Helping Restaurants Be More Profitable


How Restaurant Technology Can Help Prevent High Turnover

publication date: Mar 2, 2017
author/source: Luke Fryer


Famed entrepreneur and software developer, Marc Andreessen, once said, "software is eating the world." Andreessen was certainly not talking about the hospitality industry, where restaurant technology can sometimes be viewed as a cost center, as opposed to a revenue driver. However, the industry's "lack of appetite" for change is beginning to become the difference between making a profit or not.

The industry currently faces a perfect storm of challenges, with labor being at the eye of that storm:

  • a chronic shortage of talent (especially in our kitchens),
  • rapidly increasing minimum wages and
  • an ever more complex compliance landscape

Add to this the core challenges of bringing more customers in the door and handling our traditional foes of increasing costs, especially rents, and it's little wonder that we are on pace to see ~1% net decline in restaurants in 2016 (according to the NPD Group). Sadly that trend looks likely to worsen over the coming 3 years.

Beyond being brilliant at the basics of good food and great service, operators must devote the time and resources to embrace the efficiency and information that comes with the next generation of properly connected restaurant technology.

When we speak to our 8,000+ clients about their biggest labor challenges we consistently hear that employee turnover is top of the list, with finding employees not far behind.

After 3 years of researching this problem our team has discovered that these two problems are closely linked. Simply put, if we're not attracting a sufficient number of the right candidates, this leads to bad hiring decisions which ultimately results in higher turnover.

Beyond this, we have found that there are in fact two key contributors to employee turnover:

  1. The concept of "short cycle" turnover and
  2. Poor employee scheduling

Break the Cycle: Short Cycle Employees

Studies have shown that about 27% of a restaurant's yearly turnover happens within the first 90 days of employment. This "Short Cycle Turnover" (SCT) is disruptive to operations, expensive and a direct result of poor candidate sourcing, hiring and onboarding practices.

As wages rise across the country,

  • It costs employers $3,000 to $6,000 for an average hospitality hourly employee's first 30 days on the job; a point at which employers begin to see a small return on the hiring investment
  • With turnover rates averaging 70% annually and 40% of that turnover occurring with the first 30 days, the data shows that SCT turnover can account for a staggering 10-15% of TOTAL labor cost

It follows that by reducing SCT we can actually make a real impact on our overall wages bill and possibly enough to counter rapidly increasing wage rates which impact at least 22 states over the next 2-5 years.

There are 7 key steps to reducing SCT:

  1. Source more applicants - Think beyond job boards; build an attractive hiring brand; use your existing employee's social networks to drive referrals; tell a career and growth story on your own web site and on social media
  2. Retain more applicants in the hiring process - Make sure your application process is relevant to the position being hired - don't ask a line cook 20 questions; time from application to interview is key, >48hrs is a killer, so ensure you have a screening system that works quickly and efficiently
  3. Screen more effectively - Ensure you have the data points to know if the candidate is a fit for both competency and culture
  4. Interview smarter - You know the right questions to ask, but does your team? Put a system in place to ensure consistency in questioning. Larger businesses can collect interesting data around how interview responses translate to employee retention
  5. Use relevant and lightweight assessments - The days of the 100 question assessment are over; use your experience to find the right combination of technical, cultural and thinking questions that help build confidence in a hire
  6. Ensure onboarding is timely and efficient - Candidates are often exploring multiple opportunities at the same time so a delightful onboarding process is critical
  7. Make sure the induction is a warm welcome to the candidate

Schedule Strategically

Once an employee is settled in their position our research has shown that the single largest contributor to an employee leaving a position is a significant change to their working schedule.

Specifically this relates to:

  • The number of hours an employee works during a week
  • Who they are working with
  • The distribution of hours over various days of the week, usually as this relates to employees other commitments such as studies or family

MIllennials crave flexibility and consistency in their working lives and with 84% of our industry falling in this category it makes sense to employ the right kind of scheduling practices to keep our teams both whom crave flexibility and consistency in their professions.

User-friendly, all encompassing team management software can effortlessly solve these operational obstacles. Harri's TeamLive manages schedules more intelligently, ties schedules to historical performance and business intelligence, and offers seamless team communication amongst managers, line-level staff and even overseeing corporate team members. All built on a mobile and millennial-minded platform. Some other great features are:

  • The ability to switch employees to different entities (under the same LLC)
  • Easily curated alerts for irregular schedule changes
  • An intranet to ease the flow of communication
  • Effortlessly switch shifts and request time off with approvals from managers

Always Remember that Great Talent Doesn't Wait

Just as the best talent does not wait to move on to the next job in line, the best restaurants are those agile and open to change from old processes to more efficient ones. Speed matters in the current hospitality landscape, and getting people onboarded and paid (accurately) is a key part of the process. It's more than possible to reduce turnover with restaurant technology.

Luke FryerWritten by Luke Fryer, Founder & CEO of Harri, a comprehensive system and innovative platform that maximizes human potential with a breakthrough hospitality talent management solution for employers and job seekers.