Employee Retention: What’s the Cost?
Employee retention is important to any company, but especially to restaurants. Many owners may not have considered the cost associated with training a new employee and how it impacts their bottom line. While someone is training the new hire, the trainer isn’t as efficient and the new hire is unproductive. New hires will make mistakes, and until they’re fully trained, won’t function as fast as your experienced staff. They may also be less likely to upsell your more profitable products to clients.
A restaurant with 20 staff members, operating at an 80% churn rate (industry reports say the true churn rate is actually as high as 114%!) with a training cost of only $1,000 would have to sell an additional $160,000 to compensate for the cost, assuming a 10% margin.
Hiring the right people is certainly the first step but there are other points to consider once you’ve made that decision. Having a formal on-boarding process should be part of your hiring procedure. This will help the new member feel part of the team and set a level of expectation for which they will be accountable. Here are a few ideas:
- Welcome the new member with a letter
- Provide a list of other staff and their roles
- Assign a mentor (not just a trainer)
- Inform staff
- Provide a facility tour
- Review responsibilities and objectives
- Set date for 1st evaluation
- Provide guidance on up-selling
- Assign an employee shadow mentor
- Scheduled performance review
- Evaluation input of onboarding process
People don’t want to come to work to survive, they want to thrive. In addition to a good onboarding program for the new hire, regular communication with the entire team will help them feel part of the restaurant’s success. Good employees want to be challenged, held accountable and rewarded. This will also keep everyone focused on the objectives you have set as an owner or manager. Celebrating “wins” is also a great way to generate teamwork. A win might be a significant increase in sales in a month, great reviews on social media or success in helping a local fundraising event. It’s management’s role to find a viable reason to celebrate and use that information to celebrate a great team.
Summary
Employee retention has a direct impact to a restaurant’s bottom line. Instituting a formal onboarding and training process combined with ongoing team building management can have a positive effect on profits.
Additional sources for information and ideas:
- Ensuring success for new hires – Restaurant.org
- Cut turnover – Restaurant.org
- Why onboarding your restaurant employees is important – Modern Restaurant Management
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