Turnover rates in the hospitality industry are going up, hitting a whopping 72.1% in 2015. Compare that to the average employee turnover rate for all private-sector workers, 45.9%. If you own or manage a restaurant, according to the laws of averages, you should expect to replace almost three-quarters of your workers each year!
In addition to giving you headaches, disrupting the work flow in your business and disrupting the customer experience, this kind of turnover impacts profitability. The Center for American Progress reports that an employee earning below $30,000 a year costs 16% of that annual salary to find, hire, and train. Replacing a waiter or waitress earning an average $20,880/year, then, costs about $3,340. More highly trained employees like chefs and head cooks, earning an average $46,620-$74,240/year, cost $7,460-$11,880.
Looking at it from a different angle, if you have 20 waiters and waitresses, you can expect to lose 16 of them in the coming year. At a cost of $3,340 each, that’s $53,440 subtracted from your bottom line.
Why is the employee turnover rate so high in the restaurant industry? Low pay, long hours, minimal or no benefits and limited advancement opportunities make it likely that employees consider restaurant work a temporary situation rather than a career.
In addition, characteristics of restaurant employees factor heavily in turnover. Younger employees are more likely to leave as are part-timers. Often younger employees are students, and restaurant work is secondary to other commitments. Older employees sometimes take on a restaurant job when they lose work or experience money difficulties. When challenges ease, they leave.
You can cushion yourself against losses in productivity and profitability and reduce turnover by developing solutions based on the reasons restaurant turnover occurs:
- Characteristics of restaurant employees. The ideal employee is one who sees work in the restaurant industry as a career path. This means during the hiring process, you’ll want to get a sense of a potential hiree’s life plan. Hopefully they have not only past experience in the industry but future plans that include work in some area of hospitality. Even verifiable volunteer experience showing engagement with food and hospitality is promising. Since most turnover occurs among younger and older workers, look for mid-range in age, mid-twenties to mid-forties. Verify that a hiree’s skill set fits the particular job description.
- Compensation. When you consider the real cost of replacing valuable workers, higher pay doesn’t seem as costly as replacement. Work out your compensation policies so wages are at least competitive and workers receive regular raises. Find ways to recognize extra effort and on-the-job achievement.
- Working conditions. Workers are more likely to develop a sense of loyalty to your business if they experience a cooperative, optimistic work environment and have good opportunities for communication. Holding regular staff meetings which all attend and where respect is the basis of conversation do a lot to build team-spirit and a well-coordinated effort. These meetings can include working out challenges that affect the whole group, but save private grievances for individual monthly review sessions. Be sure to build in flexibility with things like dress codes and scheduling. Encourage creativity and ingenuity. People like to exercise these characteristics!
- Advancement. In brief, monthly review sessions, provide opportunities to raise more personal issues, but focus these one-on-one meetings on growth and improvement for your employee. How is your employee experiencing their job with your organization? Are there areas in the employee’s current job where they can improve? Where they excel? What is the next step for your employee? This question is especially critical. Long-term employees want to know there is room for them to advance, and they want to see a clear path to it.
- Benefits. Long-term employees look for and want benefits. If you have 50 employees or more, you must provide them. Even if you employ fewer than 50, consider providing something. Benefits can serve as a perk to make you more competitive. As a smaller operation, even if you can’t provide big benefits like health, you can offer other things that let your employees know you value them. Free food is always appreciated.
In addition to policies and best practices that make your restaurant environment a great place to be, cultivate personal practices that inspire loyalty: greet your employees each day, praise them when you see extra effort or something you appreciate, include them in planning and problem-solving. If you hire thoughtfully with an eye to the long-term, offer competitive compensation and extra perks, and create a pleasant, energetic, creative working environment with opportunities for growth and advancement, why would an employee ever want to leave?
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