Understanding the Real Financial Impact of Staff Turnover in the Restaurant Industry
Financial Implications of Turnover
In the restaurant industry, employee turnover is more than a mere inconvenience – it's a significant cost factor affecting both finances and team dynamics. Let’s break down how this revolving door syndrome impacts the industry:
Overall Cost:
The hospitality industry faces an average cost of $5,864 per employee due to turnover.
The break down:
Productivity Loss ($3,049.28): An employee's productivity declines once they decide to leave, often weeks before their notice. The interim period, between an employee’s departure and their replacement’s commencement, burdens the remaining staff, leading to reduced productivity.
Pre-departure Costs ($175.92). Expenses related to exit paperwork and interviews after an employee gives notice.
Recruitment Expenses ($1,172.80): Costs for hiring activities, including job description creation, application review, and job advertising.
Selection Process ($645.04): Resources spent on interviewing, reference checks, and background verifications.
Orientation and Training ($820.96): The cost of onboarding new hires, including training and acclimating them to the restaurant's processes and technology.
The aggregate effect of these costs is significant. For instance, replacing a server every two months can cumulatively cost a restaurant around $35,184 annually, a substantial amount that could otherwise be allocated to renovations, marketing, or staff bonuses.
Cultural Impact of High Turnover
Discontent Spreads: When employees are unhappy, their negative feelings can quickly spread to others. This can lower the overall mood and motivation of your team.
Challenges in Building Team Culture: If staff keeps changing often, it's tough to create a strong team spirit. The lack of a stable team makes it harder for employees to feel connected, leading to more dissatisfaction.
Solutions
Make the Right Hiring Decisions:
Avoid hiring solely based on experience or availability. Focus on aligning new hires with your restaurant's values.
Misaligned values can make even experienced employees a poor fit, leading to dissatisfaction and eventual turnover.
Implementing a Values-Based Hiring Approach.
Identify Ideal Traits: Consider which team members you would ‘clone’ due to their exemplary performance.
List Key Traits: Determine the characteristics that make these employees valuable.
Engage Current Staff: Involve your team in defining the restaurant's values.
Refine and Define: Communicate these core values to everyone, ensuring they are a central part of how you hire new team members and introduce them to your restaurant's culture.
Integrate Values: Ensure that these values are not just words, but are actively practiced and visible in every aspect of your restaurant's day-to-day operations.
In conclusion, focusing on these solutions, restaurants can address the root causes of high turnover, ensuring a more stable and efficient workforce. This approach not only reduces costs but also elevates service quality, enhances team dynamics, and ultimately contributes to a more successful and sustainable restaurant business.
