The restaurant industry continues to experience one of the highest employee turnover rates in the U.S. labor force, at 62.6% vs. the 42.2% turnover overall in the private sector (source: NRA). While it has fluctuated over the years (hitting a high of 80.9% in 2007 and a low of 56.6% in 2010), there are a few factors that are keeping turnover high across the industry, from quick service to fine dining establishments.
What is “turnover rate?"
First, let’s define what we mean by “turnover rate.” Turnover rate refers to the frequency at which employees leave their jobs. If you have an annual turnover rate of 50%, that means the number of people you hired that year is equal to half of your staff. That said, remember that some roles (servers, for example) may get filled multiple times, while other roles (bartenders, for example) may be more likely to retain the same employee over the course of a year.
Why does it matter?
High turnover brings with it multiple challenges for restaurant owners and managers. Firstly, high turnover means more time spent recruiting, hiring, and training employees. When there are plenty of other pressing issues to deal with, this can be a time-consuming distraction that may or may not pay off. Secondly, with a high flow of new employees, restaurants can find themselves operating with a less experienced staff, which makes it more difficult to maintain a high level of quality for the customer experience.
OK, yes, this is a problem. Why is it happening?
3 Reasons for High Restaurant Staff Turnover
- High percentage of student workers: The foodservice industry has a history of a high percentage of young workers who are also in school. In fact, as much as 64% of bartenders are enrolled in a 4-year college or university, according to a recent survey. Students typically don’t work a full year schedule, which can lead to greater seasonal turnover.
Source: National Restaurant Association Educational Foundation
- Seasonal changes: The restaurant industry is one of the greatest sources of additional seasonal jobs, adding more than 400,000 jobs during the average summer season (source: NRA). While this is a natural change driven by the seasonal flow of restaurant visits, this adds to employee departures and moving from one establishment to another - making it harder to retain trained workers from season to season.
- Opportunities for upward mobility by moving: As in many industries, moving to a new job often brings with it a pay increase. Bartenders, managers, and chefs, who are more likely to reap a higher pay from switching jobs, are, not surprisingly, also more likely to have worked at five or more businesses. Lower paying jobs - particularly at quick serve restaurants - can also fuel higher turnover. In fact, some quick serve restaurants face turnover rates far beyond the 63% average - much closer to 150-400% (source: QSR magazine).
Source: National Restaurant Association Educational Foundation
So what do we do about it?
7 Tips to Decrease Employee Turnover
- Collect feedback around departures - Ask your exiting employees what contributed to their departure and track voluntary vs. involuntary departures. Find the common trends either in hiring or employee experience that could prevent future turnover. Interview the rest of the staff as well to get their feedback and to get a pulse on their happiness. Departures can spur low morale and additional departures.
- Consider bonuses and other employee appreciation efforts - One of the common drivers of employees leaving is that they feel underpaid and underappreciated. Particularly for your highly valuable, highly experienced, high performing staff, consider showing your appreciation in monetary and non-monetary ways.
- Create an employee loyalty program - Define what is expected in terms of positive behaviors (for example, teamwork) - things that are valued and will add to a positive work environment. Then, provide rewards based on what employees will appreciate, such as extra breaks or a reserved parking spot. An employee loyalty program can encourage employees to stay longer, help them get through the crunch times, and translate their happiness into friendly customer service.
- Find ways to encourage more tips - Increasing tips is a way to provide a financial benefit to your employees without hitting your bottom line. A fun twist on the tip jar, such as pitting two tip jars against each other (e.g. "Superman" vs. "Batman"), or using a payment screen with suggested tips are clever ways to encourage more tips for your employees.
- Elevate employee commitment by giving more visibility - Provide employees with more visibility into the business workings to help them feel more like owners than one of many workers. This concept of “open book management” in the foodservice industry has been evangelized by Henry Patterson of the Delta Group. He is encouraging restaurants to measure all aspects of the business and share those results with all employees. Doing so helps the staff feel like they are part owners, which, in turn, can help retain them longer.
- Provide training and career opportunities - One of the primary reasons restaurant employees look for new jobs is that they want more mentorship and training (in the case of younger workers) or opportunities for career progression. By providing that training and career path within your establishment, you can gain more appreciation and loyalty while also gaining a new generation of managers who are already experienced in your establishment.
- Look to growing demographics for staff - In addition to the other tactics to improve the experience of existing staff, restaurants can also look to new, growing pools of job seekers who may turn out to be long-term employees. The overall U.S. workforce is getting older, which means there is a big pool of job seekers outside of the common 16- to 24-year old group of restaurant workers. Baby boomers may become a rising source of staff in the restaurant industry.
While the foodservice industry is likely to always have a higher level of turnover, understanding the reasons and a few possible retention solutions can help decrease the rate and cost of losing, hiring, and training employees.
Have other strategies that have helped decrease staff turnover? Share with us in the comments!