How to Calculate your Restaurant Turnover Rate

High turnover plagues the restaurant industry, but you can do something about it.

Restaurant turnover is the highest of any industry. Not only does this give restaurant work a bad rap, it affects every part of your business. So if your restaurant can maintain staff at a higher rate than others in the biz, you’re already ahead of the game. 

By retaining staff, everything from your budget to guest experience to workplace culture is positively impacted, so keeping your veterans should be your main objective. 

So how do you know what your turnover rate is? 

We’ve laid out how to best calculate your restaurant’s turnover rate, accompanied by some proactive ways to reduce turnover in your restaurant. 

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The Plague of Restaurant Turnover

Retaining staff is a tricky thing. Some restaurants are blessed with a dedicated group of employees who stay for far more than a year. Others seem to have a new face in the kitchen every week. Though great management and empathetic owners help to keep staff around, frequent turnover is the nature of the industry due to the lack of career growth and an oversaturated market.

The national average restaurant turnover rate in 2018 was 74.9% - and that number has been on the rise since 2010. 

Some owners think the consequence of high turnover is simply that you spend more time hiring and training. But it affects much more than that. Depending on the position you’re filling, it can cost anywhere from 16% to over 200% of a worker's annual salary to replace an employee in your restaurant.

Lost revenue aside, maintaining a consistent staff ensures that your patrons are having the dining experience they expect. Training new employees takes time and it’s usually months before a new team member can handle the customer volume of a veteran. 

Your company culture also shifts dramatically with frequent turnover. It’s difficult to maintain morale if there’s a different set of servers in your restaurant each week — especially if there’s a consistent reason why employees are leaving.

All things considered, it’s important to know where your restaurant stands on the turnover spectrum, so you can do something about it. Here’s how to calculate your restaurant employee turnover rate.

Calculate Your Restaurant Employee Turnover Rate

Calculating your turnover rate is pretty simple — grab a calculator, and you're ready to begin. 

Step 1
Add the number of employees you had at the beginning of the year to the number of employees you have at the end of the year, and divide that number by 2. This will give you your average number of employees.

For example, if at the beginning of 2019 you had 60 employees, and at the end of the year you had 42 employees, your average number of employees for 2019 would be 51 (102 divided by 2).

Step 2
Next, subtract the number of employees you had at the end of the year from the number of employees you had at the beginning of the year. Divide that number by your average number of employees, and multiply that number by 100. This will give you your turnover rate.

So, going off of the previous example, you would subtract 42 from 60, and divide by 51, which equals .35, then multiply by 100, which gives you an employee turnover rate of  35%.

Employee Turnover: How Your Restaurant Stacks Up

Now that you’ve calculated your turnover rate, consider these ways to retain staff based on your percentage. 

0%-25%: The Low-Turnover Rockstar

If your turnover is this low, focus on preserving your culture, as it’s clearly working in your favor. If you don’t already have a system in place to reward tenure, consider implementing one. Show your staff that you value their choice to stick around, especially since there’s no shortage of restaurant jobs

Use your point of sale system to look at tip trends and labor cost percentages to analyze how your staff is helping you save money. 

Even with a low turnover rate, it’s important to pay attention to why anyone leaves your company. Implement exit interviews and encourage transparency so that your information is accurate. 

But don’t sacrifice your bottom line to preserve your turnover rate. If you have under-performers that you’re hanging onto for the sake of maintaining low turnover, you’re doing more harm than good. It’s very evident to your staff when an employee isn’t pulling their weight, so keeping them around could be damaging to the atmosphere of your restaurant. 

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26%-50%: The Warning Stage

A turnover rate of under 50% means the majority of your staff is happy to be working for your restaurant. But there is definitely room for improvement.

To lower your restaurant's turnover, speak to all of your employees individually. Ask them what it is about your restaurant that keeps them around, and what they’re missing, professionally. If their recommendations or requests would lead to an improved work environment for all parties, do what you can to implement change. For example, if an employee expressed that they didn’t gain very much from your onboarding, invest the time to rewrite your employee handbook, and modify your training to make it a worthwhile experience for everyone.

51%-75%: The Unpleasant Average

At this stage, you’ve likely become accustomed to saying goodbye to a lot of your staff — not to mention the money you spent training them. But just because this number is (sadly) the industry average, does not mean it is where you want to be when it comes to turnover.

The best recourse is to take serious, purposeful action towards better staff management. Honestly evaluate the things you and your management staff are doing well, and look at where you can improve. If you notice your employees are overworked and underpaid, reevaluate your scheduling tactics or offer raises for tenure. If you think there’s a gap in training, create an ongoing training program that engages all members of staff, not just your new hires. 

It’s always a good idea to consider offering benefits or job perks. If your restaurant is the exact same as the other six on the block, there’s nothing in place to keep your staff loyal. Do things that differentiate you from your neighbor, and your staff will stick around. 

76%+: Red Alert

With an oversaturated market, there’s a lot of opportunity for restaurant employees to play the field. So you should dig deep to discover the underlying cause of your high turnover, and fix it before you lose your best staff. Start at square one and assess the various facets of your business, to see where improvements can be made.

Culture may be the culprit here. If you don’t have a solid set of company values, create them. Make them easily accessible to your staff, and really live by them. This will give people a reason behind their work. Studies show that most millennials would take a pay cut to work for a purpose-driven company. What’s important to you is also important to your staff, so share your mission with them and allow them to be a part of it.

Next, look at your managers. Make sure everyone is being treated with respect in your restaurant, both by you and the team you’ve appointed. Instruct your managers on how to run the show with grace and appreciation. Also consider how your staff is being managed. Try giving your staff insight into your restaurant’s finances. Look into open-book management to give your employees an understanding of their individual impact on your business and how they can improve it. Prove to your staff that they aren’t in a dead-end job, and they can learn valuable insight from working at your restaurant.

Consider that even your POS system may be contributing to your turnover. If you have an outdated machine, you’re denying your staff the opportunity to make more money. Additionally, making tipping as easy as possible is ideal in ensuring your staff makes a fair wage. Ben Mantica, the co-founder of Smallman Galley in Pittsburgh, Pennsylvania, spoke to how tip suggestions helped decrease turnover in his restaurant. “Without the tip suggestions on the Toast flip screen, I doubt anyone would remember to tip. It’s increased wages for the people in the kitchen - the line cooks are making up to $16/hour! We’re proud to have some of the highest paid entry-level line cooks in the city.”

Finally, frequently check-in with your staff, and make sure that your changes are working. Constantly assessing how to make your restaurant a better place for your employees will grow your business and bulk out your pocketbook.

Employee Handbook Template
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Employee Handbook Template

Outline your restaurant’s staff policies in this customizable Word doc to help restaurant management and staff get on the same page.

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It’s easy to write off high turnover as an industry standard. But you can make your restaurant a cut above the rest by evaluating and improving your shortcomings in employee management. At the end of the day, you’ll have a happier team that sticks around, and your pocketbook, customers, and staff will thank you.

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