As the world continues to digitize and consumer expectations shift, restaurants face new challenges. It is no longer enough to offer good food. Restaurants instead must familiarize themselves with the evolving digital economy and provide unique experiences, especially if they wish to attract the highly sought-after millennial demographic.

Along with customer retention, one major problem many are facing is increased employee turnover, resulting in a direct effect on the bottom line. Continually staffing and training new employees not only eats up time, but it also costs more money.

Why is turnover getting worse? The current economy is better today than in years past. Though this is great for the big picture because customers have more discretionary income to spend on dining out, it also means employees have more options with varying degrees of benefits. When the economy is tight, employees are less likely to look for another job. When it’s thriving, however, there’s an increase in the need for more staff, bringing higher demand and competition for qualified candidates.

The quick solution to this issue: ensure your restaurant is a place staff want to work. However, we acknowledge this is a loaded statement. To better understand the solution, we must first understand the specific factors that encourage employees to jump ship.

Why Do Good Workers Quit?

Historically, turnover in the restaurant industry has been notoriously high in comparison to other segments. However, it’s only getting worse. According to the Bureau of Labor Statistics, restaurant employee turnover has exceeded 70% for the last two years. The top four factors include:

  • Low Pay 

The number one reason employees opt to work elsewhere is for better pay potential. The federal minimum wage is $7.25. This is the cost most restaurants pay back-of-house staff. For tipped servers, this wage is much lower.

  • Bad Benefits

Additional benefits besides pay also make a difference. Traditionally, benefits for health coverage and retirement savings are non-competitive.

  • Inflexible Scheduling 

When employees have little to no control over their schedule, the result is low morale. Not to mention, many need a set number of hours to ensure they can pay their monthly bills. This can also contribute to increased stress levels, our fourth and final primary factor.

  • High Stress

Restaurants are fast-paced environments. Those not adept can naturally feel higher levels of stress. This isn’t revolutionary news, but we often overlook how these couples with the above factors. Working on your feet for long hours, keeping up with the demands of your patrons, making a low wage with little benefits, inconsistent hours and a nagging fear you’re not going to make enough to support yourself this month properly leads to higher levels of stress than what’s common in other industries.

It’s More Than the Money (But, Money is Still Important)

The most obvious way to decrease the turnover ratio is to increase pay. The reality is, many staff members are not paid a living wage as is, making it difficult to make ends meet. The minimum wage debate is intensifying, but restaurants should still find ways to get ahead of the curve and gradually increase the pay of their staff.

Though this is one of the more obvious solutions, it is also the most difficult to pull off. Margins for restaurants may already be low, so increasing pay would more than likely require an offset by raising menu prices, potentially discouraging customers from choosing your place over your competitors’. Some tried, and true implementations may help navigate this:

1. Look at how your menu is currently structured. There’s certainly a case to make for menu psychology. Food columnist Sarah Kershaw writes in the New York Times, “Like advertisements, menus contain plenty of subliminal messages. Some restaurants use what researchers call decoys.” Along these lines, Brian Wansink, Director of the Food and Brand Lab at Cornell University, suggests that the average person makes more than 200 decisions about food a day, most of which are unconscious. Some such “decoys” include:

  • Omitting the dollar sign when listing the price. This subconsciously encourages diners to increase the amount they were previously prepared to spend.
  • Offer longer, more vivid descriptions of your offerings. Menu engineer Gregg Rapp suggests, “The more copy you write on the menu item, the less it costs in the customer’s mind because you’re giving them more for their money.”
  • Place the big-ticket item(s) at the top. This makes the rest of your items look more reasonably priced by comparison.

2. Track labor costs. Even though labor budgets are notorious for often being too thin and inflexible, that shouldn’t suggest there’s nothing to work with. Consider incorporating an auto-scheduler software, or, if you already use one, revise based on employee availability and historical sales data. Watch out for the risk of overtime. This is expensive and can add up. The quick fix: prevention!

By making renewed strides to save on operational costs while working to increase margins, you may find yourself in a position to offer your employees more for their hard work.

Another solution is the introduction of an employee loyalty program. In general, everyone loves to feel valued and rewarded for their work. This doesn’t always necessitate a monetary value. An employee loyalty program can be an excellent way to reward high performing employees or those who have stayed with the company for more extended amounts of time. Consider partnering with local businesses to get exclusive discounts on haircuts, spa days, movie tickets, etc. This is an easy and manageable way to incentivize your employees while also supporting the community.

Improving Workplace Culture

Forbes reports that establishing a company culture is one of the surefire ways to keep employees happy. Signature characteristics of a positive culture feature support, empathy and a welcome reception to change. For some reason, many managers believe that creating an extremely competitive culture is the best way to motivate. This may yield short-term returns but is hardly sustainable. The competitive nature often results in increased stress levels and a toxic work environment, thus encouraging high performing employees to look for a better culture elsewhere.

One suggestion for improving culture is enhancing transparency. Leonard J. Glick, Executive Professor of Management and Organizational Development at Northeastern University, observes, “Things that managers take for common knowledge about how things are going or what challenges are down the road or what new products are coming… they often don’t take the time to share that with their employees.” Having a sense of not only the day-to-day, but the upcoming objectives of the organization help employees to feel they are an important, valued part of making them happen.

Feeling like they’re making a meaningful difference is one of the most important factors relating to employee happiness. Establish a sense of ownership, making the employee feel more like a part-owner instead of just a worker. A sense of responsibility for the customer’s positive experience and the operation’s bottom line is a great way to retain employees, watering the seeds of unity and loyalty. As Professor Glick puts it, “It all contributes to a feeling of ‘it’s mine,’ and most people, when it’s theirs, don’t want to fail, don’t want to build poor quality and don’t want to dissatisfy the customer.”

Final Food for Thought

Managing turnover can be a challenge, but for long-term operational success, it’s one that must be confronted. In addition to the above recommendations, incorporating a sense of community and collaboration with staff can enhance culture and employee retention. Routinely check in with employees, either in person or through anonymous surveys to assess satisfaction, looking for new ways to incorporate their feedback. Being on the front lines, these employees are the best source for problem-solving, and feel involved in the business operations is a great way to keep employees engaged and morale high.

If an employee does leave, consider conducting an exit interview to learn more about why. It may yield interesting insights that you’ve yet to consider, and can result in positive change down the road that may discourage others from leaving for the same reason.

Equipping your employees with the best solutions to simplify their daily tasks is yet another way to keep them happy. Check out Central Restaurant Products and our team of certified foodservice experts for high-quality restaurant solutions.

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