June 7

The Hidden Costs of Restaurant Turnover

0  comments

It may not be noticeable, but the time you take to replace an employee is a considerable expense to your restaurant business.

For far too long high employee turnover in the hospitality industry has been one pain point we’ve learned to live with. But, when you look closer at the time you spend in the hiring process, the strain you put on your existing employees, down to the customer experience when short-staffed — turnover is the secret knife bleeding your business dry.

In two recent surveys, we asked our employer audience about their hiring frequency and found that 63.9% are hiring every 1-3 months, and 47.4% of employers bring in ten or more new employees each year. Turnover at this rate is expensive and concerning — especially when the average employee tenure in other industries is about 4 years.

In a report published by Cornell University, turnover in the hospitality industry can be broken down into five categories that make up the total cost of an employee leaving:

  • Pre-departure (3%): The costs of an employee giving notice. These are mainly soft costs in the form of the time you spend performing exit interviews, filing unemployment (if needed), and any other procedures for when a worker is leaving.
  • Recruiting (20%): The hard costs of advertising your open positions on job boards, promoting on social media, and purchasing signs. Recruiting also involves soft costs, like the time spent writing job descriptions and setting up a job post.
  • Selection (11%): The hard and soft costs of choosing candidates. This involves scheduling and performing interviews, bringing candidates in for stages or working interviews (which legally should be paid), background checks, and reference checks.
  • Orientation and training (14%): The costs of bringing a new hire up to speed. Depending on your establishment, there are hard costs like videos and other training materials and soft costs like the time spent onboarding and training a new hire.
  • Productivity loss (52%): This is the highest cost to turnover, yet the hardest to assess. Productivity losses result in revenue loss and come from multiple avenues. It can accrue from employees leaving who are less productive in their final days, new hires that need time in training, and existing employees who take on more responsibility when training, or worse — burnout from the burden of covering for gaps in schedules.

After checking all the possible outlets that turnover costs you, the total comes to around $5,864 per employee — and that’s on the low end! At the rate which many hospitality employers are hiring, that’s an unforgivable amount of revenue lost to poorly managed retention strategies.

It doesn’t have to be this way.

By focusing on increasing employee retention, you can cut back on the price of turnover, manage burnout rates of your existing team and keep productivity high at your restaurant.

Employee retention comes from hiring the right people in the first place. This can be difficult with traditional hiring methods because an interview and perhaps a single working interview isn’t enough time to get to know how someone works and to see if they’d be a good fit and vice versa.

Not to mention, you’re still short-staffed during the time you’re reviewing resumes, interviewing, and then making a hire with no guarantee they will last more than 30 days. That is why our newest tool, Poached Shifts, is invaluable for employers looking to increase their retention rates.

By posting individual shifts and booking our network of skilled workers — you can take your time in the hiring process to ensure you’re bringing in the right people and increase the chances that they will stick around much longer.

There are no upfront costs to posting shifts, and you only pay after the shift has been worked. Then you pay the hourly rate, plus a flat $39 service fee per worker and shift worked. The service fee goes toward our ability to promote and fill your shift quickly, and offer Occupational Accident Insurance to workers.

By booking workers, employers can genuinely see how their candidates perform on the job by scheduling those same people over a series of shifts. After a week or two of working with the same people, both the employer and worker can better decide if they’d truly be happy working together in the long run. And, there are no additional costs when hiring someone from Poached Shifts.

Poached Shifts was built to help employers combat the chronic turnover plaguing our industry, likely since the days of the first restaurants! You can also rest easy knowing that all workers are paid fairly with no fees passed onto them.

So if you’re struggling to staff up, don’t wait any longer — schedule a Virtual Demo to learn more about how Poached Shifts can help your business.

About the author

Ashley

Ashley McNally likes to cook, loves to bake, and is always dreaming of her next meal. With over 13 years of experience working in various roles within a restaurant — McNally has made a home in hospitality.


Tags


You may also like

Hire Faster, Hire Better. 

>