How to Reduce Restaurant Employee Turnover

The annual restaurant employee turnover rate reached an all-time high of 75% in early 2019, meaning almost three quarters of restaurant employees are unlikely to stay in their jobs for a whole year. Our restaurant teams are in a rough state of affairs, friends.

Although higher-paying roles and an increase in employer options are the most common reasons for turnover right now, many restaurant staff, in both front and back of house, leave simply because they don't enjoy their work environments — and, in the current labor market, it’s easy to find a better one.

In the 2019 Restaurant Success Report, we learned reducing restaurant employee turnover is on more than half of restaurateurs’ minds: 51% of restaurateurs ranked hiring staff as a top challenge, with training staff and retaining staff close behind at 35% and 31%.

Facing one of the most severe labor shortages in decades, restaurants are trying any measure that’ll help them keep their staff, from implementing new management models to offering bonuses, childcare, and other employee benefits.

If restaurant owners and managers can’t reduce staff turnover, it could cost big bucks for business. So what are we going to do about it? In this how-to guide about reducing restaurant employee turnover, we’ll cover a lot, but here’s the summary. You’ll learn:

• What restaurant employee turnover is 
• How a high employee turnover rate affects your restaurant’s operations 
• How to identify the root causes of employee turnover in your restaurant 
• Specific ways to reduce employee turnover in your restaurant

First thing’s first.

What Is Restaurant Employee Turnover?

The term “restaurant employee turnover” refers to the situation when an employee leaves their position at a restaurant to seek employment elsewhere. Turnover rate refers to how frequently employees leave their jobs. If you have an annual turnover rate of 50%, that means the number of people you hired that year is equal to half of your staff.

Say you started the year with 20 employees. If your restaurant has an average employee turnover rate of 75%, that means approximately 15 of the original team members you started the year with left before the year’s end. With the cost of replacing an hourly employee averaging $6,000, that turnover would have cost your business $90,000. For restaurant owners with a large staff, you could be spending into the six-digits every year.

How Employee Turnover Impacts Team Culture

When you lose a member of your restaurant staff, you’ll typically see an immediate impact on service quality. With one fewer front-of-house staff member, sections become bigger, a spare second to run food or drinks is harder to come by, and the payment process might slow down. With one fewer back-of-house team member, additional responsibilities on the line will be added to staff members’ plates, extra shifts will need to be accounted for, and fewer staff members to fulfill the same number of tickets can cause a bottleneck.

If the staff member who left was a longstanding, experienced member of your team, you’re losing an invaluable knowledge base, a trainer for new employees, and a person with a high comfort level with their role, responsibilities, and your customers. Unless you’ve already established a clear restaurant training manual and succession plan, getting other staff members operating at the level of your experienced staff member is time consuming and often can’t be rushed. In the interim, customers often notice the void, and your guest reviews might suffer.

Another possible repercussion of restaurant employee turnover is that those left behind might question their own status and might even experience a sense of loss. Plus, picking up additional responsibilities while an open spot is filled could result in those workers feeling stressed and resentful.

It’s not uncommon to see a spike in your employee turnover rate when one or more employees leave. One person taking the plunge can be convincing for others who were on the fence or their friends on staff. Employee turnover also tends to spike around the holidays.

As this chart from Nation’s Restaurant News illustrates, some restaurant roles are more difficult to replace than others. Compare your restaurant against these national statistics — do things look simil

How to Figure Out Why You Have a High Restaurant Employee Turnover Rate

Restaurant employee turnover looks different for different businesses. To reduce employee turnover in your restaurant, take a look at your employee turnover history and answer the following questions:

• Which positions have the highest turnover rate? 
• Which positions have been easiest to fill? Which have been the hardest? 
• On average, how long does it take to fill a front-of-house position? How about back-of-house? Or management? 
• Which positions have the shortest tenure? Which have the longest?

To get accurate answers, you’re going to need a mix of data and anecdotal insights from your restaurant’s management, staff, and employees who have left.

Start with a spreadsheet of every employee who’s been on staff this year, whether they’re still employed at your restaurant or not. Here’s what to put in each column:

• Column 1: Their name 
• Column 2: Their title 
• Column 3: Which area of the restaurant they worked in (front of house, back of house, back office, etc.) 
• Column 4: Their start date 
• Column 5: Their end date (if applicable) 
• Column 6: Any recorded infractions or warnings 
• Column 7: Any promotions or accolades 
• Column 8: Notes

After you’ve filled in your spreadsheet with the necessary information, it’s time to analyze. Do any trends emerge? These trends will highlight areas where you should be focusing your efforts by showing which areas of your restaurant are doing an especially great or bad job retaining staff. Maybe you notice you’ve lost a lot of your original bar staff but your back of house has stayed consistent. What’s the back of house doing well that makes staff want to stay long term? What’s the bar team failing to do?

Next, have honest conversations with your entire staff. Working your way down the list, have a meeting with every current and past staff member.

For those currently on staff, ask them about their experiences working in your restaurant: what they think management’s doing well, areas where they can improve, and specific things you could offer to keep them around long term, like employee benefits, skills training, or a gratuity-free compensation structure. Ask for specific answers and examples, and stress that the conversation will not leave the four walls of your office.

For past staff members, ask why they chose to leave your restaurant. Was it for better compensation at a new restaurant? Was it the culture? Did they feel they had the opportunity to advance their career in hospitality? Though these conversations may be hard to hear, they’re necessary to figure out what’s contributing to your restaurant’s employee turnover problem.

Once you’ve completed your interviews, start looking for trends. If multiple staff members mentioned they didn’t see working at your restaurant as a good long-term option but more a stepping stone, it’s worth exploring how you can incorporate more career advancement opportunities and hospitality-skills-based learning. If multiple staff members mentioned they’re having a hard time juggling shifts with at-home responsibilities, consider expanding your employee benefits or reevaluating your scheduling practices.

Next, create a list of the trends you’ve identified and sit down with the other members of your management team to come up with an action plan. Organize a follow-up meeting with your entire staff to let them know what you’ve learned, how you plan to address it, and that you encourage their honest feedback throughout the process. Conversations like this can be sensitive to navigate but, if done well, will leave everyone feeling the good feels.

How to Prevent Restaurant Employee Turnover

Now that you’ve identified your problem areas and dug into the reasons why staff are choosing to leave, identify 3-5 specific areas to focus on improving, based on what your staff has highlighted as important to their workplace happiness. (Workplace happiness refers to how satisfied and fulfilled an individual feels working in their current role. It’s pretty dang important.)

What you’ll likely come to find is that people will stick around if you give them a reason to, meaning if you make your restaurant a workplace that people are excited to come to each day, feel appreciated in, feel aligned with your mission and purpose, and see the value that working in your restaurant has on their personal and professional lives, they’ll want to be a part of what you’ve got going on for the long term.

A recent Deloitte Insights study revealed that fewer than 10% of employees are very satisfied with the human elements of work, known as the “employee experience.” This means that something in their environment — people, work conditions, training, or processes — is causing them to dislike their jobs.

Quoted in the Michelin Guide, Josh Phillips, general manager of Washington, DC-based Espita Mezcaleria, said: "There is free agent mentality among many workers. They are essentially shopping around for the right restaurant to call home. There is always someone hiring, so if you are not 100% satisfied with your job, the grass is always greener somewhere else."

Though the specifics will differ from restaurant to restaurant, today’s job seekers are looking for more than competitive compensation when evaluating potential job opportunities.

Here’s how to up-level your workplace and reduce restaurant employee turnover by keeping your restaurant staff fulfilled, engaged, and committed.

1. Provide on-the-job skills training

One of the primary reasons restaurant employees look for new jobs is that they want more mentorship and training (in the case of younger workers) to help them take their careers in hospitality to the next level.

This year’s Restaurant Success Report survey included a section on how restaurant operators train their new hires. Shockingly, 70% offer no training at all. Only 19% of restaurant managers make online training available, and fewer than 40% check in with new hires to get a sense of how they’re doing in their new jobs.

All humans need help and support, especially when we’re learning something new. Handing a new staff member your employee handbook and expecting them to master a role isn’t enough. Providing workers with the training, support, and feedback they need to do their personal bests can help reduce turnover in the long-run. And we get it — it takes extra time and investment to provide training and support like this, but believe us‚ it’s well worth it to set your team members up for success.

Great team training doesn’t need to involve classrooms and break rooms. Smartphones and tablets can now serve as powerful tools in the onboarding and training process. In fact, today’s staff prefer to use online or mobile tools to learn instead of workbooks or print-outs.

Here are some digital hospitality skills training resources to consider:

• BarSmarts by Pernod Ricard
• Typsy
• ServSafe

2. Offer meaningful employee benefits.

One way to show your team you care about their wellbeing, both inside and outside the restaurant, is to offer employee benefits that improve the quality of their lives. Health, dental, and vision insurance are the most common — and usually most valued — ways to enhance compensation. This breakdown is from Toast’s 2019 Restaurant Success Report.

This guide to restaurant employee benefits will help you make decisions about how and when to offer benefits to your employees. Stay on top of what other local restaurants are offering their team members so you remain competitive. Choose benefits based on the needs of your best performers.

The investment in offering benefits to employees will pay off in the long-run in reducing turnover. Why? Because the cost of offering benefits is typically less than the cost of continuously replacing top performers. For more insights into why benefits matter, look to our recent coverage of the topic.

3. Develop a safe, supportive workplace culture.

Stress in the restaurant industry is pretty bad. Employees believe work is more stressful now than a decade ago, and 80% of workers feel pressured at their jobs, according to the American Institute of Stress. Restaurant work has been reported to be one of the most stressful jobs — even more than being a brain surgeon.

Unfortunately, the way our industry is depicted in television, movies, and the media isn’t doing much to help our reputation. Hot-headed owners, consultants, chefs, and other restaurant leaders have made it seem like working in a restaurant involves a lot of hierarchy, yelling, cursing, belittling, and unhealthy coping mechanisms. While this may make for good TV, it perpetuates an unsafe, toxic workplace culture that directly contributes to the restaurant employee turnover problem we’re trying to solve. What’s especially interesting about this unhealthy approach to running a restaurant is that it’s devoid of any real… hospitality.

Restaurant consultant Donald Burns stresses the importance of delighting both your external guests (your customers) and your internal guests (your staff members) with the same warm, genuine, welcoming hospitality.

“All restaurants have two customers: internal and external. We focus so much on doing all that we can to turn the external customer (or guest) into raving fans that we lose sight of a vibrant, vital customer base right in front of us… our teams. Why divert your focus from external customers and invest your time into turning your team into brand advocates? As with any investment, you’re looking for a return, and the stats don’t lie: Gallup's meta-analysis of employee engagement shows that businesses with high employee engagement have 28% less internal theft or shrinkage and 21% higher productivity.” That’s a huge difference to your bottom line.

Make your staff feel as welcome, safe, supported, and appreciated as your guests do.

4. Create an employee incentive program.

An employee incentive program is an incredibly effective, low-cost way to motivate your staff during a shift. A step down from employee benefits, employee incentives reward stellar on-the-clock performance with perks like extra breaks, a reserved parking spot for a week, an extra day off, or a week free of sidework. 

To create an employee incentive program in your restaurant, start by taking a look at your restaurant’s short- and long-term goals as well as any operational obstacles you’re faced with overcoming right now. Are you trying to surpass a certain amount of sales this month? Do you want to reach a certain follower count on social media? Do you need help finding quality candidates to fill open spots on staff? Next, spend some time with the rest of your restaurant’s management team thinking through how you could engage your staff to either overcome the obstacle or achieve your goal. 

Say you prioritize sourcing candidates for open roles in your restaurant. You could start a quarterly contest where staff are incentivized to refer friends, family, and others in their networks by rewarding 10 or more referrals. Reward staff with the option of the first cut for an upcoming shift or a monetary bonus. 

A restaurant employee referral program encourages employee participation through meaningful rewards which, in turn, will incentivize your staff to stay longer, motivate them get through crunch times, and translate their happiness into delivering amazing dining experiences for every guest.  

5. Offer flexible work hours.

The restaurant industry doesn’t make it easy to maintain work-life balance. Scheduling shifts that work with employees’ needs isn’t always possible, but it can play a huge role in job satisfaction and retention. A mother of two who needs to juggle school drop-offs and extracurriculars might not be able to work a Sunday night or Tuesday evening shift to accommodate her children’s schedules. Try to make life a little easier for her.

Your employees are also bound to have strong feelings about which shifts or sections bring the highest pay-off; these opinions can sometimes influence their availability. For example, if Thursday lunch is a traditionally slow shift, the amount a front-of-house staff member makes may not offset transportation costs like gas or public transit, so they won’t see the value in working it. 

Respect your employees’ availability when scheduling and solicit their feedback to understand why you might be lacking available employees for certain shifts. 

The data available in your restaurant technology’s reporting and analytics can be used to identify peak shifts and staff accordingly. It can also be used to uncover the sales performance of each individual front-of-house staff member, which should influence how you approach employee scheduling. 

Here’s that transparency thing again. Talk about why employees are assigned to certain sections or certain shifts with your team as well as why you’ve chosen a tip out or tip pooling method. These conversations build trust and healthy relationships with your staff.

6. Prioritize and encourage professional development.

Your main job as a restaurant owner or manager is to help your team members grow — in their current roles, into their future roles, in their skill development, and even further on into their careers. If you can show an employee you care about their long-term career success, they’ll stick with you. Even if that success lies outside your business or the restaurant industry as a whole.

Ask your team members where they hope to take their careers. If one of your servers wants to move into a manager role, have them shadow your best GM. If your head bartender wants to open up their own restaurant five years from now, show them how you manage the books. Help your team members take on new responsibilities and roles that put them on a path that’s meaningful to them.

Managers and operators can play a huge role in creating work environments that people are psyched to go to every day. You have little control over rude customers or the long line of hungry take-out customers, but being a supportive and calm leader can defuse stress and help the team find a solution in the midst of madness. If you approach each situation with a level head and positive reinforcement, reward restaurant staff with employee incentives, and model the behaviors you’d like to see, your employees will respect and trust you, perform better, and stay longer in their jobs.

Andrei Stern, CFO and co-founder of SuViche, in Miami, Fl, a Toast customer, goes beyond offering professional development to motivating staff with goals and bonuses. This helps Andrei reduce staff turnover.

There are also less traditional tactics for employee growth. Meatheads, a burger joint based in Chicago, identifies non-native English speaking leaders in their restaurant and send then to English classes to give workers the opportunity to develop from dishwashers to general managers. Additionally, this has allowed Meatheads to keep employee turnover below 30%.

7. Offer competitive compensation.

Being happy and supported in a restaurant job is important, but so is paying the rent.

The 2019 Restaurant Success Report surveyed owners on how they compensate workers, helping them stand apart from their competitors and attract the best talent. Getting a clear understanding of what your local competitors are offering and what’s of greatest importance to your most valued team members is critical.

Tipping policies can be contentious. Here are the two most common ways restaurants use a gratuity-based employment model: 

1. Tipping out – Waitstaff and bartenders collect the tips throughout their shifts and then distribute a percentage to hosts, bussers, expeditors, and anyone else who may have assisted them throughout the day. The server or bartender who originally earned the tips takes home the majority.
   
   

2. Pooled tipping – Pooled tipping takes the amount of tips earned during a shift and divides it evenly among everyone who worked that shift and is tip-eligible.

The restaurant industry’s historic battle with tipping models doesn’t work for everyone on staff. Many wouldn’t consider tips a part of “competitive compensation.” As the chart below shows, some restaurants are trying a no-tipping policy to attempt to even the playing field for their teams. 

This compensation structure has been met by a mixed reception by both diners and restaurant staff. High performing front-of-house staff will sometimes balk at sharing their tips with less-experienced staff. And as Eater has noted, tipping practices can be problematic to already-underserved populations. Also, many customers want the ability to reward service at different levels. You have many options and no clear-cut answer. The only way to figure out what works best is to try different methods. 

How you pay your employees depends on many factors and can vary widely in the restaurant industry, from state to state and region to region. It will depend on your business model, your margins, your legal wage obligations, and your philosophy on gratuities. These restaurant-specific wage and payment tools can help you evaluate your own pay structure and make adjustments if you’re finding that compensation is the reason why employees are choosing to leave.

Beating Restaurant Employee Turnover, Together

Employee turnover is a reality of all businesses, not just the restaurant industry. But by hiring, onboarding, rewarding, leading, and off-boarding your team effectively, you can reduce that turnover number for your business.

Look to restaurants like Pal’s (which has been praised for its “absurdly low” turnover rates) for inspiration, use your technology and tools to create ideal staffing models (that work for both you and your employees), take a close look at your compensation and reward structures, and above all, don’t ignore the employee experience as part of how you run your business. 

Fixing an industry-wide problem like this is a team effort. Share your challenges and learnings with other restaurant professionals to help our community beat staff turnover together. Found an employee retention strategy that works great? Or a new incentive model that kicks butt? Great. Let us know and we’ll share it. Creating workplaces that people love can be a powerful thing for the strength of an industry.

Related Resources

• Restaurant Business Plan
• Cost to Open a Restaurant
• Restaurant Licenses and Permits
• Restaurant POS System Cost
• Restaurant POS Systems
• Best Free Restaurant POS Software