Labor Shortages in the Restaurant Industry

Now Hiring: Restaurant Turnover & Retention

The foodservice industry's high turnover rate likely isn't news to experienced hospitality workers or employers. With so many restaurants and an improving economy, servers and chefs are more willing to take chances for the tempting possibility of better pay or a more pleasant work environment. In 2020, with the advent of the COVID-19 pandemic, the turnover rate for the hospitality sector was a staggering 130.7 percent,1 forcing operators to replace their entire workforce more than once on average during that year. Even in 2019, though, the turnover rate was 78.9 percent, showing that the restaurant workforce is incredibly volatile even without a pandemic upsetting the normal order. And the turnover rate only tells half the story: replacements for staff who leave are getting harder and harder to find.

Restaurant Labor Shortage: Table of Contents

The True Cost of Restaurant Turnover Rates

Replacing an employee costs time, money, and attention that operators wish they could spend elsewhere. In addition to job postings and interviews leeching time from other tasks, you will have to manage shift coverage until a new hire is found and trained. According to Gallup,2 replacing an employee costs operators a significant sum, with tangible costs ranging between 50 and 200 percent of the employee's yearly salary for each new hire. This includes the cost of hiring and training a new employee as well as the productivity loss the business deals with while down a worker and training a new one.

To put that in more concrete terms, it could cost your business about $3,328 to replace each $10/hour employee, and that's assuming you can find a replacement at all. The improving job market has given workers more freedom to be picky about where they work, forcing some restaurants to make hard decisions like reducing open hours3 due to the labor shortage.

The foodservice industry gets to add an extra layer of complication to the cost of turnover. Return customers come back to a restaurant expecting a similar experience, and constantly replacing employees lessens your chances of being able to achieve the consistency those returning customers desire. You also must consider the lost production and food quality your business incurs while coverage is stretched thin, as well as waste that might be produced due to a new employee's blunders. These drawbacks are nearly impossible to measure but could make turnover costs even higher.

Restaurant Employee Retention: Reducing Turnover

With rising wages and thinner margins, restaurants are facing difficult staffing challenges and retaining valuable employees is more important than ever. One of the most common reasons employees leave one job for another is to pursue better pay, so it can pay off in the long run to ensure your restaurant's wages are competitive with other businesses in your area. Benefits such as health insurance and vacation time also can go a long way toward keeping your employees. However, many independent businesses can't afford to offer benefits like these, which makes retaining good workers especially challenging.

Low-cost restaurant employee retention tactics

There are some nonmonetary ways to make your business a place people want to work, but the first step should always be to try and understand what your employees actually think. Be sure to encourage feedback from employees, which enables you to address problems before they start costing you workers. To learn about other areas where you might have room for improvement, you can conduct exit interviews with everyone who leaves. Already on their way out the door, they should feel more liberty to be completely forthcoming. Just be sure you're ready for their honesty and take any criticism as an opportunity for improvement.

Though the effects of the pandemic are waning slowly, the restaurant industry is still hurting,4 and we're all but guaranteed to face additional waves of COVID-19 variants or entirely different infectious pathogens. Protecting your employees from disease is vital for their safety, but also for your business. Safety concerns weigh heavily on the minds of restaurant employees, so offering a safe place to work could tip the scales in your favor.

Training and development shows your employees that you're invested in them, that you believe in them, and that you want them to have a future at your establishment. That's on top of the benefit of having better-trained workers.

Restaurant workers have notoriously tricky schedules – with late nights and early mornings, multiple shifts in a row, and long weekends, the work week for a server or a chef looks very different from the standard nine-to-five. Offering stable schedules can help your employees create a strong work-to-life balance that greatly improves their satisfaction with the job.

Another tactic many restaurants are utilizing in the fight to keep the best workers is employee incentive packages. These programs might include monetary bonuses or other gifts. Bryan King,5 owner of 12 Bones Smokehouse in Asheville, N.C., goes out of his way to make his employees feel appreciated with birthday cakes, free work shoes, and three weeks of paid vacation when the restaurant closes for the holidays each winter, resulting in a low turnover at his restaurant.

Overall, you need to determine what's most important to your workers and prospective workers. With other sectors of the economy, especially shipping and logistics, you need to be able to offer something that other jobs can't. If your employees feel comfortable, respected, and safe, you'll have a good baseline to begin growing.

Hiring Restaurant Workers for the Long Haul

Employee retention starts from the very beginning of a worker's time with your business. Hiring the right people to begin with will decrease the likelihood of replacing them, but it can be difficult to tell from an application and one half-hour interview who will be a good fit for your company. Below are some ways to attract the right people to your company and reduce your overall turnover rate.

  • Know what you are looking for6 before you ever post a job listing. Create a detailed job description and include it in your listing to help weed out uninterested parties before you spend time reading their applications.
  • Optimize your job postings.7 Include wording that conveys the culture of your restaurant to attract people who will fit in with and enjoy it; be sure to mention any incentives, like higher-than-average wages or flexible schedules.
  • Reach out to your existing fans on social media. These people likely already know your brand and can anticipate what they may encounter working there. If you don't have a large following on social media, you also can use targeted ads to let people in your area know you're seeking applicants.

References

  1. Restaurants Can Boost 90-day Employee Retention 43 Percent. QSR Magazine. Accessed November 2021.
  2. This Fixable Problem Costs U.S. Businesses $1 Trillion. Gallup. Accessed November 2021.
  3. Independent Restaurants Are Being Crushed by the Labor Shortage. Business Insider. Accessed November 2021.
  4. The Missing Puzzle Piece of the Workforce Crisis. QSR Magazine. Accessed November 2021.
  5. Asheville Restaurants Face Labor Shortage. Citizen Times. Accessed November 2021.
  6. 5 Ways Hiring Managers Can Combat the Hiring Crisis. Restaurant.org. Accessed November 2021.
  7. 7 Elements of Compelling Job Postings. Restaurant Hospitality. Accessed November 2021.