Death of staff turnover by increasing loyalty

“Managing people is harder than managing food.” — Bradley, the owner of a trendy cafe

Staff management is one of their biggest challenges for restaurants. 42% of restaurant owners told us that they’re always trying to find a better staffing solution (Atumio restaurant research, March & April 2017). In a survey with 650 independent restaurant owners, they found that over 63% of the operators had the staffing challenges. And more surprisingly, the restaurants didn’t see the staffing challenges as a major issue to “improve” or make more efficient. Most of the restaurants ranked their restaurant as a good place to work (Restaurant Owners, 2015).

The benefits of staff loyalty

A successful restaurant always has a great team of professionals who feel part of the business and part of its formula for success. Keeping staff long term rather than short term brings many benefits to a restaurant business. Here are the top 4 benefits which we’ve observed:

  1. Be more efficient. Experienced staff are good at performing multiple tasks well especially when things are busy. However, part-time staff may only do the job half as well. As a result, the part-time staff need to make double or triple the effort. For example, an experienced staff can deliver cooked dishes to table 1, take an order from table 2, refill water for table 3 and clean table 4 within 10 minutes but for an inexperienced staff, this could take 20 to 25 minutes.
  2. Better ROI. Every business trains new staff in one form or another. Training is a less significant investment if you can stretch it over a longer period of time. The tips and tricks also learnt by staff can help them become more experienced and professional to better serve your customers and in turn earn you more. Furthermore, after a few months, your staff may be able to give you insight and advice to improve your business.
  3. Trust promotes sales. 1 out of every 3 staff members maintains some sort of contact with customers they interacted with outside of their scheduled working hours. People are more likely to go with a recommendation from someone they trust so staff who achieve this relationship with customers can better but appropriately assist in a diner’s decisions. Also if your staff voluntarily share daily specials on their social media, this can drastically increase your awareness about your restaurant and can bring in regular customers.
  4. Strong and healthy culture. Every restaurant business has its own culture. Hiring staff that align with your culture and business values will make your team more productively. This also enables owners and managers to focus on the business because you can trust others to help you keep the business running smoothly.

The hidden costs of frequent staff turnover

Staff turnover in the hospitality industry is on average 21.4% higher than other private businesses based on the study below.

Diagram 1. Staff turnover rates (US, 2015)
Diagram 2. Staff turnover costs (US, 2015)

Based on the average staff turnover rate of 66% (see Diagram 1) and the average turnover cost of $5,846 (see Diagram 2), the estimated turnover will cost a 10 staff restaurant around $38,600 annually in US, which is around AUD50,000.

Why do so many restaurants prefer to lose $50,000 a year instead of increasing their staff loyalty?

Make small, thoughtful changes to retain staff

“Here’s what happens when people invest in me. I invest in them. I commit. I stay longer, than I planned to, stay. If not, I easily move. Go on. Try another thing, visit another city.” — Sofia Indy

Creating a productive and pleasant work environment will significantly increase staff loyalty in a restaurant. It encourages a loyal workforce and reduces the cost of recruitment and onboarding of new staff. Here are 4 tips to increase your staff loyalty:

  1. Build a great team culture. Many restaurant owners understand the importance of building good relationships with their customers. The same should go for your staff. Taking the time to learn about each of your staff enables you to find the best way to encourage them and assign them the appropriate responsibilities. Positive and happy staff are more likely to give you useful advices and make helpful suggestions, as they are closer to the customers and can see more opportunity for improvement. Transparency also helps to empower members of your team. For example, if you shared an easy-to-understand sales report, they may come up with some good ideas to help you be more profitable.
  2. Increase the opportunities staff have to recommend and upsell to customers. Many restaurants ask their staff to recommend dishes or drinks to customers so that they can earn the commission. It’s one of the best ways to motivate staff and increase profits for the restaurant. However, not every customer is the same and this can make the recommendations and up-selling more difficult. What if we could make it easy to remember or find which dish a customer likes or always orders? Using a digital menu to collect your customer’s behaviours will help your staff know your customers and their needs then provide more meaningful recommendations. Delight your customers with an unexpected personal touch and make the life of your wait staff easier at the same time.
  3. Use technology to reduce the inefficient tasks. Restaurants encourage their staff to build a relationship with customers using small talk. But when is the best time to talk when your staff are under the pump at the peak of service? If a waiter serves 3 tables at the same time, will he spend 5 minutes to talk with table 1 when taking orders and let table 2 and table 3 wait? We believe it would be more profitable to replace the 3 to 10 minutes a waiter spends taking a customer’s order with using that time to have a conversation with the customer. This allows staff to have a more meaningful conversation with different customers. Serving hundreds of customer a day is not an easy work and can get repetitive. If your restaurant could create a less stressful, enjoyable workplace and encourage the wait staffs provide better services, they will work harder and stay around longer.
  4. Take care of your staff. Kind and helpful team members, satisfied customers and a good atmosphere will attract staff to your restaurant. If your staff want to work with you because they understand the value they provide to your business, feel empowered and are treated well then you can worry less about the high staff turnover.

Why staff loyalty should be a business priority

On average, an Australian restaurant has 7 to 8 staff. If the staff have no reason to remain loyal to a restaurant, the cost will be huge. For example, when your staff are “lazy” at work and spend 15 minutes to talk with other staff instead of serving customers each hour, this could be costing you about $80,000 per year.

$79,890.72 = 15 minutes/hour x 8 hours/day x 6 days x 52 weeks x $18.29 (the minimum Australian hourly wage) x 7 staff

Whilst many cafes and restaurants wait for others around them to try new methods and technologies first, the cafe next door started saving approximately $24,000 per year by using a digital menu to free up their staff. This also helped them to reduce their staff turnover from 66% to 20% because the staff could work in a better environment.

$24,002 = 7 staff x 46% (reduced turnover rate) x $7,454 (turnover cost in AUD)

This means the cost of not improving your business is approximately $24,000 assuming you have the same number of staff, similar menu prices and a similar number of customers. For the calculations above, we based it on the average number of staff in an Australian business.

Want to learn how to make a change for your restaurant? Start by combining your traditional restaurant management experience with a smart and easy to use technology to increase staff loyalty. Make your restaurant stand out from the others today.

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