Great staffing is a critical element of any successful restaurant. However, as a whole, the restaurant industry is known for extremely high turnover rates. National Restaurant Association data reveals that the turnover rate in the restaurants and accommodations sector is more than 70%.
Restaurant turnover stems from several factors, such as employing many first-time, part-time, seasonal and student workers. Additionally, upward mobility for restaurant employees often occurs by taking positions at a new location. Because of the high cost of attrition, a well-defined people plan is key to reduce restaurant employee turnover.
On average turnover costs restaurants $150,000 a year, according to Decision Logic, a software company that develops technology for the hospitality industry. The Cornell Center for Hospitality Research found that turnover can cost as much as $5,864 per employee.
High turnover affects a restaurant's financial health, but it also eats up the time of management and other staff as they interview, hire and train new people. Lower turnover rates will also improve team morale and cohesion, all of which lead to a better restaurant experience for guests.
A good people plan consists of several different elements, such as developing quality managers, building a highly engaged team and tracking employee performance. What makes a people plan truly successful, however, is when restaurant leadership documents the plan ensuring everyone can execute it.
1. Develop Highly Committed Managers
A manager’s engagement and commitment to their job and team has a direct impact on turnover rate and guest satisfaction. Gallup found that employees who are managed by highly engaged managers are 59% more likely to be engaged themselves. The best opportunity to develop employee commitment and reduce turnover is through developing managers who genuinely care about their jobs.
So how do you find the right managers and get them committed to your restaurant’s mission?
2. Boost Team Engagement
The engagement level of your employees is a significant factor in turnover rate. Highly engaged employees stay longer at their job, which reduces costs and creates a smoother experience for both staff and guests.
There are many ways to engage with line-level employees to build a valued and motivated workforce.
3. Offer Competitive Compensation
Competitive compensation is often a four-letter word to owners and operators. What many fail to realize is how taking care of your line-level employees (who do the most important work, by the way) will impact every area of your financials—from top-line sales to bottom-line profit. Ivey Business Journal conducted a six-year study of companies who invested in the “bottom of their ladders,” and the impacts those investments made on their productivity, retention and financials. Costco, for example, provided employees with above-average wages and a clear career advancement roadmap, and in turn experienced record growth, same-store sales, customer satisfaction and reduced employee turnover and inventory shrinkage. Here are a few compensation best practices:
4. Track Employee Performance to Build the Best Team
Tracking staff performance is another critical tool that allows managers to build a stable, aligned team and reduce turnover. Develop a system that works for your particular restaurant type and consider including some of the performance metrics below.
Restaurant employee turnover is a constant. But great restaurant teams can reduce employee turnover by developing an environment where people want to work.
It begins through the proper selection and development of engaged leadership. Good managers help inspire and empower employees, giving opportunities for staff to feel valued. Finally, track staff performance to gain greater visibility throughout your restaurant, identifying and solving any staffing issues as they arise.