The restaurant industry is known for a few things.
The restaurant industry is notably known for its hospitality, customer service, and delicious food. Unfortunately, it also has a notoriously high employee turnover rate. In fact, the restaurant industry has among the highest turnover rates of any sector.
The constant turnover of staff disrupts restaurant operations and can profoundly impact profitability. Recruiting and reskilling workers constantly wastes valuable time and resources and greatly detracts from your guests' experience.
Addressing employee retention can turn the tide, but it has to be done with purpose and consideration of why turnover is traditionally so high. We’ll explore why employee retention is essential for stronger profits and how your restaurant can implement strategies to course-correct.
What’s the Average Turnover Rate for Restaurants? According to the Bureau of Labor Statistics, the average annual turnover rate in the restaurant industry often exceeds 70% , with some fast-food chains experiencing turnover rates of over 130%.
These numbers are alarming, especially considering the substantial costs associated with recruiting, hiring , and training new employees. Other industries, like healthcare and finance, report turnover rates closer to 30%. These industries still experience a high level of stress associated with their jobs, so the disparity highlights the severity of the issue within the restaurant sector.
The Big Reasons Employees Leave Getting to the heart of the issue is the first step to prioritize employee retention. Here are some of the factors that contribute to the high turnover rates in restaurants for you to mull over:
Lack of career growth opportunities: Limited upward mobility is a huge issue when it comes to employee turnover. Restaurants would struggle here, as there are typically only a few managers relative to servers, hosts, cooks, and bussers. The absence of training or enrichment programs can also result in your best employees seeking better prospects elsewhere.Work environment & culture: Toxic or poor management is another common issue in restaurants. In such a high-stress environment, an unsupportive manager can eat away at your staff, causing them to jump ship. This also goes for understaffing and irregular schedules, which greatly contribute to job dissatisfaction.Compensation and benefits: Low wages and insufficient benefits, such as health insurance or paid time off, play a major role in turnover. And while other professions offer raises and promotions for a job well done, that's an infrequent occurrence in the restaurant industry as it’s often dominated by hourly work.Burnout and stress: Inconsistent hours, long shifts, and stressful environments create the perfect recipe for employee burnout, and unfortunately, that’s essentially the definition of working at a restaurant. When assessing your own employee turnover, think about each of these factors like parts of a pie. Even if you only struggle with one or two, they are still noticeable issues that you should address.
Why Employee Retention is a Must for Better Profits So if most restaurants struggle with one or more of these retention issues, why is it so important to combat employee turnover within your four walls? Because missing the mark on keeping your staff happy can be extremely costly—monetarily and otherwise. Here are a few specific ways you can benefit from prioritizing employee retention.
Cost-savings Addressing employee retention directly leads to significant savings, including lower recruitment, training, and operational costs. Here’s a breakdown:
Lower recruitment and training costs: Replacing an hourly employee can cost over $5,800 in training and onboarding. Consider the bill for replacing 70% of your staff each year; you might get lightheaded. Longer tenure employees add more value: Experienced staff require less supervision, make fewer mistakes, and improve service quality. These benefits often lead to increased profits and make your entire restaurant run more efficiently.Seasoned employees = less waste: Whether that’s time spent recruiting and training, or less food waste due to incorrect orders, seasoned employees will save you significant time and money.Higher Productivity & Efficiency When your employees feel valued, they are more motivated, efficient, and generally happier—a plus for both your employees and guests. Not only are valued staff more likely to go the extra mile during their shifts, but well-trained staff can handle high-stress situations more effectively, reducing errors and speeding up service. Research from Gallup shows that a 10% improvement in employee engagement can boost guest satisfaction by as much as 22%.
Showing your employees that they are the essence of what keeps your restaurant running and your guests happy is easier than you may think. Here are a few ideas of how to show your staff you appreciate them if you need a starting point.
Consistent Guest Experiences Long-term employees help build rapport with regulars, contributing to guest loyalty. Building relationships with regulars is important, and staff who stick around can really elevate the guest experience by remembering small details about them and continuing to engage with them during each visit.
Additionally, familiarity with systems, procedures, and menus ensures a more reliable and consistent dining experience. This is an incredibly noticeable difference between a seasoned professional and a server-in-training, and when prioritized, will keep your guests coming back again and again.
3 Examples of How Leading Restaurants Retain Employees There are plenty of restaurants that do employee retention right. Here are a few examples of restaurants that push the envelope and tactics you can emulate at your restaurant to keep your staff more than satisfied.
1. Chipotle Chipotle prides itself on having fresh, healthy ingredients and going above and beyond to keep its staff happy. With over 3,500 restaurants worldwide, that’s no small feat. Here are some of the ways they are making their staff feel appreciated:
Development Programs: Chipotle invests heavily in career development with clear career paths and internal promotions for both hourly and salaried employees. They even offer a “Restaurateur” program, where staff can work their way up to a six-figure salary in as little as three and a half years. Nearly 90% of Chipotle’s current restaurant leadership also started as crew members. Benefits: Chipotle offers competitive pay, paid time off, 401K matching, quarterly bonuses, healthcare coverage, gym membership discounts, and even tuition assistance.Impact: Chipotle’s hourly employee turnover impressively dropped by nearly 10% in 2023, reaching a historical low for the company and positively affecting the restaurant’s bottom line. 2. Union Square Hospitality As a restaurant and event group in New York, Union Square Hospitality Group knows that the competition is hot to attract guests and employees that provide exceptional guest experiences. Here are some highlights of how they’re attracting and keeping their staff:
Hospitality Included Initiative: Historically, USHG instated the Hospitality Included Initiative, which eliminated tipping at their restaurants, instead using a salary-based compensation model to ensure more predictable income and job satisfaction for their employees. Since the pandemic, however, they’ve shifted to allow tipping in the front of house, significantly raising the starting salary of managers and back-of-house hourly wages. These changes prove that USHG is putting effort into keeping their staff happy and adjusting when necessary. Focus on Culture: Danny Meyer’s focus on “enlightened hospitality,” which puts employees first rather than following the traditional “the customer is always right” ideology, sets a strong foundation for retention. The concept is meant to empower staff to impact guests through creating an experience in a guest’s life, not just provide a service. Impact: The restaurant group has some of the lowest turnover rates in the industry, leading to more consistent service, higher guest satisfaction scores, and fewer wasted resources on staffing.3. Lettuce Entertain You As a private, family-run company, Lettuce Entertain You focuses on treating its employees as its greatest assets. Here’s how:
Flexible Scheduling & Benefits: LEY offers flexible scheduling to create work-life balance, along with competitive benefits, including health insurance, paid time off, a retirement plan, leaves of absence, marriage and divorce assistance, and holiday pay. Lettuce Help You Fund: Non-supervisory employees can donate a small portion of their paycheck to help fellow employees in need. A committee of peers then awards anonymous employees who are facing financial hardship with grants. This “all-for-one” mentality helps to strengthen employee bonds.Training & Development: LEY puts an emphasis on continuous training programs to build employees’ skills, promote from within, and encourage lifelong careers at their company.Impact: These initiatives have significantly reduced turnover and increased profitability, as evidenced by internal statements and industry reports. LEY is also ranked in the top 20 best restaurant companies to work for by Inhersight, a testament to its stellar retention efforts. Employee Retention is the New Black Creating a restaurant environment that encourages staff to stick around is your best asset in overcoming any and all obstacles. The people you hire—from your front-of-house waiters and hosts to your back-of-house cooks and dishwashers—should be treated as an investment. The more you put in, the more you’ll get in return.
There’s proof in the pudding: Improving employee retention leads to measurable profit, productivity, and guest satisfaction gains. All it takes from your end is investment in retention strategies, like development programs, competitive benefits, and a supportive work culture.
Additionally, leveraging technology to make employees more productive and successful can further strengthen these efforts by allowing your staff to devote their full attention to your guests. This creates a win-win situation for both employees and your restaurant, so look into ways technology can help enhance your guest experience .
Slang AI helps countless restaurants automate phone calls to boost staff productivity and capture more revenue. Book a 10-minute demo today to see how it works.
