Solving the Nightmarish Employee Turnover Rate In the Restaurant Industry

Mar 8, 2021

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How Can You Solve the Problem of Employee Turnover?

Employee turnover is something that threatens every industry. But it seems that the restaurant industry is particularly prone to high turnover rates. Training staff and getting them up to speed is a costly process in terms of both time and money. So, figuring out how to solve the employee turnover problem is critical. According to Forbes Magazine, businesses can reduce employee turnover by hiring the right people, offering competitive compensation, giving praise, providing advancement opportunities, and offering flexible schedules.

Yet in the restaurant and hospitality industry, even when you make employees feel valued, turnover remains high. Restaurants face challenges unique to their industry and reducing employee turnover requires a more individual approach.

The National Restaurant Association estimates that there are currently around 15.6 million restaurant employees. By 2030, 1.6 million more restaurant jobs will be created. But, frustratingly in the restaurant and accommodations sector, the employee turnover rate can reach alarming levels.

RELATED: What is a Gig?
Learn about a gig So, what can a restaurateur do to solve this issue? With so many workers coming and going, hospitality and restaurant owners need to find solutions for reducing employee turnover. Undoubtedly, given today’s tech-driven world, the best solution is to use the power of a gig economy app for securing a willing and trained workforce. That means the best modern solution for minimizing restaurant turnover is to use an on-demand labor app that provides trained workers in minutes. This instantly alleviates the pain of turnover and saves the company money.


How To Calculate a Staff Turnover Rate?

When you’re calculating your restaurant’s employee turnover rate, you need to work out your average number of employees first. To do this you add the number of employees you had at the beginning of your chosen time period (a month, quarter, or year) to the employees you had at the end of that same time period, then divide by two. After calculating the average, take the number of employees at the end of that time period and subtract it from the original employee number so that you have a final total of how many employees left your business. Next, divide the number of employees who left by the average number of employees and times by 100. At that point, you’ll have your staff turnover rate.

What Is a Good Turnover Rate For a Restaurant?

National Restaurant News discusses how the restaurant turnover rate right after the Great Recession in 2010 hovered around 57% for a cyclical low. Since then, average turnover has steadily gone up in the restaurant industry to reach the high average of 74.9%.

If you do your due diligence in research for restaurants, the consensus is generally that if you can maintain a consistent employee turnover rate between 25-55%, you’re an industry leader. Compared to 74.9% that is pretty good, but it is still a high rate to cope with when running a busy restaurant.

Historically, high restaurant turnover has to do with the background of the employee, type of restaurant, and wages. Restaurant managers’ pool of applicants usually contains an increased number of students who work for a limited time. Also, most restaurants have a high and low season, making it difficult to retain employees year-round. And then when you factor in that wages for certain jobs can be lower than in other industries, retaining employees can be challenging from the get-go.

What Is the Average Job Turnover Rate in the Fast Food Industry?

As reported in CNBC, the fast-food industry’s overall turnover rate is between 130-150%. We know, this sounds crazy! But when you calculate the turnover rate to include the employee replacement cycle, employee turnover can easily reach those numbers.

A fast-food restaurant has many challenges when retaining employees. So, putting a number on the cost is crucial. Depending on what source you look at, losing one employee costs anywhere from $600 to $2,000. If you then multiply the number of employees at each restaurant and consider how often they change, you start to get the idea of the hidden cost of employee turnover.

What Are the True Costs of High Turnover?

The turnover costs eat into profit margins, from hiring and training to putting in programs and measures to prevent staff turnover. But the real price really goes beyond mathematical calculations in the hospitality industry. Constant restaurant employee turnover takes a toll on employee morale and reduces food and service quality.

All the time it takes to mitigate the stress from staff turnover can seriously add up. Managers, in particular, have everything from scheduling to food quality to consider. The constant cyclical nature of hiring makes it challenging to concentrate on other essential duties. If employees are always coming and going, costs are financial and emotional. The added stress to the remaining staff inevitably may result in higher turnover.

Taking Advantage Of an On-Demand Labor App

In today’s digital world, finding and training staff can be done differently to reduce your restaurant turnover. Instead of viewing a restaurant worker as a longtime employee that you must retain to reduce overall costs, think of your staff as flexible components of an overall goal. With an on-demand app, a trained and qualified team is at your fingertips.

ShiftPixy takes care of the finding and hiring of restaurant staff. It is so simple. You tell us what you need, when, and where, and we take care of the rest. By trusting us with your staffing needs, we look after the paperwork, scheduling, and worry that comes with complying with industry regulations.

Our network has hundreds of part-time workers with a full-time mentality and trained in every aspect of the restaurant business. If you need a line cook to fill in on a Friday night, we can help. If you need a host with experience for a week while an employee goes on vacation, we can provide qualified labor.

Using the next-generation platform to staff your restaurant removes all the pain of training new workers. In the end, you’ll reduce employee turnover and never worry about becoming shorthanded again.

And all the pain and trouble that losing employees can cause will be reduced or eliminated. Restaurant workers can now have the freedom and flexibility they desire, and employee turnover rates will be reduced. It really is a win-win.

Ending Thoughts On Restaurant Employee Turnover Solutions

To wrap it all up it really boils down to the fact that because of an average turnover rate of almost 75% in the restaurant and hospitality industry, finding a solution that works to bypass turnover is super important. When employees leave your restaurant, you lose money and face a real challenge of a labor shortage. But by using a gig economy app like ShiftPixy you can access a reliable and trained restaurant workforce, at the touch of a button. Say goodbye to the worries of constantly hiring and losing staff and say hello to a stress-free employee hiring solution. For more resources on getting started in the restaurant industry check out our guide for the top grand opening ideas for restaurants!