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Restaurant turnover rate is the frequency of how often new employees are hired and when they leave. It is an important matrix to understand because it directly impacts how much profit you make since finding a new employee, training them and the accounting plus time that is required to pay them is a significant expense that comes directly out of your profits. The higher your turn over rate the more money is subtracted from your profits and the lower your turn over rate the more profit you have.
How to Calculate Your Restaurant Turnover Rate
Calculating your restaurant turnover rate requires a relatively simple formula. To find it, divide the number of workers who leave your company by the average number of people you employ.
For example, if you have a staff of 25 and you have 4 people leave over the course of a year, your turnover rate is:
4 / 25 = 16%
Emotional Intelligence toward your employees will make you more money...
11 Steps To Reduce Restaurant Turnover Rates
There are many steps you can take, when addressing how to open a restaurant, in order to reduce the turnover rate of your restaurant.
1. Hire Right
Keeping low turnover starts with hiring. Make sure to have a good interview process to make sure you find employees that will be a good fit for your company and culture and avoid people who only want a short-term job.
2. Train Well
As a business owner, you succeed when your employees succeed. Train them well and they’ll know how to handle difficult situations effectively, including tasks such as restaurant inventory management. That will help them stay less stressed and happy while helping your business perform.
3. Be a Good Paymaster
While finding fulfillment through work is important, the truth is that most people get a job for the money. Always pay your employees on time and make sure to compensate them fairly, offering competitive wages and regular pay increases.
4. Treat Your Employees Well
No one wants to work in a toxic environment, so be sure to treat your employees with kindness and understanding. There’s an old saying that “people don’t quit jobs, they quit bosses,” so don’t be the boss they want to quit.
5. Give Incentives and Rewards
While you should compensate all of your employees well, you should also make sure to reward workers for strong performance. These incentives can help convince your staff to go above and beyond.
6. Schedule Well
One of the difficulties of working in the restaurant industry is that shift scheduling can be irregular and sometimes lead to people working large amounts of time over just a few days. Try to be consistent and fair with your scheduling to keep workers happy.
7. Provide the Ladder for Growth
Many people hope to advance their careers over time, moving up the ladder and increasing their responsibilities and pay. If you provide opportunities for growth, your staff won’t have to leave your company to find that development.
8. Be a Dedicated Team Leader
Being a hands-on team leader is a great way to foster good company culture and show your team that you care about their success. Always be available to help out or lend a friendly ear.
9. Promote a Friendly Work Environment
Whenever possible, do your best to promote a fun, friendly environment. Avoid things that can make the atmosphere negative, such as yelling or getting angry.
10. Conduct Exit Interviews
No matter how well you treat your staff, people will leave your restaurant for other opportunities or personal reasons. Always conduct exit interviews and ask about their time working for you. You can use the answers they provide to improve things for your remaining employees to make sure people stay happy.
11. Thank Your Restaurant Staff
While people usually work to make money to pay their bills, and you should compensate your staff well, don’t discount the power of a simple thank you. Be thankful for your employees because, without them, your restaurant couldn’t operate.
Empathy toward your employees' personal lives creates more job value for them, often more than the money
2 Key Statistics About Restaurant Turnover Rates
If you have looked into the average restaurant profit margin and you’re worried about your turnover rate, here are two essential facts to know.
- Turnover is lowest in states with higher minimum wage. While many people enjoy their work, the primary goal of getting a job is to get paid. Turnover is lower in states with high minimum wages because workers feel more fairly compensated. If you’re in a state with a low minimum wage, paying your staff well can keep them happily employed at your restaurant.
- Front-of-house staff are more likely to turnover. In general, front-of-house staff such as waiters, waitresses, or bussers are more likely to leave their job. While you should take steps to keep turnover low, understand that there will inevitably be some turnover in these roles.
Further Effects For Your Business of a High Turnover Rate
Restaurant turnover is a major problem for business owners. Higher turnover rates are bad for business for a few reasons.
- Restaurant turnover is expensive. Each time an employee leaves, you need to find a new employee to replace them. Once you hire that employee, you need to pay them while they receive training, which can get expensive over time.
- Restaurant turnover causes workplace culture to suffer. Company and workplace culture are essential to any business. Continuity of employees is important to maintaining a culture as newer workers will integrate into the culture your employees have already established. If you have significant turnover, maintaining a consistent culture is difficult.
- Restaurant turnover diminishes workplace performance. Seeing coworkers, especially well-liked ones, can demoralize the remaining staff and reduce performance. It also means stretching your employees and asking them to do more work while you try to replace lost staff, leading to overwork and burnout and reducing performance.
Put simply, having a high turnover rate costs restaurants money, making them less profitable.
Why is Employee Turnover So Prevalent in the Restaurant Industry?
There are a few reasons that turnover is prevalent in restaurants compared to other industries.
One is simply the type of people that restaurants hire. Many companies will hire teenagers and students. For example, if you hire a high school junior, there’s a good chance they’ll leave within a couple of years to go to college. Even hiring a college student means they’ll likely leave after summer break or the end of the semester.
There’s also significant competition for employees in the industry. Think about how many restaurants there are in your town. If your staff hears about better conditions or pay at other restaurants, it’s very easy for them to jump ship to a new job without making any other changes in their lifestyle.
Your employees work-life balance is vital to your businesses success...
The Real Cost of Losing a Single Employee
Losing just a single employee can have a major impact on your restaurant’s bottom line thanks to the costs of hiring and training a replacement and asking other employees to cover the additional work. It’s important to know how to calculate restaurant labor costs to know how turnover affects you.
According to the Cornell Center for Hospitality Research, one front-line employee leaving a restaurant can wind up costing the business an average of $5,864; reducing it will make you money.
When is it Profitable Allowing High Restaurant Turnover Rates?
There’s no hiding that staff turnover costs money. You have to spend money on training and have to worry about maintaining company culture and other intangibles as you get new staff. However, that doesn’t mean you should cling tightly to every member of your staff no matter what.
In some situations, it’s better to let someone leave your business. In the worst scenarios, you may have to let someone go if they aren’t doing their job or creating a negative environment. Having the wrong employees can be worse than handling turnover because of the damage they can do to your brand or.
For example, if you know one of your servers is unhappy working at your restaurant despite efforts to make them happier at work, it might be best to let them go. An unhappy employee interacting directly with customers can create an unwelcoming environment and scare away your clients.
You also shouldn’t try to keep workers who are leaving for better opportunities such as a higher paying job or continuing their education. Being a caring boss who is flexible and excited to help an employee move on to the next step in life will foster a good work environment, which will help keep other employees happy.
If your restaurant needs more money to cover its daily expenses, you might like to consider taking out a restaurant business loan. There are many restaurant funding options available, you can find the most beneficial ones reviewed on our list.