More on the turnover problem
Since the end of the Great Recession, unemployment rates have inched downward. Restaurant turnover rates are persistently rising thanks to the tightening labor market. Today, they sit at historically high levels. Average turnover rates across all industry segments for hourly, non-management employees are close to 120 percent annually, according to TDn2K data.
While that’s troubling enough, turnover rates for restaurant management positions are closing in on 40 percent annually. And although non-management turnover rates remain high and are getting higher (increase in turnover over the last seven years has been nearly 20 percentage points as of the first quarter of 2019), management retention is most worrisome, TDn2K said. Since 2012—that same time span—turnover rates for management employees in restaurants jumped more than 10 percentage points, per TDn2K’s People Report. This spreads industry wide, but it’s especially prevalent in quick service. Half or more of the positions available for counter-service brands, including fast casual, will be occupied by a new, untenured manager within the next 12 months.
Why is this such a big issue? For starters, one of the A1 reasons the restaurant industry struggled during its downturn was because of market saturation.
As Dave Bennett, CEO of Mirus Restaurant Solutions, told FSR, the restaurant industry expanded a decade or so ago when it went through a boom of sorts. Then competition flooded in from all sides—grocers, C-stores, new concepts, third-party delivery—and redefined the consumer relationship with sit-down chains. Bennett says the fresh reality, as reflected by continually dropping traffic figures, could lead to a 15 percent reduction in restaurant locations over the next few years, which effectively would wipe out 100,000 sites. “We’re in a zero sum game,” Bennett said. “For every restaurant that opens, we close one.”
In addition to meeting surging off-premises demand, restaurants are separating from the pack with great customer service, whatever that might be to their particular guest base. In the case of full-service brands, it usually means delivering hospitality superior to what a diner expects when they court convenience or price in quick service. Although most retail companies look at value as being strictly price driven, restaurants tend to view it differently.