No one knows the woes of restaurant turnover like a quick service operator. Quick Serve Restaurants (QSRs) are at the nadir of the industry for employee retention, with estimates coming from The MIT Technology Review that fast food establishments have reached a 150 percent turnover rate — the highest recorded since data began in 1995. That means for every 20 employees a restaurant needs, they have to hire 30 people each year.
The effects aren’t simply on HR or management’s time to hire and retrain. Between 2016 and 2017, drive-through turnarounds at quick service giant McDonald’s slowed down to 239 seconds per car, a difference of 30 seconds. That doesn’t seem like a lot of time, but remember: about 70 percent of McDonald’s overall business is from their drive-thrus.
With unemployment still at its lowest point in almost two decades, and average wages hovering between $13,000 and $13,500 per year over the past decade, competition for workers in the QSR sector of the restaurant industry is particularly brutal. Anything that can give a restaurant an edge over its direct competitors in attracting talent that will stay is worth considering.
One major key to reducing restaurant turnover in this economic climate, according to these QSR giants, is incorporating tuition assistance and other education support into their core employee benefits. It seems counter-intuitive, right? Paying for your employees to qualify for higher paying jobs elsewhere?
But the results are speaking for themselves.
Taco Bell, through a partnership with Guild Education, offers a tuition reimbursement program for its employees, that has resulted in a 98 percent retention rate over six months — that’s 34 percent higher for employees enrolled than those not participating in the program.
Likewise, Chipotle’s employees who enroll in their Guild Education program have proven to be twice as likely to stay on with the company, with 89 percent of them still employed by the Chipotle brand nine months after beginning the program.
Starbucks, too, has seen similar results. Not only are enrolled baristas 1.5 times more likely to stay with Starbucks than their non-enrolled counterparts, but they are also earning promotions at 2.5 times the rate of non-enrolled baristas as well.
And McDonald’s recently tripled its tuition assistance for restaurant employees, allocating $150 million over five years to their Archways to Opportunity education program. That adds up to an estimated 400,000 U.S. employees who can take advantage of the opportunity McDonald’s is providing. That’s a significant investment in their employees, but also in the corporation’s long-term ability to retain talent, a significant concern in the coming years as a traditionally reliable workforce demographic — teenagers — become sparser in the QSR space.
Where have all the teenagers gone? Many to other jobs that pay more competitively. Some to their own entrepreneurial pursuits. But the result is the same: the percentage of teenagers between 16 and 19 who have a job has dropped by a third in 18 years, from 45 percent to only 30 percent. It’s a larger pool, with Generation Z replicating the size of Millennials before them at 26 percent of the population overall, but it’s still a net loss for employers who are already struggling in the recruitment of entry-level employees.
So, there is an urgency built into these educational programs. And a scientific basis for the solution, as economists from the Bureau of Labor Statistics have found that an increasing emphasis on education — and more money in the ecosystem for scholarships — has contributed to fewer working teenagers in the market.
As a result, the need for a quick incentive to retain this category of worker is very real. How long an employee needs to have been with their QSR employer — and what kind of commitment that employer expects during a course of study — differs for each organization, but it’s not as long or demanding as one might think. For instance,
- McDonalds: 90 Days, 15 hours a week in shifts
- Starbucks: 3 months, 20 hours a week in shifts
- Pizza Hut: 6 months, 15 hours a week in shifts
Given how high the QSR restaurant turnover rate has reached, it’s no surprise the restaurants affected want to act early and fast.
What does this mean for your restaurant?
If you’re not experiencing hiring woes, maybe nothing. But if you are having trouble retaining talent and seeing your restaurant turnover rise above the most recent 72.9 percent for the hospitality industry, you may want to consider the broad picture of education assistance for your employees.
Maybe it’s offering mentorship between your chef or sous chef and another employee who has culinary aspirations. Maybe it’s offering actual financial assistance for management education for employees on that track in your restaurant. Or offering other incentives like paid time off or flex schedules to accommodate those employees making the effort at furthering their education on their own.
Competitive salaries are always a plus for potential employees, especially in this economy, but benefits for those in the job market don’t start and end at wages. Culture, health care, and perks — financial or otherwise — matter. Discovering what incentives will matter to your employees could make the difference between managing a strong, consistent team and spending all of your time as a manager refilling your ranks with new hires.
Need more ideas on how to hire the best people (and keep them longer)? Download our free eBook “Hire, Train, Retain, and Discipline: Restaurant Management for Success” today!
Rewards Network® does not provide legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or accounting advice. You should consult your own legal and accounting advisors before engaging in any transaction.