THE HIDDEN RESTAURANT PROFITABILITY KILLER AND HOW TO FIX IT

We hear every day from our clients about the difficulties in hiring and retaining employees. Read more for some brutal facts in our industry.

In 2025, the average turnover cost is estimated to be around $5,864. This includes the cost of

recruiting, interviewing, onboarding, and training, varying depending on the role. Front of the

house positions are about $1,056 and back-of-house is approximately $1,491 per employee.

Replacing managers is much more expensive with estimates as high as $15,000 or more.

These numbers do not reflect the reduced productivity of newly trained employees while their

skill sets develop. Nor does it include negative impacts on customer service and product quality,

waste, breakage, and accident occurrences attributable to inexperienced new hires.

Gallup’s 2025 annual employee engagement report summary states: “U.S. employees remain

emotionally detached from their workplaces, and most are still watching for their next

opportunity. As of midyear, Gallup data show 32% of employees are engaged in their work, a

stagnation that points to deeper organizational challenges.” Think about that statement for a

second. What are the other 68% up to? They are mildly to actively disengaged from their

employer’s business! Adding to this dilemma, few owners or managers know the number one

reason for turnover in all industries in the United States is how people are treated by their

immediate supervisor.

Too often, restauranteurs are buried shopping for products, scrambling for staff, and struggling

just to get the doors open. They have no time to think about long-term strategic issues like

employee engagement, retention practices, and developing their staff. In the end, we hear from

all the time: “we don’t have time to work on this,” and they accept the high turnover as a cost of

doing business. The truth is it is completely manageable. A restaurant with fifty employees and

100% turnover (2025 industry average across all segments) the numbers above translate to

roughly $293,200 a year in lost profits due to turnover and lack of engagement. That is more

than poorly managed cost of goods sold, or labor is costing, yet not enough restauranteurs spend

any time on this part of their business.

The fixes are defining your organizational culture, determining what kind of people fit that

culture, hire for the culture, train thoroughly, coach teach and develop, focus on keeping people

engaged by providing opportunities for career growth, and understanding they need to be treated

properly.

For the owner/operators out there who think they don’t have the time, or can’t afford to take on

these fixes, the question they must ask is what can you do with the time and financial resources

you’re burning through on the current turnover merry go round? $293,000 could solve a lot of

problems if invested wisely at the front end of the employee experience instead of bleeding out

the back end of your company with high turnover and low engagement.

Our team at SSCP can help. If you want to know more about this topic, contact us at:

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