The hospitality industry sees frequent staff movement. On average, around 30% of workers leave their jobs each year.
But for restaurant and coffee shop owners, constantly hiring and training new staff is both costly and time-consuming. It also makes it harder to maintain quality service and keep customers happy.
In this guide, we’ll explore why staff turnover in the hospitality industry is so high and share practical steps to reduce it, helping you protect your restaurant or coffee shop’s profit margin.
How to measure staff turnover in the hospitality industry?
Staff turnover refers to the number of employees who leave an organisation within a specific period like a year. This metric includes both voluntary departures such as resignations or retirement and involuntary departures such as dismissals or redundancies but excludes internal movements like promotions or transfers.
A clear view of staff turnover rates gives hospitality leaders stronger insight into how well current recruitment and retention efforts are working and can reveal early signs of management or cultural issues.
Here’s how to calculate it:
Employee turnover rate (%) = (Number of leavers / Average number of employees) × 100
For example, if 30 employees leave a business with an average workforce of 100 over a year, the staff turnover rate would be 30%.
This formula can also be applied to monthly or quarterly data to help spot issues early and act sooner. Most modern payroll software systems include tools that can calculate turnover automatically for you.
The true cost of staff turnover in the hospitality industry
Every time an employee leaves, you’re paying not just to replace them but to train, support and absorb the productivity gap they leave behind. General estimates show that these costs can be high even though figures vary across different sectors.
Currently, replacing an employee in the UK can cost 6 to 9 months of their salary which works out to 50% to 75% of their annual earnings.
If steady departures take place over a year, these costs start to weigh heavily on a restaurant or coffee shop. This is why owners should make conscious efforts to reduce turnover and protect their margins from the costs that impact their bottom line.
5 causes of the high staff turnover in the hospitality industry and how to reduce it
Understanding the reasons behind staff turnover is the first step in reducing it. Here are the most common causes and practical steps you can take to address them:
Low wages and tips
Historically, low base salaries topped up by consistent customer tipping used to be the norm. But the rising cost-of-living crisis combined with a noticeable decline in tipping have made it harder for hospitality businesses to retain staff. As a result, many workers are now seeking roles in sectors that feel more financially stable.
The recent increase in the National Minimum Wage may help offset some of this pressure but hospitality businesses still need to rethink how they balance pay, benefits and profitability.
Check out our blog: Autumn Budget 2025: What SME Founders Need to Know for more detail on upcoming wages and what they mean for employers.
If your margins are tight, raising wages may not be feasible. Instead, set up a tronc scheme to collect and distribute tips among employees. It ensures compliance and recognises contributions from all team members involved in delivering a great customer experience including chefs, cleaners and admin staff.
Limited career progression
In the hospitality sector, many employees feel stuck because they rarely see opportunities to grow. They may start in roles like waiting tables or washing dishes but staying in the same position for months or years can lead to frustration and higher turnover.
To address this, you can:
- Develop a clear career growth plan that shows employees how they can progress to senior front-of-house roles, kitchen leadership or management positions.
- Offer new responsibilities such as taking charge of shifts, training new staff or managing sections of the restaurant/cafe to build skills and experiences.
- Enable departmental rotations to keep roles interesting and motivate employees to stay longer.
Many hospitality leaders are already making progress in this area. In a small-scale study conducted by hospitality data specialist Pineapple and AI-native workforce management platform Sona, participating businesses recorded a reduction in annual team turnover from 75% to 67% after increasing their focus on internal progression.
The same study found that internal promotions to key on-site leadership roles such as head chef rose from 44% to 51%.
Seasonal fluctuations
A major reason for high staff turnover in the hospitality industry is seasonal demand. Off-seasons often require fewer employees which can lead to temporary layoffs and staff departures.
To manage this:
- Retain a core permanent team to ensure consistency and smooth operations year-round.
- Offer flexible or seasonal contracts for staff who prefer short-term work.
- Cross-train employees so they can cover multiple roles such as front-of-house, kitchen or barista duties, keeping your workforce adaptable and engaged.
Lack of training and support
Many roles in cafes and restaurants require specific skills from preparing menu items to handling customer service efficiently. However, employees don’t always receive the training or support needed to perform well. This can lead to frustration and turnover among employees who feel unprepared for their roles.
To address this:
- Collect feedback from new hires and improve the onboarding process.
- Provide role-specific training such as barista skills, kitchen techniques or customer service workshops.
- Set clear expectations and goals and give regular performance feedback.
- Recognise achievements through milestone celebrations or a formal recognition program to keep staff motivated.
High stress environment
The fast-paced and demanding hospitality industry can create a high-stress environment that affects your staff’s mental and physical well-being. This may involve dealing with irate customers, managing sudden influxes of guests during peak hours or working prolonged shifts. Employees may feel stressed, burnt out or anxious which can lead them to leave.
To prevent this:
- Monitor workloads and check in regularly to understand how happy staff are and identify areas where support is needed.
- Encourage personal time off so employees can recharge and return more productive.
- Foster a positive environment with open feedback and communication to make your team feel valued and supported.
By implementing these steps, you can maintain consistent quality service, retain experienced staff and maximise profitability. Strategic initiatives like menu engineering and monitoring contribution margin can complement these efforts. It’s always wise to work with an expert to ensure employee wages are fair while protecting your profit margins.
At Rise Accounting, our team of specialist hospitality accountants can help you assess the financial impact of staff turnover, plan staffing costs and optimise payroll and tip distribution.
We serve as your outsourced finance function, providing the strategic financial guidance you need to manage challenges, optimise operations and grow your venture.
Contact our team here to learn how we can support you.
