Failure to Launch: The Restaurant Industry’s Inability to Retain Staff
Updated: Mar 10
By Andrew Parr
The restaurant industry suffers from 73% annual turnover (don’t even get me started on the numbers through the pandemic) the average line level employee’s tenure being only 56 days long. These numbers are devastating in terms of a broad stroke understanding of the restaurant business culture, a company’s inability to connect its employees to its WHY and crushing financial ramifications. This downward spiral of mortal existence begins on day one with onboarding. Employees are immediately treated like the Dollar Store ball point pen they are given to fill out their paperwork; disposable and replaceable.
Research into the onboarding process show significant gaps. Only 12% of employees surveyed by Gallup believe they were onboarded well. That coupled with research by Glassdoor showing a strong onboarding program leads to 82% better employee retention speaks volumes. With already incredibly high restaurant industry turnover, we see why it starts on day one.
You know the cliché scenario, that day you are told to come in at 4:00 pm on a Wednesday to complete your paperwork before your shift starts. Invariably, the restaurant is going through shift change, the staff is stretched thin as the PM crew begins to meander in, the manager is taking the final AM drops and changing out the bar drawer; oh, and there is an unexpected happy hour crowd. The manager looks at you and says, “it’s too busy to complete your paperwork now, let’s take care of it after volume decline.” You know what happens from here — you’ve seen this movie before — dinner rush goes late, the manager isn’t in the mood to complete your paperwork, and they say, “let’s do it tomorrow.” Guess what; that manager is off tomorrow, and before you know it payroll needs to be processed and the administrative assistant is calling you frantically at 8:00 on an already dreary Monday morning asking you to recall every hour you worked over the last pay period because you were never entered into the system. That, my friends, it the first impression your employee has of your organization. Worse yet, a bad onboarding experience leaves employees 2X more likely to look for another job. Your new hire hasn’t even received their first paycheck yet, and they are already looking for employment elsewhere.
The cost of restaurant employee turnover is financially devastating in terms of both hard and soft costs. Cornell’s Center for Hospitality Research reports the average cost for line level employee turnover is just short of $6,000 per employee. The expenses involved include recruiting, selection, orientation & training and productivity loss. A study conducted by Black Box Intelligence showed the expense of losing a restaurant manager is upwards of $14,000 per manager. This means, if you suffer from the industry average of 73% turnover, and you maintain a staff of 50 line-level employees, you will replace 37 of them over the course of one year at a cost of $222,000. If you need to replace two managers, add almost $28,000 to that for a total of $250,000. If you are fortunate to own and operate four different locations all at the industry average for turnover, your cost annually is $1,000,000. $1,000,000!
According to the Human Capital Institute, most businesses focus on only the first week of onboarding, and 58% say their program is primarily focused on paperwork and process. It is imperative to change the typical onboarding process. The primary focus needs to be connecting your new employees to the WHY of the business. Introduce employees to the culture and the brand and make that connection. Is paperwork important — of course it is, but that should not be the most significant component of onboarding a new employee.
Restaurant Onboarding needs to focus on engagement, excitement and a sense of purpose through real human connections. The way to foster a high engagement mark is through staggeringly impressive content which is easy to access and take action from. Building lasting peer and leadership relationships will significantly improve retention, as will always educating staff on WHY, in order to build and maintain their sense of purpose. Whether you want your employees to hop on the bus, drink the Kool-Aid, or bite the proverbial apple; a highly curated and well executed onboarding program is your pathway there. By helping your new restaurant employee from their very first day to know your WHY, feel their purpose in the business & community, and bask in the glow of your brand, you will develop a deeply committed and loyal contributor who is a strong cultural fit for the team with the expectation of a long-lasting and productive tenure. The time is now to evolve your entire restaurant hiring process; what’s next?
Andrew Parr, Angry Olive Consulting's Founder, is a restaurant and hospitality industry leader with over 25 years of experience including consulting, project management, restaurant operations and talent acquisition. His education includes a BA in Psychology and History from the University of Wisconsin along with a JD from Hamline University School of Law.
Andrew was born and raised in Milwaukee, WI, and currently resides in Denver with his wife Jody and their dog Cooper. Andrew is a Past President of the Board of Directors for the Scleroderma Foundation – Rocky Mountain Chapter.