Staff Turnover Can Cost You More Than Empty Tables
A happy staff will help your bottom line.
Skimping on wages and not offering benefits doesn’t always equate to savings in the long run. Especially when you’re in the restaurant industry, which employs 14 million people, or 10 percent of the national workforce, according to the National Restaurant Association. With such a large pool to draw from, it pays to pay well, especially since the 2013 turnover ratio was 20 percent higher than the overall private sector average—a whopping 62.6 percent for the restaurant industry as reported by the Bureau of Labor Statistics.
Save yourself the headache, time, and money of replacing the valuable members on your team by paying them fairly and competitively. Let’s take a look at just how that’s done, examining average salaries within the industry and what that turnover ratio is really costing you.
To fully understand the problem we need to look at the facts—in this case, restaurant industry wages from 2013.
Waiters and waitresses earned an average of $20,880 a year or $10.04 an hour. The top ten percent earned $29,810 a year with the bottom ten percent taking home $16,300. These numbers included tips.
Cooks on average earned a bit more, bringing in $23,440 a year. The top ten percent brought home $31,670 while the lowest ten percent earned $17,060. Fast food cooks on the other hand made $18,720 a year, with the top ten percent earning $23,140 and the bottom ten percent less than $16,090 a year.
The chefs and head cooks earned an annual income of $46,620 with $74,240 a year going to the top ten percent and $24,160 going to the lowest ten percent.
Managers brought in $53,130 a year on average, the top ten percent earning $82,370, and the bottom ten percent earning $30,540 that year.
General and operations managers on average earn $116,090, with the top ten percent bringing home $187,199 with the bottom ten percent bringing home $46,190.
Now that we know what it costs to employ these positions, let’s look at what it costs to replace them.
According to the Center for American Progress, an employee earning below $30,000 a year costs 16 percent of that annual salary to find, hire, and train. This figure jumps to 20 percent of the annual salary if someone is earning between $30,000 and $50,000 a year. That cost continues to rise exponentially as the salary rises, costing roughly 213 percent of the annual pay to replace highly educated executive positions.
Hiring a new team member is anything but cheap.
Once you consider advertising, interviewing, screening, and training a new employee and the time and money associated with each, it really adds up. Let’s not forget that somebody needs to train the newcomers too, but even then there is a ramp-up period where new employees are bound to make mistakes, costing even more time and money. Not only is this turnover costing you internally, but a consistent rate of turnover will create waves in the customers experience as well. Repeat customers come in expecting a certain experience and the food to taste a certain way. Having a constantly rotating staff will absolutely change both the taste and presentation. If it’s disruptive enough, it will definitely be felt on the bottom line.
When things are off at their favorite restaurant, it may cause diners to return less often, if at all. This part really hurts because repeat customers make up 64 percent of traffic at casual-dining establishments, 63 percent at family-dining eateries, and 51 percent at fine-dining restaurants, according to data gathered by the National Restaurant Association.
A company’s innovative capacity is only as great as its talent pool. Paying your employees enough to stick around may cost more in the short term, but that’s because it’s as much of an investment in the individual as it is into your company’s future. Good help is hard to find—once you find it, hold on to it.
The opinions of contributors are their own. Publication of their writing does not imply endorsement by FSR magazine or Journalistic Inc.