Employee retention has always been a challenge for the restaurant industry. The industry ranks among the highest turnovers, with an average turnover rate in 2023 of about 74%. According to the Bureau of Labor Statistics, the quit rate in food service and accommodation is over 5% higher than in any other industry.
There are several well-known reasons for these employee fluctuations. There are also restaurant brands that have found a way to rise above these numbers, retaining many of their employees. And then there are those that fall to the bottom in retention scores.
With one estimate suggesting it costs restaurants over $5,860 to replace an employee due to training and productivity loss, it pays to examine the best strategies for keeping your employees happy to call your restaurant their workplace. Let’s explore one of the greatest challenges in the restaurant industry and how the top brands have succeeded at creating an environment that calls employees in and gets them to stay.
Why Do Restaurants Have a High Turnover Rate?
Employees report several reasons for considering abandoning their restaurant ships.
- No opportunities for advancement
- Inadequate compensation
- Ineffective leadership or management practices
- Issues with work-life balance
- Feeling undervalued
- Toxic work culture
What Restaurant Is Known for Low Employee Retention?
According to Comparably, Panera Bread’s retention score falls to the bottom 5% of similar-sized companies with 10,000 or more employees. When employees were interviewed, two telling answers stood out, with 60% feeling burnt out and 56% believing leaders don’t do what they should to retain them. Other comments include managers who lack communication skills and insufficient training.
What Can Restaurants Do to Increase Retention?
So, how do you motivate your employees to stay? It comes down to pay, benefits, and company culture.
- Increase wages and benefits
- Consider a lifestyle spending account that pays for items like gym memberships
- Create an inclusive culture and nurturing work environment
- Open communication between employees and managers
- Recognize outstanding performance with gift cards or tickets
- Build team camaraderie
- Flexible scheduling and supporting work-life balance
- Provide a path for advancement
There are nearly limitless ways to accommodate some of these employee retention strategies. Some restaurants incorporate team-building events. Others focus on creating fun work environments.
What Brands Have Found the Secret Sauce of a Satisfied Workforce?
Boston University’s School of Hospitality Administration pointed out four restaurant brands that have been standouts in creating a positive company culture and receiving praise from employee rating agencies. Perhaps these will inspire you.
Chipotle is known as one of the best restaurants to work at. Perhaps the fact that they have a Vice President of Chipotle RSC People Experience and Chief Diversity, Equity, and Inclusion Officer, says it all. It’s clear that they consider their employees valuable assets.
Some of their many benefits include a tuition reimbursement program and bonuses. They also have a clear-cut layout of how crew members can ultimately advance to the highest position of General Manager.
Five Guys is an Employer Brand & EVP award winner. EVP translates to Employer Value Proposition or the value you offer your employees in return for their work ethic and contributions. According to Gartner, building a more human EVP requires building deeper connections and training managers to develop trust through empathetic conversations. It also requires creating growth opportunities on a personal and professional level.
According to Jerry Murrell, CEO, investing in their employees is the only way they believe they can operate effectively. They offer an outstanding tuition assistance program, as well as English as a second language and GED programs. They also adjust schedules to accommodate employees. Their LDX program lets employees work in different departments for a time, expanding their knowledge.
Union Square Hospitality Group
This brand places its employees as number one in terms of importance, followed by guests, the community, vendors, and investors. Their goal is to help their employees reach their full potential.
Some changes they made post-pandemic were raising managers’ salaries. They also increased the BOH hourly rate by 26% and split a 1% sales share. In the FOH, they reinstated tipping. You probably read the headlines when Union Square Hospitality Group pioneered the no-tipping policy, which ended in 2020. They also increased their employee discount to 51% and serve a daily free family meal.
Lettuce Entertain You
This privately held, family-run company believes its employees are their greatest assets. To that end, they strive to provide career opportunities, encouraging lifelong careers with the company by supporting an entrepreneurial spirit. They also offer numerous benefits, including health insurance, life insurance, and 401K plans.
President R.J. Melman states, “Employee education and engagement is the only way to ensure a guest’s experience exceeds expectations, and a company can grow.”
And that pretty much sums up the attitude of these restaurants that place extreme value on their employees. While independent restaurant owners with one or two units can’t compete in terms of benefits, they can build a culture that promotes learning, growth, and appreciation.