A high staff turnover in the hospitality industry: causes, consequences and solutions

Over a year ago, ABN AMRO (2019) published the results of a study on employee turnover within the hospitality industry. These results showed that 44% of restaurant employees change jobs every year. This high level of turnover among employees costs restaurants over €600 million annually due to recruitment & selection, training & education, productivity loss and exit costs. Per restaurant, this amounts to €48,500 each year. Problematic, to say the least. In this article we discuss the causes and consequences of this high staff turnover before we offer several solutions. Are you watching 44% of your staff walk out the door each year or are you going to take action in an effort to reduce your restaurant staff turnover?

 

How did this high employee turnover in the hospitality industry orginate?

Compared to an average employee turnover rate of 19% for all industries, an employee turnover rate of 44% is extremely high (SHRM, 2017). The fact that employee turnover in the hospitality industry is, on average, higher than in other sectors can partly be explained by the fact that restaurants employ many young workers (Driessen, 2019). More worrying however, is that a large proportion of restaurant employees are currently dissatisfied. As a restaurant employee, if you feel that you are undervalued, you do not experience growth opportunities or the workload is too high, you will more likely choose for any alternative options.

ABN AMRO’s (2019) report found that there is dissatisfaction among restaurant employees about their salaries, high work pressure, poor supervision during the familiarisation period and a lack of career growth opportunities. In contrast, the flexibility that the hospitality industry offers is very much appreciated by restaurant employees. For example, schedules are often adjusted when private circumstances or a busy student life requires to do so.

 

What are the consequences of high restaurant employee turnover levels?

Costs:

The costs of the high staff turnover in the hospitality industry are overwhelmingly. On average, €48,500 for each restaurant, year in, year out (ABN AMRO, 2019). This amounts to 6% of the average revenue per restaurant. These costs include exit costs, lost productivity, educating and training new employees and costs associated with the recruitment and selection process. It is therefore important for the hospitality industry to minimize the times of staff having to be replaced. By taking effective measures, you and your restaurant can take the first step and set a good example. However, we should not be blinded by the financial picture. In addition to the additional costs, the high turnover of restaurant employees also results in a decrease in labor productivity as well as an increasing staff shortage.

Labor productivity:

The familiarization period relatively takes up a large period in time when restaurant employees work at a restaurant for only a short period before leaving again. In this case, so to speak, the restaurant employee is gone before his labor productivity is at the level where the manager would like it to be. This does not benefit the average labor productivity. The same, incidentally, applies to the quality of work delivered by “new” restaurant employees.

Staff shortage:

A major staff shortage has been a problem for years within the hospitality industry. In particular, independent cooks are diligently sought after while the constant search for waitresses should not be forgotten. In 2019, there was a staff shortage of 17,000 cooks and 65,000 waiters (KHN, 2020). This staff shortage combined with the high staff turnover and the growing demand, especially for delivery meals, does not make the situation any better. The demand for restaurant employees is expected to continue to rise in the years to come (Misset Horeca, 2020).

 

Don’t worry… Solutions are available to tackle the high turnover of employees in the hospitality industry!

Fortunately, tricky situations like this always present opportunities as well. Some of the measures you can take regarding high employee turnover among restaurant workers are explained below

Increasing wages?

A common first reaction to high staff turnover and staff shortages is to increase wages. And despite the fact that wages have increased substantially in the hospitality industry in recent years, these percentages are not groundbreaking (CBS, 2020; Misset Horeca, 2020). Thus, given the still high staff turnover and staff shortage within the hospitality industry, the increase in wages has not yet solved the problems. Additional measures are needed.

We advise you not to focus solely on your wages as the cause of the high staff turnover. However, it might be wise to compare your current wages with those of your competitors to make sure that you can exclude this reason as the main cause for your high staff turnover. While doing so, don’t only include salary, but consider all the variables that may be of value to your hospitality staff. Consider, for example, team outings, how tips are distributed and whether staff can eat for free while working.

Reducing workload without losing productivity?

Another solution to retain your restaurant staff longer is to reduce the workload without sacrificing the productivity of your restaurant staff. For example, take a critical look at your menu. Are there ways to simplify it? Do not only consider the number of dishes, but also the number of ingredients per dish. A simple menu provides more peace and overview for cooks, especially at peak times. In addition, there are now several apps available that combat overwork such as L1NDA, Horeko and Keeping. These types of apps keep track of the presence of restaurant employees and provide a clear administration of the hours worked.

Investing in technology?

You can also choose to invest in technologies that allow you to make strides in the efficiency of your business processes. For example, smart kitchen equipment can take certain tasks off the hands of your restaurant employees and increase the labor productivity per employee. In addition, it offers the opportunity to reduce the workload, which can have a positive effect on employee turnover within your restaurant. In this blog you can read about the latest developments with regard to the use of robots in the hospitality industry.

CashDesk delivery software might also be valuable in this case. Your staff can easily keep the overview and fewer mistakes are being made because all of your orders (which come in through different channels) are linked in one system. Other tools such as the CashDesk waiter app and the delivery app have all been developed with the purpose of improving the efficiency of restaurants.

 

In conclusion: Don’t consider your restaurant employees as numbers

A final solution that is often underemphasized in practice is a piece of attention, love and recognition that a manager could give to his restaurant employees. For example, offer them perspective by giving them more responsibilities if they perform well. It might be wise to discuss topics like this with your restaurant employees so that you can better understand the position they are in. What would you want if you were a restaurant employee?

In addition, there are numerous ways in which you can involve your restaurant employees in the fight against high staff turnover. Look for new staff within the network of your own staff, and offer them compensation when a recommended employee passes their trial period.

 

In short, it is important that you actively try to keep your staff turnover to a minimum. Realize the added value of your restaurant employees and show it to them!

Are you interested in CashDesk delivery software? Click here for more information.

 

Thank you for reading,

CashDesk

 

References

  • ABN AMRO. (2019). Verloop personeel kost horeca jaarlijks 1,4 miljard.
  • Centraal Bureau voor de Statistiek (CBS). (2020, 2 januari). In 2019 grootste cao-loonstijging in 10 jaar.
  • Driesssen, S. (2019, 10 september). Verloop personeel kost horeca jaarlijks 1,4 miljard.
  • Misset Horeca. (2020, 24 januari). Arbeidsmarkt horeca in kaart: steeds minder vaste contracten.
  • SHRM. (2017). 2017 Human Capital Benchmarking Report. Society for Human Resource Management.
  • KHN. (2020, 14 januari). Arbeidsmarktrapportage horeca 2019.