If your restaurant is struggling with high employee turnover, you are not alone. Learn how to reduce restaurant employee turnover and retain quality staff to keep operations running smoothly and profitably.
High employee turnover can increase labor costs because of the time, effort, and resources required to find, hire, and train new employees. A constant stream of new hires can also cause inconsistent customer service and decrease productivity, leading to more lost revenue. Below, we explore why restaurants have such high turnover and how to retain restaurant employees to help build stability and sustainability for your business.
Average Restaurant Turnover Rate
Employee turnover in the restaurant industry is among the highest of any sector. According to the National Restaurant Association, the average annual restaurant turnover rate is around 70–75%, compared to about 47% across all private-sector jobs. That means nearly three out of every four restaurant employees will leave their role within a year. For restaurant owners, this creates hidden costs, from training new hires to lost productivity and decreased service quality. Restaurant turnover is expensive, with an average cost of $5,864 to replace one single employee.
Tracking turnover in your own restaurant can help you better understand your staff issues. To calculate your restaurant staff turnover rate, divide the number of employees you lost in a given period of time by the total number of employees during that same time period. Multiply the answer by 100 to get a percentage that represents your restaurant turnover rate. For example, if you had an average of 40 employees last year, and 24 employees quit during that year, your turnover rate would be 60%.
Why Is Turnover So High In The Restaurant Industry?
High employee turnover is one of the most common reasons restaurants fail. Part of the high restaurant employee turnover rates is because they commonly hire part-time restaurant workers, students, and seasonal employees. Other factors contributing to the high turnover rate in the restaurant industry include low wages, long hours and irregular schedules, limited advancement, and fast-paced and stressful environments. These challenges impact job satisfaction and overall business stability.
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How To Retain Restaurant Employees
Your food could be amazing, but you need amazing staff to serve it in order to run a successful restaurant. That’s why employee retention is so important. Reducing employee turnover in the restaurant industry requires more than short-term fixes. It’s about creating an environment where staff feel valued, respected, and motivated to stay. Key strategies for reducing turnover and improving employee satisfaction include competitive pay, training, recognition, and flexible scheduling.
To help you understand how you can improve employee retention, track why employees are leaving by conducting exit interviews whenever possible. This is especially valuable with high-performing employees. It’s also important to be proactive in your employee retention efforts, not just reactive when employees voice concerns or leave. Taking a long-term approach to retention can keep staff motivated and loyal, which can ultimately improve overall business stability.
Offer Competitive Pay And Benefits
One of the most effective ways to lower restaurant turnover is to pay employees fairly. Competitive hourly wages, transparent tip policies, and regular raises show staff that their work is valued. Offering competitive wages and putting together an appealing benefits package can make your restaurant stand out and attract talented staff with experience in the industry.
Consider offering:
- Healthcare packages (medical, dental, vision)
- Paid time off for rest and recovery
- Meal discounts to ease food expenses
- Performance bonuses for hitting sales or service goals
- Transportation stipends for staff commuting long distances
These benefits not only attract quality employees but also build loyalty, making staff less likely to seek jobs elsewhere. Before you can determine how much of a raise you can give employees, you need to have a full picture of your current labor costs. Accurately calculating labor costs and learning to track and manage them are crucial skills for the long-term sustainability of your restaurant.
Provide Growth And Training Opportunities
For many employees, a restaurant job can feel like a temporary stepping stone. Combat this mindset by showing that long-term career growth is possible within your business. Training programs and career advancement paths encourage employees to stay longer.
Training and growth opportunities include:
- Formal training programs for new hires to learn quickly and gain confidence
- Cross-training opportunities so staff can rotate between kitchen, floor, or bar roles
- Upskilling sessions (e.g., wine education, leadership training) to keep the job engaging
- Clear advancement paths for hardworking employees to progress to supervisory or management roles
Employees who see growth opportunities are more engaged and less likely to leave for another restaurant offering the same pay.
More staff training is also a great way to improve customer experience in your restaurant!
Foster A Positive Workplace Culture
Company culture can make or break your restaurant. A toxic environment drives employees out faster than low wages. High employee turnover rates can negatively impact staff morale and overall workplace culture, leading to even more turnover. This cycle can be difficult to escape, but it’s possible by being proactive about building a safe and positive workplace culture.
- Open communication: Create open lines of communication and encourage staff to provide honest feedback
- Team-building activities: Celebrate milestones, attend events off-site together, or host staff meals or game nights
- Respectful leadership: Train managers to resolve conflict fairly, recognize contributions, and implement staff recommendations to show you value their opinions
- Inclusive environment: Create a safe space where all employees feel welcome
When employees enjoy coming to work, they’re more productive and less likely to quit. Fostering a strong work culture starts with hiring the right people. Be transparent about wages, scheduling, job demands, and workplace culture in your job postings and during interviews to find the best-fit staff for your restaurant.
Recognize And Reward Employee Efforts
Recognition programs, incentives, and public acknowledgment are easy ways to celebrate achievements and keep employees engaged and loyal. Acknowledging effort keeps morale high and motivates staff to continue contributing their best work.
Ways to recognize employees:
- Employee of the month programs with small rewards
- Shoutouts during staff meetings for good performance
- Gift cards or free meals as on-the-spot rewards
- Performance-based incentives, such as extra PTO for consistent excellence
Modern restaurant goers value experience, convenience, and transparency. Encourage employees to take the initiative to create a positive customer experience. This could look like comping a dessert for a customer’s birthday or crafting a new seasonal menu item. Rewarding this kind of employee initiative empowers staff to go above and beyond to provide excellent customer service, which can improve your restaurant’s overall value.
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Prioritize Work-Life Balance And Flexibility
Restaurant jobs often require late nights, weekends, and holidays at work. Over time, this leads to burnout and high turnover. Giving employees scheduling flexibility and fair shift distribution can reduce stress. Prioritizing balance shows respect for employees’ personal lives, leading to higher retention rates.
Key approaches:
- Flexible scheduling tools to allow staff to request shifts or swap easily
- Fair distribution of busy shifts (like Friday nights) so the burden isn’t always on the same employees
- Advance scheduling so employees can plan their personal commitments
- Encouraging breaks during shifts to recharge
Simplify Your Employees’ Cash Handling With ICL’s CashSimple® Cash Management Solution
Now that you understand how to reduce restaurant employee turnover, it’s time to take action. Reducing turnover isn’t only about culture; it’s also about removing stress from employees’ day-to-day responsibilities. One common pain point in restaurants is cash handling. Errors, shortages, and the risk of theft can make employees feel uneasy and managers feel overwhelmed.
Modern solutions like ICL’s CashSimple® can simplify cash management, making life easier for both managers and staff. CashSimple® streamlines cash management across locations, providing secure deposits without provisional credit. It automates key processes, reduces operational risk, and ensures accountability, so your staff can focus on what matters most: delivering great customer service.
Schedule a demo today to see how CashSimple® can simplify cash management for your restaurant to reduce employee stress, improve productivity, and transform your restaurant operations.
