A Different Look at the Cost of Turnover
The most important decision we wever make in the restaurant business is who we choose to let in the doors to take care of our customers. Every time we hire a new employee, we put a lot on the line.
Just one bad decision costs a lot in terms of time and money, but a bad hiring decision will also cost in terms of lost productivity, efficiency, poor customer service and teamwork too. The on thing a bad hire is guaranteed to give you is more aggravation.
How would you feel if you were robbed of $1000? And not just once, but 12 or 15 times a year? Did you know that every time a frontline, hourly employee quits or is fired, that the cost to recruit, interview, hire and train a new person will be at least 150 times that person’s hourly wage?
Losing a minimum wage employee in Texas costs at least $1200 while in California it subracts a whopping $1375 from the bottom line — and, as the minimum wage and training costs increase, these numbers are just going to keep going up.
Have you ever figured out how much your store loses each time someone is fired or quits? Here’s a ballpark example where we assume only eight new hires in a year at only a $7.00 an hour wage.
Calculation: $7.00 Hourly Wage x 150 Minimum Cost to Rehire & Train = $1,050 Lost Each Time Someone Quits or is Fired.
$1,050 x 8 Hourly Hires Lost Last Year = $8,400 Lost Last Year
Let’s look at it another way… IF we assume a 5% net profit, you have to sell $168,000 worth of hot dogs, fries, and drinks just to cover your yearly cost of turnover. And, if your average ticket is $8.00, it means you have to do 1,500 transactions per month to cover these costs.
In today’s world it is going to be a lot easier to reduce turnover than to increase customer counts.
So don’t focus on trunover focus on retention. Turnover is number based. Retention is activity based.
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