The Single Biggest Cost to Restauranteurs

The U.S. restaurant industry faces exceptionally high employee turnover in 2025, with rates far exceeding the private sector average.

U.S. Restaurant Industry Turnover in 2025

• The average employee turnover rate exceeds 75%, much higher than the private industry average of 47%.

• Quick Service Restaurants (QSR) can see turnover rates above 130%.

• Full-Service Restaurants experience 75%–100% turnover.

• By role:

Back-of-house (BOH): ~43%

Front-of-house (FOH): ~41%

Managers: ~28% (with full-service management turnover dropping to 35% in Q3 2025 from 41% in Q3 2024).

Cost of Turnover

• Average cost per hourly employee: $5,864.

• Hourly staff: Over $2,300, up to $6,000 for some FOH roles.

• Managers: ~$10,518.

• General Managers: ~$16,770.

• Losing ten employees in a year can cost a restaurant over $58,000, a significant impact given typical net profit margins of 3%–5%.

  
  

Key Drivers of High Turnover

• How employees are treated by their immediate supervisor

• Poor training 

• Lack of a career path

• Burnout and poor work-life balance

• Lack of recognition

• Toxic workplace culture

In 2025, a strong company culture is crucial for restaurant success, as it directly impacts employee engagement and retention amid ongoing labor challenges. Key drivers of engagement include competitive compensation, flexible scheduling, clear career development opportunities, and most importantly is a strong company culture where the company values are lived and tole modeled daily. 

Key Culture and Engagement Drivers in 2025

Build the Right Culture: Determine real, meaningful values, and be able to clearly explain what they mean in terms of behavior internally and with guests.

Set Clear Performance Expectations: Develop comprehensive and thorough training programs. The cost on the front end is minimal compared to the cost of turnover.

Compensation and Benefits: Transparent compensation programs and performance-based incentive plans are key. Competitive benefits are necessary as well.

Flexibility and Work-Life Balance: The challenge of seven-day operations and lunch, dinner, and even early morning shifts create work life challenges. Employees with school schedules need accommodation, and employees with second jobs need accommodation.

Avoid the “Need Experience” Trap: Restaurant skills are teachable, find great people who fit your culture and be willing to provide the experience yourself. 

Career Development: Provide clear career paths and growth opportunities. Offering leadership training, cross-training, and mentorship programs helps staff feel invested in their future and motivated to stay long-term.

Supportive Leadership and Communication: A positive relationship with management is a primary driver of engagement. Open, transparent, and consistent communication from leadership builds trust and ensures everyone understands company goals and values.

Recognition and Feedback: Regular, authentic, and timely recognition for hard work and achievements significantly boosts morale. Establishing channels for both positive and constructive feedback, and crucially, acting on it, makes employees feel valued and heard.

Technology Integration: Smart implementation of technology (e.g., AI for scheduling and inventory, digital ordering systems) can streamline operations, reduce manual workload, and allow staff to focus on high-value, personalized customer interactions, enhancing job satisfaction.

Purpose-Driven Work: Younger employees are often motivated by working for companies that align with their personal values, such as sustainability and ethical practices. Anchoring work to a clear mission beyond profit creates a powerful motivator. 

Have an "Open-Door" Policy: Allow people to express their job-related concerns and share their ideas. Conduct regular one-on-one meetings to foster open communication.

Attract the Right Talent: Job postings should be providing a reason great employees should choose you over someone else. Make recruit more than a list of criteria candidates need to meet. 

Highlight your company culture during the hiring process using social media and employee testimonials to attract like-minded candidates. 

If you want to know more about turnover, engagement and company culture, contact Strategic Supply Chain Partners.

We have engagement and culture coaches on our team who are able to collaborate with you to increase retention and improve your profitability. 

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