The restaurant industry is known for an exceptionally high turnover rate. While your restaurant may never be able to prevent turnover entirely, your company can retain more employees than ever with strategic technology tools. Knowing how to reduce restaurant employee turnover and increase retention rates in your staff can save your restaurant money in the long term, with resources once wasted on constant hiring and training put to better use.
As the restaurant industry emerges from the effects of COVID-19, the restaurant labor market is much more volatile than usual. However, when restrictions ease and the economy picks back up, the labor market is likely to rebound, and employers will once again face high employee turnover rates. As reported in August 2019 by the National Restaurant Association, operators had consistently rated “recruiting and retaining employees” as the number one challenge facing restaurant businesses every month for over two years.
What is restaurant employee turnover?
Restaurant employee turnover is the number of employees that leave a business over a period of time. The restaurant industry is known for a high rate of turnover, but the actual rate varies for different types of restaurants. For example, fast food restaurants generally have a higher turnover rate than fine dining, because of the difference in things like tips and earning potential.
Average restaurant employee turnover
A high employee turnover rate is a significant cost for restaurant operators. In the restaurant industry, the turnover rate has been tending to hover around 75%, while the U.S. workforce turnover rate as a whole averages 45%.
This high number is due in large part to many factors:
- Restaurants hire the most teenagers out of any industry, and for many teenagers, this is their first job.
- The restaurant industry employs a high number of students whose work schedule may not be year-round.
- Many cities have hubs of restaurants, making it easier for employees to leave jobs and find opportunities elsewhere.
- Many restaurants have normal cyclical seasonal staffing levels, built around seasonal fluctuations in business.
In addition, the high turnover rate in restaurants can be attributed to factors that are within the control of a restaurant operator, like scheduling, company communication, and work environment.
Cost savings of employee retention
Some restaurant owners may not sweat employee turnover when there are many potential applicants in the industry as a whole. However, while there may be a pool of new hires to choose from, the substantial cost of losing an employee can make retaining employees a worthwhile investment.
The cost of filling an open position includes recruiting, hiring, onboarding, training, a period of development, and the time spent with an unfilled team role. The indirect and direct costs for filling even an $8/hr. entry-level position in your restaurant are estimated to cost around $3,500 per employee. With figures like these, the cost savings of improving employee retention start to add up.
Turnover can also lead to the less-quantifiable effect of unengaged and unhappy employees, who can cause operational issues (no accountability, no-shows), or poor customer service (negative team morale, bad online reviews).
How to reduce employee turnover with technology
With the cost of high employee turnover, the restaurant industry is looking toward new technology tools to increase employee retention. Check out some of the most common ways restaurant operators are leveraging technology to proactively reduce turnover.
Conduct Anonymous Employee Engagement Surveys
Anonymous surveys can be a powerful tool to understand new and better ways to manage and work with your staff. Today, there are many different tools that can distribute and regularly collect surveys for your employees. You can use these tools to not only collect communications and ideas, but also to help show employees that their opinions matter. In addition to regular feedback, anonymous surveys can be used to conduct exit interviews, which can help you identify trends in your turnover and analyze factors like the effectiveness of your management.
Use Mobile Apps to Facilitate Communication
The use of restaurant employee apps as a centralized communication space has grown in recent years. In the restaurant industry, people aren’t behind desks checking their email; they are on the go. The more points of contact you have, the greater the risk that some of your employees will miss some information. With one central mobile app, you can streamline your communication with your employees. Although many restaurant employee apps have a paywall for employees to download, consider choosing a mobile app that comes with no cost to employees, so they are more incentivized to download and use it.
Show Appreciation for Your Staff and Reward Hard Work
When your employees feel appreciated and can see why their hard work matters, they are more likely to stay with your business. Recognition from management can trickle down and help create a culture of engagement and investment. To help ingrain appreciation in your company culture, show recognition in real time through the mobile app instead of on a monthly or annual schedule. Appreciation can be as simple as acknowledgment and thanks, and it can also be a reward like offering time off (paid or unpaid) or flexible scheduling for star employees.
Ensure Accurate, On-Time Pay with Payroll Software
Let’s face it. Your employees work for a paycheck. Consequently, paying your employees on time and with accuracy is a non-negotiable for keeping them happy. But, doing it manually can be a daunting task, especially with all the tipped wage rules and the various withholdings. Restaurant-specific payroll software can help you show your gratitude for employees’ hard work by ensuring you pay them on time and that the amount is error free, while saving you time and the potential for costly errors.
Hire the Right People and Create a Positive Onboarding Experience
A key to retaining employees is to hire the right employees in the first place. Finding and attracting the optimal employees for your restaurant business requires multiple tactics and strategies, but human resources software streamlines the entire candidate search and hiring process to make it easier for you to hire the best employees, as well as to create a positive onboarding experience to reinforce that employees made the right decision in choosing your restaurant as their employer.
Streamline Your Restaurant Scheduling with Restaurant Scheduling Software
With restaurant scheduling software, you can help streamline the headache-inducing process of scheduling your employees. Not only can the scheduling software automate parts of the process with tools like schedule templates, but you can also build in tracking your labor cost percentage goals. If you are using a restaurant employee app that fully integrates with your scheduling software, you can allow employees to request exchanging or picking up shifts on the app, and your management can create custom workflow for approvals. The addition of restaurant scheduling software can not only help you meet the needs of your employees, but it can also save your management time and energy.
Invest in a Digital Wellness Program
The restaurant industry is not for the faint of heart. Your employees have a lot of demands put on their shoulders every day, and burnout can be a common cause of high employee turnover rates. However, there are more and more online wellness programs focusing on mental and physical wellness. If you have an interest from your staff, consider investing in a digital wellness program for your employees to help them address any work/life balance issues before they become larger problems.
Use Technology to Create a Positive Work Environment
Restaurant employee apps can not only impact how your staff communicates, but they can also be used to share information and strengthen company culture. Whether you are announcing changes, highlighting personnel, or celebrating achievements, an employee app can be a tool in engaging your staff and making employees feel invested. You know that your employees are already looking at their phones frequently anyway, so take advantage of the opportunity to grow your positive company culture.
Use Digital Training
Training is one of the most important elements for not only improving how your staff works together, but also for reducing turnover. When employees spend a significant amount of time being trained and learning about operations, business goals, and staff expectations, they are more likely to feel invested in the role.
There are more online learning programs than ever that employees can do in the comfort of their own home. Consider implementing digital trainings not only for new hires, but also for ongoing skills training in different areas to keep your veteran employees engaged.
Encourage Career Development
The restaurant industry prides itself in encouraging career development opportunities, and there are strong numbers backing it up. Check out these statistics from the National Restaurant Association:
- 8 in 10 restaurant owners started their industry careers in entry-level positions
- Restaurants employ more minority managers than any other industry
- The number of middle-class jobs ($45K-$75K) in the restaurant industry grew 84% between 2010 and 2018, more than 3 times faster than in the overall economy.
The restaurant industry can provide a viable, steady career path. If you are able to communicate and prove that to your employees, they may be more likely to stick with you. Your employees, especially millennials, value opportunities to grow their knowledge and develop professionally. Acknowledging and valuing career development in your employees is not only a good strategy for reducing turnover, but it can also lead to fulfilling mentorship opportunities.
The very nature of the restaurant industry means that there will always be some turnover. However, if you can use things like technology to improve employee engagement and satisfaction, you can ensure your employee turnover rate is as low as possible. Knowing how to reduce employee turnover can help you not only make the most of your labor cost, but also ensure a positive experience for both your customers and your team.
Restaurant365 incorporates smart scheduling software, restaurant accounting software and restaurant operations software into an all-in-one, cloud-based platform that’s fully integrated with your point-of-sale system, as well as to your food and beverage vendors, and bank. To learn more about optimizing your labor costs and tracking your labor data, read the e-book, Guide to Restaurant Labor Regulations and Wages.