The Restaurant Turnover Rate is Astronomical. Here's Why (And How to Fix It)
If you’ve spent any time in the restaurant industry you know the staff room has a bit of a revolving door.
Among the many metrics that restaurants should keep an eye on, perhaps one of the most pertinent (and prophetic) is employee turnover. The restaurant industry has an astronomical amount of turnover, with data showing an average churn of around 73%, or more than 1.5x compared to all private sector workers (turnover around 46%).
So why do so many employees leave their restaurant jobs? Where are they going instead? And more importantly, how can you lower your own turnover rate, retain your employees and save money that you might otherwise have spent on things like renovations or marketing.
The key to curbing turnover at your establishment is knowing what causes all the churn in the restaurant industry. Once you understand the driving forces behind turnover in the industry, you can make changes to reduce your own staff churn. No restaurant will ever eliminate employee turnover, but with the right steps, you can cut your own rate down. Here’s what you need to know.
How high is your restaurants turnover rate?
Before planning out how you can reduce your turnover rate, it’s probably helpful to calculate what it actually is. To determine your turnover rate, divide the number of employees who have left your restaurant by the average number employees it takes to fully staff your restaurant, and then multiply the resulting number by 100 to get a percentage.
For example, let’s say it’s the end of the summer high season, and you just lost 15 employees. Let’s break this down in steps:
Typically your restaurant is fully staffed at 29 employees.
15 divided by 29 is 0.517.
0.517 multiplied by 100 is 51.7 percent.
This means your staff turnover was over half. Yikes!
So how does your turnover compare to the rest of the industry?
Industry-wide, restaurant turnover is high. In 2014, the National Restaurant Association found overall employee turnover to be 66.3 percent annually.
According to the U.S. Bureau of Labor Statistics 2014 Job Openings and Labor Turnover Survey, 46.5 percent came from “voluntary separations,” such as when an employee quits. Layoffs accounted for 17.2 percent, while 2.6% came from other kinds of turnover, like retirement, transfers, death and disability-related separations.
A 66.3 percent overall turnover rate would be alarming to any restaurant owner. The fact that 46.5 percent turnover from employees who quit should be even more alarming. What’s driving all those employees away? Take a deep breath, because the truth isn’t quite as concerning as the raw data.
A major part of why restaurants will always have higher turnover than other private sector industries is the composition of their workforces. Adolescents account for 1.5 million restaurant workers—in fact, restaurants employ about one-third of all working teens. That means that the majority of individuals entering this industry have little-to-no work experience. They’re also likely to be students who usually only work seasonally or with limited hours as their academic schedules allow.
Then there’s the inherent seasonality of the restaurant industry. More people eat out in the summer, when they can hit a patio, and grab a burger and a refreshing drink, than in the winter, when the weather drives them to cozy up at home. During an average summer, restaurant employment increases by about 400,000 employees across the U.S., meaning that 400,000 employees theoretically turned over at the end of the high season. Typically, many of those employees are students who only work during summers off from school, which helps soften the blow of such a huge-seeming loss of jobs.
One last factor to consider when comparing your own turnover rate to that of the industry as a whole is what kind of restaurant you’re running. According to the People Report Workforce Index, fast food restaurants have the highest turnover rates, followed by fast-casual, casual and, lastly, upscale restaurants. Employees are less likely to turn over if they have jobs at fine dining establishments, where tips and conditions tend to be much better. Fast food workers are more likely to churn, especially if they get an opportunity for more lucrative employment elsewhere. Public perception also plays a part—managing a fine dining restaurant is typically viewed as a stable career, whereas working the counter at a fast food joint is often perceived as a dead end job.
But why should you try to prevent turnover?
The short answer is employee turnover is costing your restaurant.
Empty tables aren’t the only thing that can hurt your bottom line. The National Restaurant Association estimates that the average restaurant loses $150,000 yearly in just staff turnover. According to the Center for Hospitality Research at Cornell University, losing a front-line employee costs an employer, on average, $5,864. That includes:
$176 in pre-departure costs
$1,173 in recruiting costs
$645 on selection costs
$821 on orientation and recruiting costs
$3,049 on lost productivity while a position is unstaffed
Multiply that cost by the number of employees your restaurant turns over annually, and you’ll have a better idea of what your turnover rate is actually costing you (and probably some nightmares too... Sorry!)
There’s a somewhat prevalent idea in the food service industry that employees are expendable. The numbers show pretty clearly that is not the case. There’s a real financial argument to be made for keeping your employees. But how?
Here are some steps to reduce your turnover:
So you’re ready to implement some strategies to cut down on turnover in your restaurant? Here are some steps you can take.
Collect data on what causes employees to leave your restaurant. One of the easiest ways to do this is to conduct an exit interview with any employee that voluntarily leaves. If many of your employees say they found better paying jobs elsewhere, you probably want to look into how you are compensating your employees. If several employees cite poor management as their reason for leaving, you might want to coach the current manager or hire a new one altogether—it’s cheaper to replace that one employee than to replace several who leave their jobs because of management disputes.
Even if employees aren’t openly complaining about their pay at your restaurant, it doesn’t hurt to do some research. Find out what competitors and similar restaurants in your area pay their employees, and make sure your offers are comparable. Lower wages won’t save you money in the long run, because you’ll be spending your savings on staff turnover when your employees head for higher paying opportunities elsewhere.
The next step is to take a good look at your employee work schedule and make sure no one is being overworked. It’s easy to fall into assigning a lot of hours to your best employees because of how good they are, but they need to feel like they can take time off and strike a healthy balance between work and other priorities in their lives. On the other side of this coin, some employees may leave because they aren’t getting as many hours as they would like. Keep communication open about the schedule and how much your employees want to work. You won’t always be able to accommodate their wishes, but trying will go a long way.
Another thing you can offer to encourage employees to stay on board at your restaurant is good development opportunities, especially if you have younger staff without a lot of work experience. A mentorship program, skillshare or industry-related classes and workshops will make your staff feel like you’re invested in them and their future.
And while you’re at it, you should consider implementing an employee recognition program if you don’t have one already. This will help your staff feel like they’re working toward a common goal and that their contributions matter. It will give them a sense of belonging that will make them less likely to leave their current job. And if there’s some kind of bonus, like a cash incentive for good performance, all the better.