How to Reduce Restaurant Employee Turnover in 2024

Ever walked into your favorite restaurant and wondered why the friendly waiter who used to serve you every Sunday afternoon no longer works there? It seems like the staff keeps changing each time you visit. The reason behind this is a pressing issue running rampant in the restaurant industry: high employee turnover. 

This phenomenon often leads to a vicious cycle of increased hiring costs, disrupted customer service, and plummeted staff morale. The cost and hassle of searching, recruiting, and training new hires, coupled with the effects on service regularity and team spirit, make it a problem that must be addressed. The question is, what can be done about this?

Understanding Employee Turnover

In the simplest of terms, employee turnover refers to the overall number of workers who leave an establishment, be it through resignation, termination, or retirement, and the process of filling these vacancies with fresh hires. In essence, it measures the rate at which a business loses its employees.

Within the restaurant industry, staff turnover holds significant importance. Why? Restaurants are often characterized by fast-paced, stressful work conditions with lower pay than other industries. As a result, employees may choose to leave, needing the employer to replace them frequently. This churn incurs significant costs, including: 

• Advertising and recruiting potential employees
• Time and resources spent on interviews
• Substantial training expenditures to get new hires up to speed

Moreover, the continuous fluctuation of staff members affects more than just the pockets of restaurant owners. It can disrupt the smooth operation of the enterprise, leading to inconsistent customer service experiences. This inconsistency can erode customer trust and loyalty, impacting the brand reputation and, ultimately, the bottom line. 

How to Calculate Employee Turnover

Employee turnover is typically calculated by dividing the number of employees who have left a company during a certain period by the average number of employees during that same period. The formula for calculating turnover is:

Here's a breakdown of the steps to calculate turnover:

• Determine the Time Frame: Decide on the specific period for which you want to calculate turnover (e.g., monthly, quarterly, or annually).
• Count the Number of Employees Who Left: Count how many employees left the company during that chosen period.
• Calculate the Average Number of Employees: Add up the total number of employees at the beginning and end of the period, then divide by 2. Alternatively, you can use the average number of employees for each month in the period if you're calculating monthly turnover.
• Plug into the Formula: Divide the number of employees who left by the average number of employees, and multiply the result by 100 to get the turnover rate as a percentage.

For instance, if your restaurant had 50 employees at the start of the year, 10 employees left during the year, and they had 60 employees at the end of the year, the calculation would be:

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So, the turnover rate for that year would be approximately 18.18%.

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Employee Turnover by the Numbers

In the ever-changing world of restaurants, turnover rates have historically soared up to 80.2%, spiking even higher at 132% during the tumultuous year of 2020. Calculating turnover involves tracking monthly and yearly shifts in staff. For instance, a 40% monthly turnover packs a punch, scaling up to a whopping 480% annually!

The average annual turnover stands at 79.6% over the past decade, slightly higher than the pre-pandemic average of 71.6% from 2013 to 2019. The dramatic spike in 2020 was triggered by lockdowns and closures in March and April, accounting for 36.5% and 28.7%, respectively.

Even though turnover rates remain above pre-pandemic levels, projections based on a decade's worth of data hint at a potential drop to 73.9% in 2023, marking the lowest rate since 2017.

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The True Cost Of High Turnover

At first glance, high employee turnover may seem to be merely a minor inconvenience in the grand scheme of restaurant management. However, a deeper look reveals the severe consequences it has on both the finances and the overall operations of the business. 

1. Financial Implications

The monetary ramifications of high turnover might be the most apparent for any restaurant owner. The costs of recruiting, interviewing, onboarding, and training new hires can add up very quickly, particularly when these expenses recur frequently. According to the Center for American Progress, the cost of turnover for hourly employees, such as those in restaurants, can be an estimated 16-20% of the employee's annual salary. When compounded over time and multiple vacancies, the financial burden becomes even more significant.‍

2. Workplace Culture

High turnover adversely affects the workplace culture as well. Constant staff changes can create a sense of instability and insecurity in the remaining employees. It becomes challenging to build rapport and camaraderie among team members, resulting in a weakened workplace culture. In turn, this diminishes employee satisfaction, leading to lowered productivity. These negative outcomes eventually create a self-perpetuating cycle, driving the employee turnover rate even higher.‍

‍3. Customer Service Quality

The effects of high turnover extend beyond in-house staff to the patrons themselves. As employees leave and new hires replace them, the consistency and quality of customer service take a hit. Regular customers who value familiar interactions might find the constant change off-putting, causing a decline in loyalty and repeat visits.‍

‍4. Brand Reputation

A poor workplace culture, stagnating customer service, and decreased employee productivity can all contribute to a tarnished brand image. Word-of-mouth travels fast, and the restaurant may soon become known for its frequent staff changes rather than its food and service offerings. This negative perception can result in declining patronage, further threatening the viability of the business.

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Common Causes Of Employee Turnover In Restaurants

Irregular work schedules, stressful work conditions, and bouts of unruly customers are a few realities of the restaurant industry, challenges that can drive the revolving door of employee turnover. But what are the most common triggers? Let's delve into five pivotal causes that can push restaurant staff to say goodbye.

• Low Pay: According to Zapier, the median hourly wage for a line cook in the U.S. is merely $17.11. The financial struggle often propels employees to seek better-paying opportunities outside the industry.

• Unsatisfactory Work Conditions: The restaurant environment can be tough - long hours on foot, little downtime during shifts, exposure to hot equipment, and constant pressure to perform and please customers. These taxing conditions can lead to job dissatisfaction and a high level of physical exhaustion.

• High-Stress Environment: The restaurant industry is synonymous with high stress. Rush hours can bring a flood of customers, all expecting prompt and flawless service, placing considerable strain on workers. This high-stress environment, coupled with low wages, can quickly burn out employees, forcing them to seek less demanding jobs.

• Lack of Career Development: Long-term job satisfaction often hinges on opportunities for growth and advancement. In many restaurants, especially smaller establishments, a clear career progression path might not be evident. In a survey conducted by Poached in 2022, growth opportunities were ranked the third most important aspect of a job when prospects are on the hunt for a new position. 

• Poor Leadership & Hiring Practices: Inconsistent rules, lack of communication, favoritism, and inadequately addressed conflicts are just a few symptoms of leadership issues. These issues can create a toxic work environment, eroding staff morale and enhancing turnover rates. Bad leadership paired with rushed hiring decisions can ultimately result in cultural mismatches or skill deficiencies.

Understanding these core causes is the first step in the fight against high turnover. With this foundation, restaurants can begin to build strategies that not only retain their valuable employees but also attract top talent to their teams

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Strategies For Reducing Restaurant Employee Turnover

Reducing turnover in the restaurant industry requires a multi-faceted, strategic approach that is inextricably linked to enhancing employee satisfaction and engagement. Below are five proven strategies that can help restaurant owners address this issue.

Offer Competitive Pay & Benefits

The significance of offering competitive pay and benefits cannot be overstated. While managing costs is a top priority for any business, underpaying staff is a short-term gain that leads to long-term pain. Pay scales commensurate with the market levels not only attract quality talent but also improve employee retention. 

Benefits should be part of this equation as well. Offering employees perks like healthcare benefits, paid time off, retirement plans, and even meal discounts can significantly enhance job satisfaction and loyalty. Incentive programs celebrating retention or sign-on bonuses can also attract and retain talent, although their impact on retention rates requires further exploration as it start to become commonplace in the industry.

Focus on Work-Life Balance

Promoting a healthy work-life balance is crucial for employee well-being. Implementing fair scheduling practices, providing adequate breaks, and avoiding overworking employees can significantly reduce stress levels. Additionally, offering flexible scheduling options or part-time opportunities can attract individuals seeking a better balance between work and personal life.

Invest in Staff Training & Mentorship

Investing in training and development programs isn't just about boosting skills; it's a statement of dedication to employees' growth. These initiatives show that the team is valued, creating a sense of investment in their progress. Restaurants that invest in team training and mentorship build loyalty and confidence among their staff. 

Leadership training for managers is especially essential to creating a positive work environment. Managers should be equipped with the skills to effectively communicate, motivate, and support their team members. Ensuring fair treatment, providing constructive feedback, and resolving conflicts promptly can significantly improve employee satisfaction and retention.

Provide Career Growth Opportunities

Employers can champion advancement by providing financial support for certifications like Sommelier or Cicerone or organizing training programs such as Rouxbe to enhance culinary skills in the back-of-house (BOH) team. 

Supporting career development can be done in-house too. From educational gatherings on topics like wine, beer, or cheese to discussing crucial industry trends like food waste management, there are various ways to empower staff. For instance, rotating family meals among BOH members allows each person to explore recipe creation, and kitchen management, and share their inventive flair—a fun and cost-effective path to career development.

Become an Open Book Company

A strong company culture can be a significant retention factor. Encouraging teamwork, recognizing employee contributions, and fostering an inclusive and supportive environment can go a long way in retaining employees.  Consider having an open book policy where you go over restaurant finances with your team to show them the realities of running a restaurant or even change their business to a profit-share model to give your team equity within the company. 

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How Tech Can Help You Reduce Staff Turnover

Implementing these strategies requires a dedicated effort, but the payoff in terms of reduced employee turnover and a more cohesive and efficient team can be substantial.

When hiring and retaining top talent, utilizing platforms such as Poached brings remarkable efficiency to the recruitment process. Unlike generic job boards, Poached is tailored to the hospitality industry, providing a focused and targeted approach to finding the right talent.

For hiring managers, Poached offers a strategic advantage. Whether you need permanent hires or temporary staff for individual shifts, their platform accommodates both, allowing flexibility while connecting open roles with their network of over 1 million hospitality workers explicitly looking for jobs in the food and beverage industry.

Furthermore, the Poached platform offers employers free applicant tracking tools with messaging and interview scheduling features to help reduce no-show interviews and organize their hiring process in one space.

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