Tackle Restaurant Turnover: A Quick Guide
Employee turnover in restaurants is a constant struggle. Losing experienced staff affects the customer experience, forces constant rehiring, and leads to mounting costs. Tackling this problem head-on requires understanding why employees leave and what you can do to keep them. In this guide, we’ll explore the causes of high turnover and actionable solutions, plus provide a turnover cost calculator to help you better grasp its financial impact.
What Is Restaurant Employee Turnover?
Employee turnover refers to the percentage of employees who leave your restaurant over a specific period. It’s often split into two types:
• Voluntary turnover:
When an employee chooses to leave, often due to pay, working conditions, or lack of growth opportunities.
• Involuntary turnover:
When you terminate or lay off an employee, typically due to performance or business needs.
In restaurants, turnover rates are notoriously high, sometimes exceeding 70% annually. While some turnover is inevitable, high rates are costly in terms of hiring, training, and lost productivity.
The Real Cost of Turnover
You might not realize it, but turnover impacts much more than just your staffing levels. Each employee who leaves represents a loss in training investment, team cohesion, and potentially even customer satisfaction. That’s why understanding the real cost is key to developing strategies that work.
Use a Cost of Turnover Calculator
Here’s a basic formula you can use to estimate turnover costs:
(Number of employees lost x cost per hire + training costs + lost productivity)
This formula helps clarify the total cost of frequent staff changes. On average, it can cost a restaurant $5,864 to replace just one hourly employee. The impact becomes even greater when you consider more experienced employees like managers.
By calculating your turnover costs, you can identify how much you stand to save by improving employee retention—and that’s where the following strategies come in.
Key Causes of Restaurant Employee Turnover
There are several recurring reasons why restaurant staff leave, and understanding these causes can help you address the root of the problem:
1. Low Pay
It’s no secret that restaurant wages are often lower than other industries. If employees feel they can earn better pay elsewhere, they’ll likely leave. Even with tight budgets, small adjustments to wages or benefits can have a significant impact on staff loyalty. Working with a virtual accountant can help you optimize your financial resources, so you can offer competitive compensation without stressing your bottom line.
2. Poor Management and Communication
Employees leave managers, not jobs. A manager who doesn’t communicate well or support their team is often a key reason for turnover. Encouraging better communication and offering leadership training for managers can help create a more positive work environment.
3. Lack of Career Development
Many restaurant workers feel stuck in their roles. Without opportunities to grow, they’ll look elsewhere for career advancement. Restaurants that offer training programs, mentorship, or paths to promotion see higher retention rates.
4. Inconsistent Scheduling
Inconsistent hours or last-minute scheduling changes can make life difficult for employees, particularly those with other responsibilities or second jobs. By improving scheduling consistency and offering flexibility, you show that you respect your employees’ time, making them more likely to stay.
Practical Strategies to Reduce Turnover
Reducing turnover requires focusing on both hiring practices and employee retention. Here’s how you can take actionable steps:
1. Hire the Right People from the Start
Focus on hiring employees who are a good cultural fit and who understand the restaurant’s values. A structured interview process that assesses both skills and attitude can help you make better hires who are more likely to stick around.
2. Offer Competitive Compensation
We know not every restaurant can offer top-of-the-market pay, but getting creative with benefits can help bridge the gap. Consider offering perks like meal discounts, transportation assistance, or even healthcare options. If budget management feels tight, this is where outsourcing accounting services, like virtual accounting, can help. It allows you to optimize costs and make room for better compensation without overwhelming your financials.
3. Create a Positive Work Environment
A supportive, inclusive workplace is crucial. Encourage open communication, address conflicts quickly, and foster teamwork. Small steps like regular check-ins, acknowledging good work, and being approachable can go a long way.
4. Provide Growth Opportunities
Show your team there’s room for advancement. Offering clear paths to promotion or cross-training to learn new skills can significantly improve retention. One client we worked with implemented a leadership program for waitstaff who wanted to move into management. The result? Lower turnover and a more engaged team.
5. Improve Scheduling Practices
Predictability is key. Offering schedules in advance and allowing for some flexibility can make your restaurant a more desirable place to work. We’ve seen restaurants adopt scheduling apps to streamline this process, allowing employees to swap shifts or view schedules well in advance.
Cost of Turnover Calculator for Restaurants
Understanding how much turnover is costing your restaurant is essential. Use this calculator to estimate your costs:
Enter the number of employees who left in the last year.
Estimate your cost per hire, including recruiting, interviewing, and onboarding costs.
Add the cost of training, both formal and informal.
Factor in lost productivity, especially for experienced employees who were key to operations.
For example, if you lost 10 employees in the past year, and each new hire cost you $1,000 in recruitment and training, plus an additional $1,500 in lost productivity, your total cost of turnover would be $25,000 annually.
Outsourcing: A Strategy for Efficiency and Stability
One often overlooked solution to turnover is outsourcing. Many restaurant owners think they need to manage every aspect of their operations in-house, but outsourcing tasks like bookkeeping, inventory management, or accounts payable processing can free up time and reduce the pressure on your internal staff.
By outsourcing non-core tasks, you’re able to focus more on your team and your restaurant’s growth. Not only does this reduce turnover in back-office positions, but it also improves overall efficiency.
Outsourcing your accounting needs can help you streamline your financial operations, provide better reporting, and ensure that you’re maximizing every dollar. We’ve seen clients who shifted to offshore accounting services save significantly while improving their financial oversight. With 24/7 support and access to specialized talent, it’s a flexible, cost-efficient solution for restaurants of all sizes.
Wrapping Up: Take Control of Your Turnover
Reducing turnover in your restaurant starts with understanding the reasons behind it and implementing the right strategies. From improving pay and benefits to creating a more positive work environment, small changes can have a big impact on retention.
And if managing your restaurant’s financial operations is adding to the stress, outsourcing your back-office tasks could be the answer. At Over Easy Office (OEO), we specialize in helping restaurants optimize their accounting processes, so you can focus on running your business—without worrying about turnover in your back office.
Contact us today to learn how outsourcing can help you save time, reduce costs, and create a more stable operation.