Don't let turnover costs surprise you [Free turnover calculator!]

Turnover is a reality in every industry, but it hits quick-service restaurants extra hard. In fact, only 54% of QSR employees reach 90 days on the job before quitting. This high turnover isn’t just disruptive. It threatens morale, hurts profitability, and impedes your ability to deliver top-notch customer service. Plus, replacing and training employees is spendy—research suggests it can cost  $6K per individual.

There are many factors that influence how much turnover costs—but what really matters is what it’s costing you. We can help! Our free turnover calculator helps you consider the tangible costs + hidden costs of turnover and get a better feel for the financial impact turnover is having on your business today. 

The hidden costs of turnover

A lot of turnover costs are obvious, and they can really add up. Let’s look at a quick example.

Let’s say you own a 30-person store.
Your HR software costs $5,000 annually.
The time your manager spends on admin tasks each year equates to $37,500 of their salary.
The average cost to replace an employee is $6,000.

Considering the hypothetical scenario above,  at an average turnover rate of 80%, it would cost you $186k a year to keep your store staffed. 

That’s just the tangible dollars and cents. There are also many not-so-obvious costs to consider as well that will hurt your bottom line indirectly. 

Team morale

Team morale is one of the most significant hidden costs of turnover. Losing a teammate can raise questions for the remaining workers. Are there better jobs out there? Can I get paid more elsewhere? Why did they leave? When turnover is high, employees won’t see the workplace as a more permanent place where they can potentially grow their careers. They’ll start to stick one foot out the door. When people aren’t committed to their workplace, morale lowers. And when their friends keep quitting, they might want to quit too. 

Burnout

When team members leave, the remaining individuals often have to take on additional hours or responsibilities to compensate. This can lead to increased workloads and stress, putting employees at risk for burnout. 

This is especially true in the fast-food industry, where workload is the #1 reason employees quit. Being stretched thin makes it more difficult to grant requests for time off or accommodate sick or unavailable workers, leading to frustration from your employees, decreased satisfaction, and a higher likelihood of burnout. And people will only tolerate that kind of workload for so long before they begin to look elsewhere.

Company reputation

Excessive turnover can affect the reputation of a business—both internally and externally. Employees may perceive the high turnover rate as a sign of poor leadership and instability, which can lead to even more turnover. Plus, loyal customers will recognize when staffing is low or when their favorite team members aren’t around anymore, and it can make them wonder whether the establishment is being run effectively and fairly.

Business disruption and productivity loss

Even with the most well-oiled onboarding and training systems, new employees are simply not as productive as seasoned ones. A high turnover rate means there’s a new person on almost every shift, and when you’re always working with new team members, you can’t deliver goods and services as quickly—or as smoothly. Plus, when valuable veteran employees are constantly being tasked with training someone new, you’ll never have a staff that’s fully operating at 100% productivity. 

Loss of clients

A loss of productivity and overworked employees is just the beginning of the effects of turnover—customer service and experience will inevitably suffer, too. Whether it’s longer lines, dirty facilities, less cheerful interactions with customers, or a product that isn’t quality checked as thoroughly (or is wrong altogether), even your most dedicated customers may second-guess their loyalty once their experience is negatively impacted. Once customers don’t have a positive experience, they may decide to return less frequently, or not at all. Loyal customers can be the backbone of solid franchises, so the importance of keeping them shouldn’t be overlooked.

Calculating turnover costs

Now that you understand that turnover costs can creep into unexpected areas of your business,  you need a way to calculate how much it’s costing you personally. Calculating an accurate turnover cost is important for understanding your bottom line, and there’s often more to it than meets the eye. 

Our turnover calculator will help you get a more accurate understanding of how turnover is impacting your business. Use it for free here! Just Make a copy to get edit access and update the fields to reflect your unique business attributes. In a few clicks, you’ll be that much closer to understanding your turnover costs. 

Strategies for reducing turnover

Once you understand how much turnover is costing you, your next question will inevitably be, “How can I lower the cost?” The good news is there are several strategies you can employ to accomplish this.

Ensure fair compensation

Hourly workers can tell you there is often a significant divide between minimum wage and living wage. Offering a competitive compensation package can speak volumes about how much you value your workers and in turn, boost their loyalty to you and the company. In the end, a job is a job, and employees need to feel like they’re making enough to return to work each day. Clear opportunities for growth and professional development plans can also help reduce turnover rates.

Not sure how much to pay your workers? Compare wages across roles and locations with our Hourly Wage Index.

Foster a positive work environment

Nurturing a positive work culture is key to keeping employees engaged and satisfied with their job. Emphasize ongoing communication and feedback channels to continually address employee concerns so workers feel seen and understood, prioritize fair hours and a balanced workload, and recognize when your employees are doing a good job so they feel appreciated.

Enhance employee engagement

Speaking of feeling appreciated, recognition programs can help employees feel valued. Team-building activities are another great way to help employees feel invested in each other’s success and make positive memories, boosting synergy and satisfaction overall. Whether this means treats in the backroom or first dibs on schedule requests, get creative to implement something that helps your team feel appreciated and engaged. 

Provide opportunities for growth

There’s a common misconception that hourly workers aren’t interested in building careers; they’re here for a short time. And while that may be true for some, a surprising amount of this workforce is looking for opportunities to build a career and climb the ladder. In fact, 41% of employees quit their previous jobs due to a lack of career advancement. Creating clear growth opportunities (and communicating them often) can give hourly workers a reason to stay. This can mean development planning for each employee, mentorship programs, or continuous learning opportunities through trainings. 

Improve recruitment and onboarding

Boosting retention can be as simple as finding the right team members in the first place. Setting clear expectations can ensure you’re attracting workers who are a solid fit for the role and company culture. Once hired, individuals need to feel supported and engaged from the beginning through a strategic and effective onboarding program. One study showed that a well-executed onboarding program can boost retention by a whopping 82%.

Measure your retention efforts

Last but certainly not least, you need to implement a way to measure your retention situation. Are there specific positions or locations struggling more than others? Are there any patterns revealing how long employees tend to stay? Dive into the data to assess your current situation, then create a game plan for how to address your business’ unique turnover challenges. 

Take steps today to secure your team’s future

Turnover rates may seem overwhelming, especially when confronting all of the hidden costs and implications for the business, but there are many ways to take action so your team members feel valued, heard, and dedicated to your business's long-term success. 

Our calculator is a great first step in creating an action plan. Share it with your managers and keep it handy so you always have the most up-to-date figures to drive your retention strategy. 

By taking proactive steps now to address turnover rates, you’ll not only boost morale, but you’ll lay the foundation for sustained growth and profitability in the competitive franchise landscape.