10 Ways To Reduce Your Restaurant Turnover Rate

There are a few key ingredients shared by good restaurants. Delicious food made with quality ingredients, exceptional customer service, and a team of loyal employees are all important to the success of your business. But while things like menu selection and delivery options seem within your control, other aspects like keeping good employees on your payroll may seem beyond your control. Or are they?

The turnover rate in the restaurant industry is notoriously high, and the problem has only grown worse since the COVID-19 pandemic. Finding — and keeping — good help may seem like an impossible task. Fortunately, though, there are ways to reduce your turnover rate, allowing you to find loyal employees that are ready to take your restaurant to the next level.

High turnover is not only stressful for you and your employees, but it’s costing your business thousands of dollars each year. In fact, a 2016 study by Cornell University’s Center for Hospitality Research showed that replacing a single employee could cost as much as $5,864. Consider that numerous employees may leave your business each year, and you can see why a high turnover rate hits your business (and your wallet) hard.

Whether you’re a struggling restaurant owner or a manager that’s frustrated with constant hiring and short-staffed shifts, you’re in luck. In this post, we’re going to take an in-depth look at restaurant turnover. We’ll review the different types of turnover and how to calculate your restaurant’s turnover rate. Then, we’ll provide actionable guidance as to how to lower your turnover rate and create a positive atmosphere that helps you keep your business staffed with great employees. Keep reading to learn more.

Understanding & Calculating Restaurant Turnover Rate For Your Business

Restaurant turnover rate is a calculation that determines the percentage of employees that have left your business. Employee turnover is calculated over a set period of time: yearly, quarterly, monthly, etc.

There are four types of employee turnover. Let’s take a closer look at each:

• Voluntary: Voluntary employee turnover means that the employee willingly vacated the position. This could be because the employee has accepted another job, is moving to another location, is taking another career path, or for a variety of other reasons.
• Involuntary: Involuntary employee turnover means that the employer severs the relationship with the employee. Examples include an employee being fired for poor performance or an employee being let go due to budget cuts.
• Retirement: Employees that have reached retirement age may opt to leave the workforce. Retirees contribute to your restaurant’s turnover rate.
• Transfers: Employees may opt to transfer to a different department or location in order to pursue different career opportunities.

In the majority of businesses, most employee turnover is due to the first two types, and is not affected much by retirement or transfers.

To calculate your employee turnover, you’re going to need two numbers. Both numbers will need to be taken from the same time period (i.e., the same quarter or the same year.) The first number is the number of employees that have left your restaurant. As an example, let’s say that you’re calculating the turnover rate for the year 2020. During this time period, you had five people leave your restaurant.

The second number to know is the average number of employees of your restaurant. At the beginning of 2020, your business had 10 employees. By the end of 2020, your business had 12. Calculate the average by adding both numbers, then dividing by two.

10 + 12 = 22

22/2 = 11

Average # of Employees: 11

With both of your numbers, you can now calculate your turnover rate. Simply use this formula:

Employees That Left / Average # of Employees = Employee Turnover

In this instance, we divide five (the number of employees that left your business) by 11 (the average number of employees. The result is around 45%. While this is far below the hospitality industry turnover rate reported in 2020 (more on that later), you might want to still drive that number down further. Fortunately, we have some tips to help you forge ahead — just keep reading.

Staff Turnover Is Rough Everywhere Right Now

After completing your turnover calculations, did the number shock you? You’re definitely not alone. Employee turnover is a challenge that businesses around the world are facing, especially businesses in the hospitality industry.

While it’s easy to blame the pandemic, unfortunately, this has been an issue for restaurants even before COVID-19 … and the problem only seems to be growing.

Even established restaurants are facing high turnover numbers. In 2019, it was reported that Panera Bread’s annual turnover was close to 100%. For other restaurants, the numbers were even more staggering, with turnover rates reaching as high as 150%.

And these numbers aren’t just a handful of restaurants, either. According to the Bureau of Labor Statistics, the hospitality industry’s turnover rate reached 130.7% in 2020. Compare that to the 78.9% turnover rate reported in 2019, and it’s easy to see that the pandemic also had a severe impact on an industry that was already struggling with high turnover rates.

10 Ways To Improve Restaurant Staff Turnover

While the numbers can be scary, you don’t have to sit back and let high turnover affect your business. Start bringing that number down — and bringing loyal employees to your business — by following these ten tips.

1. Coordinate & Train Wisely To Reduce Staff Turnover

The first step to reducing employee turnover in your restaurant seems obvious: make sure that you’re hiring and training the right people. Unfortunately, this can be much more difficult in practice.

This is especially true if you’re facing a staffing shortage. It’s easy to simply hire anyone that comes to your business and states they’re ready to work. But to ensure you get loyal employees that are committed to your restaurant, you have to take the time to find the right candidates.

During the interview process, make sure you’re honest about your expectations. Be upfront about the requirements of the job, starting from the job listing and continuing through the interview process. If a candidate is unable to work weekends but that’s when your restaurant really needs all hands on deck, communicate this honestly. You wouldn’t want a potential hire exaggerating their skills, experience, or availability, so make sure you give the same respect by clearly and honestly communicating what the job entails.

Finding the right person for the job is only the first step. The next is to provide solid training so that your new employee is prepared to perform. Don’t toss your employee into the deep end right away. Instead, allow them to dip their toe into the water and get a feel for what’s in store. Make sure that company policies and procedures are properly explained (extra points for providing manuals and other documentation they can review on their own later). Ensure that the employee understands your restaurant’s technology and equipment. Make sure that you’ve done everything you can to make them comfortable before setting them loose on their own.

Finally, continue to provide training on new procedures and continue communicating and providing training refreshers as needed to help your staff maintain efficiency and productivity.

2. Get A User-Friendly POS System

Help your employees work smarter, not harder, by upgrading to a user-friendly POS system. Whether you’re still using pens and pads to take orders or your current POS is slow, laggy, and outdated, modern POS systems are easy to use, affordable, and offer a host of benefits to your restaurant.

Your new POS system should be easy to use, have a modern and intuitive UI, and have plenty of features to help your business prosper. Touch screen systems are portable and easy to use, allowing your employees to use tablets, smartphones, or other devices to take orders, run payments, or perform other tasks. You can also find POS systems loaded with features such as inventory management, employee management, and advanced reporting.

Make sure to do your research to find the right POS system for your business. Look for one that doesn’t just fit your budget but is easy to set up, learn, and use. For smaller restaurants, a basic POS system with a card reader may be sufficient. Larger restaurants may want to invest in additional hardware options, including customer-facing displays, kitchen displays, cash drawers, and more.

3. Utilize Technology To Ease Pressure Off Of Staff

A modern POS system isn’t the only investment that can help take the pressure off your staff. There’s a wide assortment of hardware, software, and apps that you can use throughout your restaurant — from tableside to front counter to the kitchen — that makes work easier for your employees. Additionally, your business can become more efficient and improve customer satisfaction with a few upgrades.

What you choose really depends on the size and needs of your restaurant. But you can get started with updates like online ordering, kiosks that allow customers to place their own orders, and QR codes.

Many all-in-one POS systems such as Revel and Lightspeed offer this type of technology, so if you plan to upgrade your POS system, make sure to look for these advanced features.

4. Create A Positive Company Culture

According to a Deloitte survey, “94% of executives and 88% of employees believe a distinct workplace culture is important to business success.” Creating a positive company culture has benefits for your business and your employees. Strong company culture makes it easier to attract new recruits — and keeps them loyal to your restaurant. Additionally, positive company culture can help boost morale, improve teamwork among employees, and reduce stress in the workplace.

5. Reevaluate Salary & Benefits

Not offering your employees benefits seems like a money-saving move, right? Well, not exactly. According to a report from Paycor, the average turnover rate for employers that don’t offer benefits is 157%. Bringing on new employees over and over again doesn’t come cheap. Instead of spending time, money, and resources on finding, hiring, and training new employees, why not offer a benefits package to entice your employees to stick with your business?

There are a number of benefits you can offer your employees, including:

• Health insurance
• Paid time off, sick days, and vacation days
• Life insurance
• Retirement plans
• Short- and long-term disability
• Tuition reimbursement
• Gym memberships and wellness programs

Offering these employee benefits can help keep your workers happy, healthy, and loyal to your business.

Additionally, reexamine the rate of pay you’re offering employees. Are your salaries competitive, or do your competitors offer far higher rates? Do you give regular raises to deserving employees? If not, it’s time to make changes. Ask your employees what benefits they would most like to receive. Do some research and find out the pay rates and benefits of local competitors. Make a plan for giving salary raises, i.e., after annual performance reviews. Don’t just tell your employees they’re appreciated — make sure to show it.

6. Offer Sign-On Bonuses

Is your restaurant looking to hire new staff? Consider offering a sign-on bonus for newly hired employees. Adding an incentive of just a few hundred dollars can help bring help your way if you’ve had difficulty finding new recruits. Want to make sure that your staff sticks around? Try implementing a 90-day hiring bonus. If the employee stays with your restaurant for 90 days (or another agreed-upon time period), they will receive the bonus.

This method will cost you a few hundred dollars or more. However, the savings of finding good help willing to stick with your company can be exponential when compared to the costs of hiring, training, and onboarding new employees with a high rate of turnover.

7. Celebrate Accomplishments

Your employees want to feel appreciated, so why not celebrate them? And the good news is, you don’t have to break the bank to show your appreciation, either. Have a fun and friendly competition among your staff by naming an employee of the month. Does an employee have a birthday coming up? Get everyone to sign a card and offer a round of free desserts to your staff to celebrate. Did one of your employees go above and beyond? Recognize them in front of your staff — and consider offering the employee a bonus, raise, or another reward. Celebrating accomplishments and special occasions boosts morale, makes employees feel appreciated, improves productivity, and can ultimately help reduce turnover.

8. Maintain Adequate Staff

An understaffed restaurant can be a nightmare for everyone. Employees may have to take on extra shifts, show up on their days off, and take on responsibilities that weren’t in the job description. Take these overworked customers, throw in stressed managers and cranky customers, and it’s a recipe for disaster.

Unfortunately, restaurants across the nation — from the local diner to fast food chains and fine dining establishments — are really feeling the labor crunch. Despite restrictions being lifted, restauranteurs are finding it difficult to bring staff back up to pre-pandemic levels. Not only are restaurants short-staffed, but employees are reaching burnout levels quickly.

To increase your staff, make your restaurant a more appealing place to work by using one (or a combination!) of the tips on this page. Offer sign-on bonuses with competitive salaries and benefits. Foster a positive company culture, and make your restaurant an enjoyable place to work. And if you can’t bring on new staff quickly enough? Make sure to invest in time-saving tech to help ease the workload of your staff.

Once you have increased staff levels, make sure to continue to explore ways to reduce turnover to avoid shortages in the future.

9. Don’t Forget Work/Life Balance

Your employees aren’t just employees. They’re people with families, hobbies, and lives outside of working at your restaurant. This can be easy to forget, especially during a weekend rush or in a short-staffed restaurant. But long hours and extra shifts can lead to burnout fast. And if your employees always expect to hear “no” when asking for time off — or, perhaps even worse, are too scared to even ask — you may see your turnover rates start to climb.

While it won’t always be possible to provide the best work/life balance for your employees, you can make an effort to try. If it’s a slow Tuesday night and you’re adequately staffed, why not let a waitress off that wants to spend extra time with her children? Or if another worker asks for a night off to attend an important event, see how you can make changes to accommodate this request without stepping on the toes of other employees.

This step is made even easier by making sure that you have an adequate amount of staff, as well as that user-friendly tech we’ve mentioned a few times already. With enough workers on your roster and tools to help ease the workload, providing your employees with time off when they need it shouldn’t put undue stress on the rest of your staff.

If a new POS system is in your future, you can also make scheduling easier than ever with a system that offers employee management features. A good option is Square, which has a team management feature that allows you to schedule employees, view availability, and even allows your employees to claim open shifts via the Square Team app.

10. Respect Your Staff

R-E-S-P-E-C-T. Find out what it means to your employees. It should come as no surprise that your employees want to be respected. In fact, Christine Porath of Georgetown University conducted a study of nearly 20,000 employees. These employees ranked respect as the most important leadership trait.

It’s easy to respect your employees, and if you’re looking to turn around turnover on a tight budget, it can be absolutely free. Respecting your staff is simple — just think back to the age-old adage, “Treat people the way you want to be treated.”

Of course, it should go without saying that you should never yell at, curse at, or berate your employees. But respect goes a little bit further than that. Listen to your employees. Make sure they know that you are really hearing them, whether they are discussing a conflict that needs your intervention or sounding off some new ideas that can improve your business. Encourage your employees to develop social relationships with other employees. Sure, you don’t want your staff goofing off, neglecting important duties, or offending customers. But there’s no harm in workplace friendships and making your restaurant a fun place to work, provided boundaries are put in place.

Respect your employees. Listen to their ideas and complaints. Recognize that they are human beings with real feelings and emotions, just like you. Let them know that they are respected, appreciated, and a valuable part of the team.

Restaurant Turnover Rate FAQs

Key Takeaways To Reduce Staff Turnover In Your Restaurant

Staff turnover is inevitable in any industry, but this problem has plagued the restaurant industry for years, and it only continues to grow. Fortunately, you don’t have to sit back and spend thousands of dollars replacing staff. With a few changes within your business, you won’t be able to eliminate turnover, but you can certainly improve your turnover rate.

Some methods may require some cash output on your part. When offering benefits, upgrading to a new restaurant POS system, or setting up a convenient online ordering system, you may have to reach deeper into your pockets for equipment, monthly subscription, and implementation costs. Other methods, such as celebrating employee accomplishments and improving your training program, may cost little to nothing at all.

While you don’t have to follow every one of the tips in this post, it’s important to at least sit down and analyze where you could make some changes within your restaurant. Think back to when employees have left in the past — has there been a pattern that shows why your turnover rate is so high? Talk to your current employees about what needs improvement in your restaurant, and really listen to them. Do your research to find out what technology you could bring into the workplace to improve the work environment, and make sure that you’re offering benefits and pay that’s competitive with other local restaurants.

It certainly won’t happen overnight, but making even small changes in your business can lead to big improvements in employee turnover.

Not in the restaurant industry but still facing problems with employee turnover? Start with an upgrade to your POS system. Whether you own a bar or nightclub or you’re in the retail industry, a new POS system can help ease the workload of your employees and can contribute to reduced turnover. Good luck!