How to Cut the High Costs of Restaurant Employee Turnover

How to Cut the High Costs of Restaurant Employee Turnover 

Most restaurant owners and operators are aware of the challenges high turnover can cause. The restaurant industry is notorious for its rotating labor pool with recent studies showing the turnover rate for the restaurant sector at almost 75% and up to 130% for fast food restaurants! This metric is more than twice the average turnover rate for all private sector workers and, unfortunately, these numbers are expected to rise with the highest turnover since the Great Recession. 

Why is Turnover so High? – High turnover in the restaurant industry is nothing new. A key factor in the high turnover rates is the structure of the restaurant industry. With seasonal opportunities and many entry-level positions, restaurant jobs attract a less permanent workforce.  

• Restaurants employ a high percentage of teenagers (1/3 of all working teenagers) and students 
• Seasonal staffing requirements mean more temporary positions 

• Restaurant employees are in high demand, so they may move to competitors if they hear of better wages or working conditions 
• High availability of positions means ample employment opportunities within the same area 

The High Cost of High Turnover – In the past, the restaurant industry viewed this as a fact of life and looked upon employees as easily replaceable. While it is true that there are a lot of workers in the applicant pool than there are employers, this perspective has proven to be costly. According to The Center for Hospitality Research at Cornell, the cost to replace a typical front-line employee costs around $5,864. These costs add up over time and restaurant owners are losing on average around $150,000 a year on turnover. So, how can restaurants reduce turnover and cut those costs? 

Operational Tips to Reduce Turnover – Reducing turnover is largely about understanding employees’ wants and needs and then implementing them into the workplace. For some employees’, this may be schedule flexibility. For others, it may be about wages or promotional opportunities. A comprehensive strategy will aim to make a restaurant the best work environment it can be for the staff.  

• Conduct exit interviews – This is often the best opportunity to get a candid response and a true assessment of employees’ working conditions. Exit interviews can help brands determine why staff members are leaving so they can make the appropriate changes. 

• Review and assess management – Reducing turnover means creating a desirable environment for employees. One bad manager can cause front-line employees to leave in droves. It would be cheaper to replace the manager than the rest of the staff.  
• Offer competitive wages – It is important to do market research to make sure employees are receiving competitive wages. If a restaurant offers employees below-average wages, they risk losing them to a higher paycheck. The money saved paying lower wages will be spent on higher turnover costs.  
• Prevent burnout – Be conscious of staff members’ hours to make sure they can maintain a healthy work/life balance. Overworked and overstressed employees are less productive and may be less committed to the organization. Restaurants must give staff a balanced schedule and watch for signs of exhaustion that may lead to burnout.  
• Recognize and reward outstanding employees – Engage employees emotionally by letting them know they are appreciated. Engaged employees are much more committed to an organization and more are more likely to stick around. Consider employee of the month programs, bonuses for outstanding work, and other perks for your star employees.  
• Invest in employee development and growth – No one wants to feel that they are in a dead-end job. Encourage employees and make sure they feel supported in their career goals by giving them opportunities to expand their expertise and grow their professional capabilities. Provide opportunities like mentorship programs, educational workshops, training programs, etc.  

Do not let employee turnover destroy your bottom line. Create an atmosphere and culture where people are excited to go to work every day. To find out how much employee turnover is impacting your restaurant, contact us today.