The restaurant industry is massive. Not just because of the sheer number of food establishments, but because of the total number of people this industry encompasses.
According to the most recent data released by the Bureau of Labor Statistics’ Job Openings and Labor Turnover (JOLTS) program, 792,000 employees were hired nationwide for the restaurant and accommodations industry – in the month of April 2015 alone. However, 817,000 separations occurred that same month.
More separations than new hires? No wonder employee turnover and retention are such hot button issues in our industry! Sadly, if this area is allowed to fester and grow out of control, it can contribute to restaurant failure too.
So let’s take a behind the scenes look at why the industry’s turnover rates tend to be so high.
A quick look at some more industry data, provided by JOLTS, sets the stage:
- In 2014, the overall turnover rate was 66%.
- Nearly half (46.5%) of the turnover was due to employees quitting.
- About 17% of the separations were attributable to layoffs and discharges.
And while that turnover rate seems gigantic, it’s actually somewhat low in terms of the historical data provided by JOLTS. From 2002-2007, we were facing an annual average turnover rate of 80%!
For comparison’s sake, the industry seems to be doing a lot better on the turnover front. Even so, it’s still an issue that needs to be addressed by today’s restaurateurs.
Why is Turnover So High?
Naturally, turnover is going to occur everywhere, regardless of industry or sector. Even when you carefully source talent, you’ll still have turnover.
The goal, though, is to push that number much lower than average.
But before you can do that, you need to understand how our industry’s unique staffing needs contribute to higher turnover rates.
I’ll briefly mention the top three scenarios.
1. Restaurants have a high level of teen employees.
Nearly one-third of the entire employed U.S. population, ages 16-19, works in a restaurant. As the first job for many of those 1.5 million employees, they’ll often gain experience, and then transition to employment with another company, possibly outside of the restaurant industry completely.
A portion of this demographic will inevitably go on to college also, which attributes to an increase in turnover rates.
2. Restaurants have an influx of seasonal employees.
Restaurant owner-operators tend to rely heavily on seasonal employees too – particularly during the travel-friendly summer months – which also influences the upswing in annual turnover rates.
According to the National Restaurant Association, “the restaurant industry is one of the economy’s largest creators of seasonal jobs during the summer months.” In fact, U.S.-based restaurants add more than 400,000 seasonal jobs annually during that timeframe.
3. Restaurants have an abundance of competitors.
The beauty of our restaurant culture is that there is a wide range of tastes represented. From curries to gyros to pastas, customers have a delicious spectrum from which to sample.
But here’s the catch 22 – so do employees.
If the opportunity for advancement and growth isn’t available, your company culture isn’t a good match for their skills and personality, or you don’t have a functional retention program in place, then employees will move on.
Remember: Employees have choices, just like your customers.
Lowering Employee Turnover
Now that you understand why turnover rates tend to be much higher in the restaurant industry, it’s time to get busy and counteract this trend.
Make a plan to reign in turnover rates, while amping up your retention efforts at the same time.
Luckily, I’ll be passing along my most effective tips for employee retention in a future post.
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Legal Disclaimer: The information I publish is not legal advice but rather is intended to prompt a discussion on best practices in human resources. Further, federal and state laws are amended frequently and vary significantly from jurisdiction to jurisdiction. Therefore, the published information may not be current at the time that you read it or it may not be applicable to your jurisdiction. As such, you should not rely upon any of the published information without first consulting directly with Restaurant HR, legal counsel, and reviewing your local, state, and federal laws as well as any applicable industry practices and company policies.
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