How to Help Reduce Restaurant Turnover Rates and Foster Retention

Restaurant turnover is the calculation of how many restaurant employees leave their job over a given time period. Turnover rate can also be known as the restaurant employee churn rate.

High turnover rates are suboptimal for restaurants — given the costs and time required to fill open roles and the need to onboard and upskill new employees. 

High employee turnover rates are prevalent throughout the hospitality industry.

Toast is the point of sale system built for restaurants. We conducted an online blinded survey between February 27, 2023 - March 19, 2023 of 1,011 current restaurant employees.

In this article, you will learn about data-driven insights from research on restaurant employee behaviors and preferences. Restaurant operators can act on these insights to help you and your managers mitigate churn, improve employee experiences, and boost the overall morale of your restaurant staff.

What’s the average restaurant industry turnover rate?

Using the most recent data as of January 2024, the average annual restaurant industry turnover rate is 79.6% over the past 10 years.

Prior to the pandemic, the average restaurant industry turnover rate was 71.6% (from 2013-2019). The data shows that the 2020 annual rate of 132% was heavily influenced by the lockdowns and subsequent restaurant closings in March and April of that year (36.5% and 28.7% respectively.) 

Since then, the restaurant industry turnover rate has remained higher than pre-pandemic — though it’s on track for the lowest annual rate since 2017 at 73.9% (using 10 years of historic averages to forecast unreleased data from 2023.)

How to a calculate and interpret restaurant employee turnover rates

Restaurants usually calculate turnover rate on a monthly and annual basis. You can start by calculating your operation’s average monthly headcount. 

This can be done by noting the total number of employees for your restaurant business at the start of the month — let’s say 38 employees as an example. Then you want to note how many employees you have at the end of the month — let’s say 32. Add those employee numbers together and divide by two to get the average monthly headcount — 35 employees. 

If you had 14 terminations over that month, you’d divide that total terminations number by your average monthly headcount (35) — so 14÷35=0.4, or 40%.

You can get to the annual turnover rate by adding up each turnover rate over the year. For example, if 40% of your staff turnover every month, your annual turnover rate would be a staggering 480%.

Calculating turnover rates can get tricky if you get lost in the semantics. 

Some calculations may simply look at the difference in your total restaurant employment levels at the beginning and end of the month. That calculation misses your actual employee turnover and new hires and only measures your beginning and ending employment levels.

Data-driven insights to help overcome turnover rates and encourage restaurant employee retention

Restaurant turnover is inevitable.

An employee may not work out and need to be let go. Long-time employees may decide to retire, get out of the industry, or branch off to open up their own shop. 

The point is: some turnover is natural, healthy, and expected.

These insights focus on preventable, voluntary turnover — employees leaving whom you may have been able to keep around.

With that in mind, two common types of turnover that restaurant managers have to manage include — staff members exiting the restaurant industry and staff members taking a job at another restaurant. 

Toast’s research breaks down these distinct churn types to help operators visualize the differences and assess tactics to mitigate turnover. 

Analyzing restaurant turnover rates for restaurant industry exiters

Our research identified four categories of restaurant workers based on how long they plan to work in the industry — highlighting that 30% of restaurant workers plan to leave the industry in less than two years.

Poor hourly pay is the most common reason why the short-timer cohort plan to exit the industry (47%).

Just behind pay, the short-timer cohort lists a lack of recognition for hard work as a reason for churn (44%). A desire to leave the industry, difficult managers, and lack of long-term career growth are the next most frequent factors for churn.

Restaurant owners don’t always have the capability to easily increase pay — nor are they always able to control employee perceptions of their managers. 

On the flip side, awarding recognition and dedicating time to path career advancement can be a totally free way to help mitigate some churn.

Analyzing restaurant turnover rates for employees remaining in the industry

A majority of restaurant staff looking to stay in the industry for more than two years are “Somewhat or Very Interested” in finding a new restaurant job — or churning.

While low pay is still a major concern for these churners, bad restaurant managers are the top reason that staff members churn.

For team members that have churned recently, 45% say dealing with a bad manager is a top factor — followed by low pay, lack of recognition, and work schedule complaints.

Operators can help mitigate some of these factors by continuously training and checking in with managers and awarding recognition for great performances.

Exploring tactics for improving workplace culture and reducing turnover

Employee satisfaction is essential to help with reducing turnover — easier said than done in the food service space. 

Restaurateurs may consider how to be more strategic and intentional with their employee retention strategies. 

Activities and initiatives that boost employee morale can be great in the short-term, though they likely need to be rooted in a more sustainable approach to consistent employee engagement and company culture.

Here are a few tactics that can help improve your work environment, beat burnout, and boost employee retention.

Cultivating a positive, supportive workplace culture

Stress can lead to burnout — and burnout is what we want to reduce in the restaurant industry.

Restaurant employees in the front of house to the back of house are subject to burnout and overworking — especially if their restaurant is dealing with high turnover levels.

Restaurateurs may consider starting with a strong workplace culture. It can be a great foundation to build any churn reduction and boost employee retention tactics.

This could look like assigning buddies to new hires, encouraging employee engagement via daily staff meals, stressing the importance of work-life balance, and staffing folks that are intent on being team players.

Focusing on training — at onboarding and beyond

Restaurant managers often have the dual role of managing and mentoring restaurant employees. Our data shows bad managers are a top contributor of churn. 

It’s possible that restaurateurs and their managers can help improve manager perceptions by shifting focuses to ongoing training and professional development.

This may be a blend between typical — even mandatory — food service training programs, upskilling across different restaurant roles, or development focused on employee health and well-being and personal growth.

Creating an employee incentive program

Managers can instill a restaurant employee incentive program as a way to help motivate staff — during a shift as well as throughout the week, month, and quarter.

Employee incentive programs shouldn’t be confused with formal benefits programs. Instead, these are perks that may include daily or weekly performance rewards, such as gift cards to a restaurant of choice, free coffee for a week, or employee of the month awards.

The incentives can split between front of house and back of house — where front of house may be based on total sales or table turns and back of house can be based on food waste or other impacts to the bottom line.

Toast is here to help with restaurant employee management

Whether it’s for point of sale (POS), Payroll, Scheduling, or other restaurant management tools, Toast is here to provide essential automations, processes, and efficiencies that may help restaurateurs and managers encourage lower employee turnover rates and boost retention.

Reach out today to learn more, schedule a demo, or expand your suite of Toast products.

Related Restaurant Resources

• Restaurant POS System
• Bar BOS System
  
• Food Truck POS System
• Restaurant Business Plan
• How to Open a Bar
• How to Open a Coffee Shop

This information is provided for general informational purposes only. Toast does not warrant the completeness of any information, text, graphics, links, or other items contained within this content. Toast does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.

Methodology

Toast conducted a blind online survey of 1,011 U.S. restaurant employees not operating at a manager or owner level ages 18 and older between February 27 - March 19, 2023. Respondents were not made aware that Toast was fielding the study. Using a standard margin of error calculation, at a confidence interval of 95%, the margin of error on average is +/- 3%.