How Turnover at Your Restaurant Is Costing You Money

By: Matthew Griffith

Your favorite server just quit.

The line cook you thought would be with you forever is moving away.

It’s sad and frustrating, but employee turnover also can cost you a lot of money.

Between the cost of hours lost to interviewing, of advertising the position, of training a new staff person, of accounting for early mistakes, and the loss of customers from temporary decreased customer service (or the cost of overtime to balance it out), nearly $6,000 goes right down the drain every time someone walks out your door for the last time.

And the trouble is, these costs are nearly invisible on your balance sheet. But that doesn’t mean they aren’t there.

The good news is, there are at least five ways to retain your employees longer and keep this type of labor costs to a minimum.

  1. Hire smarter.

Part of the magic behind finding a great hire is being clear upfront about what the position entails, including hours, physical labor, and any goals you may set. And doing that in the advertisement will save you from wasting time in the interview stage.

Once at the interview stage, what you ask potential employees is crucial, but so is giving them a sense of how you operate. Have a peer-level employee give serious applicants a tour. They may ask questions they wouldn’t otherwise with manager in earshot.

 

  1. Train better.

According to Little Caesars’ Manager of National Training Jeff Drozdowski, the pizza chain had a company-wide turnover rate of 170% in 2006. After instituting a comprehensive training program, their turnover dropped to 80%, an unheard-of level for quick service restaurants in America.

Better trained employees and managers save you money in many ways other than turnover as well. When efficiency and customer service improve, profits improve. Investing the time (and money) upfront during onboarding — and then refreshing on a regular basis as procedures change — can save you much more down the road.

 

  1. Reward and recognize.

A great way to start your decision-making on rewards for employees by asking them what is most meaningful to them. Cash is always likely to be a popular answer, but you may be surprised by what else is important to your staff, from paid time off to gift cards.

Focus recognition at your restaurant on accomplishment — not necessarily longevity. It will motivate productivity and appreciation from your employees. Five years of service can seem unattainable to a member of your kitchen staff, but doing something today that has a positive effect on your business and their team is much more attainable.

Employees want to know how they’re doing, but public recognition doesn’t take the place of one-on-one manager-employee discussion. Sharing feedback can mean the difference between an employee that knows they are valued, and one that will look for that feeling elsewhere.

Have regular discussions with staff that act like mini-check-ins, and ask some of the following questions:

  • “If you could change one thing about your job…”
  • “What’s the one thing you would never change about your job?”
  • “What can I do to make sure you stay happy at your job?”

 

  1. Offer a career path.

Be clear with your employees if there is a career path for their position available in your business. For instance,

Team Member —> Shift Manager —> Assistant Manager —> Manager

Share competencies needed for each position, as well as how the training works to move from one to another. Do not share upfront any information about salaries (because wages will invariably change over time) and timing (as that is likely to depend on the ebb and flow of your management turnover and the need that presents itself as your restaurant hopefully expands).

Do be sure to share success stories of other employees when you have the chance. It may inspire some of your lower level employees to stick it out and work toward a goal!

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