What is your restaurant turnover rate? Is your restaurant a Turnover All-Star, or are you in the Red Alert phase?
Read on to find out:
- What your restaurant's turnover rate really is.
- How you compare to the average restaurant.
- What you can do to lower your turnover rate.
When you finish reading, make sure you download our brand new Restaurant Hiring Kit to lower your turnover rate with smarter hiring campaigns, a better interview process, and a standout onboarding playbook.
The kit includes templates, research, and insight to help you bring on the very best and most committed candidates.
The Plague of Restaurant Turnover
Restaurant turnover is a fickle thing. Some restaurants have found success in the industry with a dedicated group of employees who stay far more than a year.
Other restaurants seem to have a new face in the kitchen every week.
While the restaurant turnover rate itself does vary, the national average in 2016 was 72.9% - and that number has been on the rise since 2010. Not only is this the highest industry turnover rate since 2008, it is over 25 percentage points higher than total private sector turnover.
Some owners think that high turnover just results in spending more time hiring and training.
However, the spillover effects add up to much more than that. Depending on the position, it can cost anywhere from 16% to over 200% of a worker's annual salary to replace that employee in your restaurant.
Just think about how much time it takes to do these tasks:
- Write the job posting.
- Shuffle through applications.
- Interview candidates.
- Offer and negotiate the terms of the job.
- Train and onboard.
Think too about the time that is lost in this process and the costs associated with the learning curve. Replacing a restaurant employee is not cheap.
Calculate Your Restaurant Employee Turnover
To calculate your restaurant employee turnover rate, enter the number of employees you had one year ago, the number of employees you have now, and the amount of employees that quit or were fired from your restaurant.
The number in the right column is your turnover rate.
Employee Turnover: How Does Your Restaurant Stack Up?
The results are in. Let's see how your restaurant is doing! Click on your turnover rate to see what actions to take.
0%-25%: The Turnover All-Star
If your turnover is this low, do everything you can to preserve your culture, as it’s clearly working in your favor. Use the tools in Toast's Restaurant Hiring Kit to both document and streamline your recruiting and onboarding process. You can also dedicate some time to uncovering tip trends and labor cost percentage through the reporting in a restaurant point of sale.
That said, low twenties isn’t the ideal turnover rate. Do some analysis into the reasons behind your staff’s departure. If it’s just teenagers headed back to school after a summer of bussing, that won’t necessarily break the bank compared to your head chef or best waiter leaving you for a better opportunity.
Keep in mind there is such a thing as a too-low turnover rate. All workplaces have a normal flow of new hires and those who wish to move on. And as hard as it is, you may have to let an under-performer go if he or she is costing you money. Preserving your turnover rate is not as important as protecting your bottom line.
26%-50%: The Warning Stage
We call this the warning stage because you’re not too far gone at this point. With a turnover rate of under 50%, that means the majority of your staff is happy to be working for your restaurant.
To lower your restaurant's turnover, speak to all of your employees individually and ask them what it is about your restaurant that keeps them around. If you’re not getting a positive answer from an individual, they may be among the next to leave.
Don’t let this be the case! While you still have them, ask them what they think is missing from their professional life. If it’s a change you are willing and able to make it, see it done to lower your turnover rate. For example, some employees may have found the onboarding process unclear or that the role didn't match their expectations.
51%-75%: The Unpleasant Average
If you want to perform like the “average restaurant,” be prepared to say goodbye to a lot of your staff and all the money you spent training them. Just because this number is the industry average does not mean it is where you want to be when it comes to turnover.
The best course of action here is to take serious, purposeful action towards better staff management. We suggest reading up on industry news and advice and - if necessary - consider hiring a consultant if your turnover rate is seriously increasing.
At this rate, your restaurant just needs to be straightened out a bit. Investing time into documenting a solid staff culture and hiring program can make a world of difference.
76%+: Red Alert
Want to know the reason restaurant turnover rate is so high? Look in the mirror.
That’s not intended to be insulting, it’s intended to help you realize that there is a significant culture problem in your business if you have a turnover rate that high.
You can say that you’re in an oversaturated market or you’ve got too many younger employees on your team. Those could result in a higher turnover, but many of these factors come down to management decisions from your business.
The bigger issue, however, is the underlying culture problem in your restaurant. High schoolers will stick around throughout the school year if the job is worthwhile (heck, I did!), and an oversaturated market is no excuse if your culture is strong enough.
If you’re unable to turn this issue around and lower your turnover rate, you may have to seek professional assistance to save your restaurant. Just because you’re breaking even does not mean you can justify this turnover. The immense costs associated with hiring and firing add up to lost profit for your restaurant.
Just take a look at FATZ Café. In 2009, their turnover rate was 125%. That's not good. To bring that down over 30 percentage points, the company decided to revamp its hiring process.
Improving Your Restaurant Turnover Rate
Restaurateurs agree: one of the most effective ways to lower turnover rate is to take it back to the hiring process. Enticing job descriptions, purposeful interviews, and detailed job offer packages can make the difference between a good staff and a bad one.
Start making the changes your restaurant needs today.