The Key to Reducing Turnover in Your Restaurant is a Well-Defined People Plan
Retail

The Key to Reducing Turnover in Your Restaurant is a Well-Defined People Plan

By Justin Biel, Trends Editor & Brady Thomason, Solution Manager—Restaurant & Hospitality

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.

The High-Cost of 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 is the Key to Reducing Turnover

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?

  • Find managers with the right talent through a targeted and selective application process. Be on the lookout for individuals with past management experience or people with innate leadership qualities.
  • Institute ongoing management training and development programs to give managers the skills necessary to build and manage a successful team.
  • Work with a manager's strengths to help them engage with their team in the most effective way. Understanding their strengths can help a manager identify strengths in employees and build a capable, empowered organization.

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.

  • Create a “Raving Employees” committee, chaired by a line-level employee representative from each department and focused on identifying opportunities to boost employee morale and engagement throughout the restaurant.
  • Implement a “Trainee Mentorship” program, in which a trainee is assigned a mentor to make sure he or she succeeds in the first 90 days. Mentors should be model employees who are tenured and have great rapport with the management team.
  • Practice empathy. Be genuine when you ask what’s going on in an employee’s life. Be a champion of your people. A restaurant is a stressful place to work, and fostering a caring environment will make it a place where employees flock to, not run away from.
  • Get involved in your community. Host fundraisers, sponsor sports teams, participate in outdoor cleanups. Create a Community Engagement Committee and appoint an employee as Community Brand Ambassador. You’ll be amazed at how this impacts your team, not just your community.
  • Encourage staff feedback, hold managers responsible for addressing it, conduct daily huddles, quarterly staff meetings (food tasting should always be a part of these) and exit interviews. These policies promote open communication and lead to a better understanding of staff desires and concerns.

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:

  • Document your restaurant’s approved high and low starting wages by job, and approved raise rates. This ensures that no one gets under or overpaid.
  • Monitor the Bureau of Labor Statistic’s average hourly rates by job, and use it as a guideline when deciding on what to pay.
  • Benchmark with other local restaurants to see what pay and benefits they offer to their employees, and use the competitive intelligence to your advantage.

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.

  • Utilize a staff-tracking document that contains performance metrics on all members of your front-of-house (FOH) and back-of-house (BOH) staff. This living document can track employee behavior and progress, covering items such as days worked, overall appearance, workplace behavior, guest satisfaction ratings, training and promotional opportunities.
  • Develop an internal rating system for employees based on key performance indicators like per-person average (PPA), the number of guests served per-hour and server error per guest.
  • Regularly meet with employees to discuss their development, future employment goals and address any necessary problem areas.

Build A Restaurant Where People Want to Work

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.


Sales Chat

Interested in growing your business with NetSuite?

Start chat