical engineer, you'll look back and say, 'The things I learned at Pal's I still apply today,'" says Crosby,

Ken Schiller, CEO of K&N Management, which operates two restaurant chains in Texas, has brought team members to Pal's 14 times in nine years to study firsthand its training and other processes. "Everything they do is based around achieving excellence," says Schiller. "It's a very long-term way of thinking. They were the real catalysts for us becoming the company we are today."

"People ask Thom, 'What if you spend all this money training someone and then they leave?'" says Schilling. "His answer is: 'Suppose we don't, and then they stay?'"