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“I QUIT!” How High Employee Turnover Is Costing Restaurants a Fortune, and What You Can Do About It.

January 19, 2017

Jim Sullivan from Sullivision.com delivered an inspiring talk at the 2016 Multi Unit Food Service Operator’s Conference October 2016. Among the restaurant leadership topics he covered was a section on the real costs of restaurant turnover. Presented here are his statistics and some solutions for operators.

 

The problem

Staff engagement in the foodservice industry is low. How low? As many as 5 in 10 employees are disengaged with the company brand, of which 2 in 10 are actively disengaged, i.e. complaining about the company while at work.Overall, only 3 out of 10 employees are actively engaged with the company.

 

The turnover

Because of low overall engagement in restaurant brands, 42% of restaurant employees quit within 45 days. Furthermore, only 19% aspire to be a manager. This all results in a turnover rate for the restaurant industry averaging 110%. At such a high number, managers must constantly be hiring.

 

The real cost of turnover

Let’s take an average restaurant that employs 20 people and experiences 100% staff turnover. This means hiring 20 new people each year. The National Restaurant Association estimates it costs $4000 to hire a new employee, meaning the restaurant is spending $80,000 on new hires per year. At a 10% profit margin, restaurants would need to make $800,000 in sales just to pay the price of the industry’s average turnover rate. This means working until mid-year just to offset that expense.

 

3 tips to discourage employee turnover

  1. Looking at average employment time for each of your restaurant positions can help you put strategies in place to reduce turnover. For example, if your average length of tenure for a dishwasher is 20 months, maybe think about sending a dishwasher who is at the 19-month mark a pack of swag (hint: millennials love company-branded sweatshirts) to get them re-engaged with the brand.
  2. Recruit new employees from the top tier of candidates; not just from college job fairs but also from academic organizations and clubs such a DECA, the National Honor Society, and Key Club International.
  3. Providing growth opportunities to employees can reinvigorate their engagement with the brand. Promoting from within and creating career pathways, success road maps, positional stepping stones, and clear achievement goals will go a long way toward keeping staff engaged and boosting morale at a restaurant.

 

As a manager, it is important to express how much you care about your employees’ success. Taking small steps such as listening and then responding, providing professional methods to communicate with staff, and implementing flexible scheduling solutions (ways for staff to enter their availability, change shifts when unexpected events come up, etc.) will make a big difference toward keeping employees engaged and involved.

See more ways to battle restaurant turnover by Toast POS.

 

The real cost of high employee turnover is felt by managers and restaurants throughout the foodservice industry. Low engagement in restaurant brands leads to uninspired staff, which culminates in haphazard work and costs businesses hundreds of thousands in hiring costs. If we can work together and make concerted efforts as an industry to boost actively engaged employees from 3/10 to 5/10 using some of the methods above, we will see higher retainment of staff interest and pride in the company, less employee turnover, and exponential improvements in restaurant brands.


About the Author: Michael Pullman

Michael Pullman

Michael loves working with franchisees and franchisors to introduce cool technology. He's passionate about using data to help managers make great staffing decisions. He loves flying, climbing trees and playing in the snow.