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Blog | Employee Retention

The Key to Employee Retention in a Tight Labor Market

Unemployment is low and hourly workers have more job opportunities than ever. Learn how you can reinvest in your employees and increase employee retention.

If you’re a restaurant operator who has put a “Help Wanted” sign in your window in the last few months, you’re not alone. Restaurants across the United States are having employee retention problems.

The hospitality industry, which includes restaurants, had 844,000 open jobs in April — that’s the highest number on record, according to a recent Wall Street Journal report. In fact, restaurant worker unemployment has fallen a full percentage point since 2000, sitting at a record low of 6%.

In other words, there’s an abundance of restaurant jobs, but not enough workers to fill them. Just look at these numbers from TDn2K’s recent People Report:

  • 73% of restaurants consider themselves understaffed in front-of-house hourly employees
  • 98% percent say they’re understaffed in back-of-house hourly employees

Open jobs mean that your team members can leave if they aren’t satisfied with their current working conditions. Employees unhappy with the pay, the hours or their development opportunities at your establishment can simply get another job at another restaurant without much hassle.

But the increase in restaurant employee turnover has definitely created a hassle for restaurateurs. TDn2K data shows that employee turnover at limited-service restaurants costs $93,000 annually per location. The news is even worse for full-service businesses, where turnover costs an average of $127,000 annually per location.

Employee Retention in the Gig Economy

Restaurant employee turnover has always been high — this is an industry that churns. But the rise of on-demand work through the gig economy has opened up even more avenues for hourly workers to make a living. Now, restaurateurs don’t just have to worry about employees leaving to work at other restaurants — they need to worry about them leaving the industry altogether.

Approximately 1 in 4 Americans earns income from some form of digital, on-demand work, according to the Pew Research Center. So many people are getting swept up in the gig economy that Forbes estimates on-demand employment will be the workforce majority by 2027.

The gig economy attracts employees because it’s an opportunity for more flexible work arrangements. And with an increase in services that provide options for last-minute shift work, the labor market for hourly employees is more flexible than ever.

So, how can restaurateurs attract and retain talented employees when those folks could just as easily go drive for Uber?

By investing in your people from their first day in the restaurant. According to TDn2K, 40 percent of employees terminate within the first 90 days of their employment. Thus, it’s critically important to engage those employees from the start.

Research from TDn2K shows that brands who provide 4 or more hours of new employee orientation have lower turnover rates than brands who provide less. Furthermore, employees want training opportunities. If your workers don’t feel that they’re developing in their jobs, they’re more likely to leave.

Invest in Employees and the Technologies they Need

Investing in your workforce also means investing in technologies that will help make them successful. Companies that offer technology and systems training have a turnover rate 20% percent lower than companies that don’t.

In an industry with such high turnover, employees with the right skill set can be hard to come by. That’s why you should consider modular solutions that can help tackle your labor, learning and development, and prep and production needs.

Employers can implement labor management solutions that make it easier and more cost effective to schedule their workers, empowering employees to swap shifts and communicate with management right from their smartphones. Such tools will allow your teams to achieve the work/life balance they crave.

Technology solutions like HotSchedules can help brands optimize their labor, simplify their business and become an employer of choice in an incredibly tight labor market.

And with HotSchedules’ learning management system, Clarifi Talent Development, operators can make it easier to engage and connect with employees from their first minute in the store. The platform’s learning management module also enables the seamless delivery of training content to build employee skill sets and keep them engaged throughout their tenure.

Gig work provides flexibility, yes, but it lacks security and longevity. By giving employees an engaging professional environment and solutions that will help them succeed, restaurant operators can establish themselves as employers of choice that will attract the right talent and keep them around for the long haul.


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