There’s no doubt the employment rate in the restaurant industry had a quick rebound once restaurants began to reopen. Data collected from 30,000+ Restaurant365 customer locations show restaurant hires increased by 104% during the first quarter of 2021, which would mark the re-opening of many restaurants. The data also shows a clear slowdown to the initial momentum, with only a 65% increase between Q2 to Q3 of 2021.
A slowdown in hiring would be expected once the necessary positions are filled. However, a 65% increase in new hires is still steep, even in an industry notorious for high turnover. An Insider report shows there is a 144% turnover rate at fast-food restaurants.
With such high turnover and the US seeing no end to the worker shortage in the near future, focusing on employee retention is the only clear solution to keeping restaurants staffed.
Why is This Important?
Many restaurant operators don’t know their retention statistics, such as the average tenure in their restaurants or their turnover cost. But when you to look at average turnover cost industry wide, you understand the importance of employee retention. According to Black Box Intelligence, the average cost of restaurant turnover in 2021 was $1,869 per hourly employee.
This is why employee retention matters. Employee turnover can greatly affect your profit margin, making it imperative that you hire with a retention mindset and then focus on employee retention strategies. Below are nine tips on how to retain your best talent.
Hire the Right Employees
While it’s an employee’s market, try not to succumb to hiring people out of desperation. Hiring and training a new employee only to find out they do not fit into a restaurant’s culture or hold the same values as an existing staff is exhausting and expensive.
Of course, restaurant operators still need to ask traditional interview questions to learn about the person’s past work experience and skill set, but they must also remember that skills can be taught, personality can’t. Behavioral based interviewing involves asking open ended questions as to how the candidate would react in various situations. It tells a more complete story about the person and whether they are a good cultural fit before hiring them.
Be Transparent During the Interview
It’s important to be thorough about detailing the job duties during the interview. For example, if a manager doesn’t tell a busser applicant during the interview that it will be their job to unclog the toilet when it gets clogged, that person may quit the first time that occasion occurs. Why? Because the employee was not informed at the interview that it was part of the job and is unwilling to perform that task.
Use Referral Bonuses
A referral bonus program communicates “we want more employees like you to work here.” It’s important to be consistent with this. If a restaurant sometimes offers referral bonuses and sometimes doesn’t, it sends the message that it can’t fill this job and needs any help it can get.
Be sure the bonus is only paid after the new employee stays for a period specified by restaurant management: e.g., six months and is separate from regular pay. If a restaurant pays by direct deposit, the employee might not even notice the extra pay. Present a check or pre-paid credit card during the pre-shift meeting and make a big deal of it so other employees follow suit.
Offer Competitive Benefits
Historically, most restaurants have not offered benefits to hourly employees. But the pandemic and resulting hiring crisis has prompted restaurants to provide benefits to their hourly workers. If a restauranteur can’t afford a full health insurance package, they should consider benefits that are popular among employees, such as free meals, same day pay, paid time off, and tuition reimbursement.
Offer Steady Pay Raises
Be sure current employees are being compensated the equivalent of what is offered to new employees. If a restaurant is not in a financial position to compete with the higher rates being offered by larger chains, be strategic about employee retention by offering regular raises. A restaurant should communicate that it will do a salary review every 3 or 6 months to align pay – and follow through on it.
Provide a Career Path
Nine in ten restaurant managers started in entry-level positions, so it’s safe to say a restaurant’s next manager may come from its internal team. Map out a career path and begin working on the skills associated with each step on their career paths.
For example, if an employee is interested in being a lead line cook, start that person on prep projects, then progressively add jobs that move the employee forward. By doing so, you’re not only offering the employee development, but you’re also building the staff member’s value to your restaurant group.
Building relationships with your staff is a crucial part of a comprehensive approach to employee retention. It’s the number one insurance toward retention. Learn what motivates employees. Everyone is different. Perhaps they are motivated by a flexible schedule, money, or a fun work environment. In an employee’s market, managers must be more attentive to employees’ needs.
Give Employees Control
Keep employees happy when coming to work by creating a schedule with each employee’s requests in mind. Posting the schedule far in advance will give employees time to reschedule shifts if needed and give everyone time to plan and optimize their time away from work. If possible, provide employees the ability to self-manage schedule changes, swaps, and picking up shifts.
Identify the root causes employees are leaving
When employees do quit, be sure to conduct an exit interview to learn what went wrong. While it may be too late to retain employees at this stage, restaurant managers can gain useful insights toward retaining future employees.
Better yet, restaurant managers should conduct frequent check-ins with employees to understand their level of satisfaction. Understanding what might not be working for an individual provides the insight to make real-time changes that could help retain that employee.
Employee retention is a major challenge for all restaurant operators but building innovative employee retention strategies into a hiring strategy is the first step in both hiring the right employees and encouraging them to grow with the restaurant business.
About the Author
Tony Smith is Co-Founder and CEO of Restaurant365, an all-in-one, cloud-based, restaurant-specific accounting, back office and reporting solution. Smith earned his bachelor’s degree in business management and information systems from Brigham Young University. After earning his degree, Smith joined John Moody and Morgan Harris as Director of Services at Dynamic Methods, a consulting company that assesses business issues, especially accounting needs, that can be solved with a software as a service (SaaS). After dissecting the restaurant industry, Smith’s work with Dynamic Methods led him to co-found Restaurant365 in partnership with Moody and Harris, where product direction and strategy has been his main focus. Smith has a passion for trying out new restaurants, spending time with his family, singing and watching college football.