The cost of staff turnover
It is an oft-quoted cliché that it costs four times as much to acquire a new customer as it does to retain an existing one. But much the same is true of another key stakeholder in your restaurant or bar business: staff.
In fact, it has been estimated that the cost of hiring and training waiting staff can be anything up to €5,000.
If you employ 50 staff and have a 50% annualised turnover, that translates to €125,000. Per year.
And here’s the biggest killer: by far the biggest cost of staff turnover (estimated at 52% in a study by Cornell University’s Center for Hospitality Research) is not an obvious one, like recruitment, hiring and training costs. It’s lost productivity.
Which basically means there is a direct inverse relationship between staff walking out the door and money flowing through your tills.
So, what can you do about it?
Let’s start with what you can’t do.
One is to (substantially) increase pay, unless you are paying a lot less than your competitors. Your staff wish you would, obviously. A 2018 YouGov poll asked workers in the sector what would make them more likely to stay in their job. Unsurprisingly, the answer given by nearly two-thirds was better pay and conditions.
But labour costs have already increased significantly in recent years.
And it is no use blaming Brexit. According to a report by The Caterer, over the period March to September 2018, EU workers’ wages rose 5.2% from £8.08 to £8.50, while UK workers’ wages rose 5% from £7.73 to £8.12. In the rest of the world outside the EU, workers’ wages rose at a slightly lower rate, 4.2% from £8.52 to £8.86. In other words, this is a global trend.
You also cannot change the fact that a large proportion of workers in the sector are career-starters and students, many of whom will inevitably move on, even if they love you and your business.
Ten things you can do to retain your employees
1. Accept that there is no simple, one-size-fits-all answer.
So you should collect information on what causes employees to leave your restaurant.
One of the easiest ways to do this is to conduct an exit interview with any employee that voluntarily leaves. As we discussed recently, it is also a good reason to conduct annual reviews.
2. Engage with your staff more.
It is amazing how the occasional pep talk makes a big difference.
Yes, employees will sometimes throw problems at you that you cannot solve. But some problems can be solved and the mere fact that you listen will make a difference.
Plus, even inexperienced staff can often see ways to make things work better.
3. Better control over shift patterns and work life.
Staff frequently complain that they are either run off their feet or twiddling their thumbs, with nothing in between. Not an easy one to solve, but if you observe and analyse – and again, listen – you can improve things.
Often what happens is that employers put their best employees on busy shifts – because they are the best earners – and less good employees on the slack shifts.
Makes sense on a superficial level, but also makes it difficult for new staff to advance to the next level and may cause burnout for the top performers.
4. Look out for bad practice.
This is a delicate one, but it must be done.
Keep your ears open for any signs of bad practice by your managers and more experienced workers. Not just outright harassment, but pettiness can be a real downer on staff morale.
It is better to replace one manager than having to replace several front-line employees.
5. Provide opportunities for staff development.
A mentoring programme, skill sharing, distance learning and workshops will make your staff feel like you’re interested in them and investing in their future.
6. An employee recognition programme.
Especially relevant for multi-location businesses. Everyone likes a bit of visibility.
7. And while we are at it, if you are multi location, maybe some staff would appreciate a spell in another outlet?
This maybe also a good way to deal with internal conflict/personality clashes.
A surprisingly large number of employees leave because they think their immediate boss (not you) or a colleague is a jerk.
Remember: younger employees take these things more seriously than us world-weary grown-ups.
There’s often not enough of it. So treat your staff now and again.
A meal out in someone else’s restaurant, being the ones waited on for a change, can be a huge morale-booster.
9. OK, so there are limits to how much you can increase wages.
But you do need to keep your eye on similar establishments in the vicinity and what they are paying.
You get what you pay for, and if your competitors are paying better wages, they will attract the best quality staff.
10. Finally, and this is another reason why you should consider Bizimply, if you are not already using it.
According to a report recently published in The Morning Advertiser, 32% of employees said that greater transparency into shifts and scheduling would make them less likely to change jobs.
And what better way to provide transparency (especially to millennials) than to put everything they need to know on their mobiles?