How to Reduce The Cost of Employee Turnover at Your Restaurant
By: Jennifer Simmons
Mar 23, 2018
The restaurant industry is in a serious hiring crisis.
According to Dallas-based Black Box Intelligence, the turnover percent in the restaurant industry today is 110%. Yes, one hundred and ten percent! And if that wasn’t bad enough, the industry estimate for the replacement cost for an hourly employee is $5,000 per employee or 20%-30% of an entry level salary.
For example, if you employ 50 people at your restaurant and your annual turnover rate is 100%, you’re incurring $250,000 in annual replacement costs per restaurant.
Here are a few ways to combat the cost of turnover in your restaurant.
Hire the Right Employees
One of the best ways to hire and retain staff more effectively is via an applicant tracking, applicant assessment, and employee onboarding system. Just a 25% reduction in restaurant staff turnover can save an average $62,500 per restaurant. Having a more seasoned staff will also improve service quality and productivity. A system like this provides you with the tools to hire the right restaurant employees right off the bat, including:
Custom online applications
Built in offer system
Tools to stay compliant
Hiring assessments will screen for culture-fit characteristics and behaviors that make candidates successful in their roles and in turn more likely to be successful with their job.
Assessments allow managers to quickly screen out candidates who are unlikely to be a good fit. According to a recent study done by Corvirtus, a 30 year leading provider of assessments for the restaurant industry, assessments reduce employee turnover by 58%.
For example, if you hire 50 people at your restaurant and your turnover rate is 42% instead of 100%, you’re saving $145,000 just by administering assessments.
"Hiring assessments that screen for culture-fit behaviors reduce employee turnover by 58%."
Hiring employees that are a good fit for your restaurant operations has been proven to increase employee happiness in the workplace tremendously. Studies have shown that assessing and hiring right can increase employee loyalty by 200%. Happier employees typically translate to happier customers, and happier customers means higher check averages and an increased likelihood they will be return customers.
In restaurants where employees were happy, seasoned, and loyal, check averages were $2.66 higher per person, resulting in a 7.27% higher total profit for the restaurant.
Happy and efficient restaurant employees also save managers time. And time savings for your managers is a contributor to your restaurant success. An applicant tracking and onboarding system talent matches candidates who passed the assessments so managers aren’t spending time reviewing unqualified prospects. This decreases the time to fill a position and allows managers more time to be out of the floor, ensuring customer satisfaction.
"In restaurants with happy employees, total profit increased by 7.27%."
How will you reduce the cost of restaurant employee turnover?
The restaurant industry is in a serious hiring crisis, but your restaurant does not have to be. By creating an excellent restaurant culture and using a digital hiring and onboarding system such as Compeat OnBoard to improve the efficiency of your restaurant hiring strategy, you can reduce the cost of employee turnover at your restaurant for good.
What are your tips for reducing employee turnover costs? What are your battle stories working with employees who simply weren't a good fit for your restaurant? Share them in the comments below!
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