Reducing Turnover in The Restaurant Business

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The Bubba Gump Shrimp Company, a national chain of franchised seafood restaurants, prides itself on great customer service and affordable high-quality food, and knows that to meet their goals, they need a culture that attracts and retains the best employees (Bubba Gump Shrimp Company, 2011). In an industry notorious for high employee turnover and low job satisfaction (Prewitt, 2000), the Bubba Gump Shrimp Company reduced “management turnover from 36% to 16% in 2 years” (Aamodt, 2010, p. 397). What intervention opportunities exist for restaurant operators to reduce turnover of both managers and restaurant staff and more importantly, what resulting performance improvements can operators expect? While openly competitive pay and benefits are a central requirement, in addition, operators need to create a culture that challenges employees and provides opportunities for growth, in an environment that encourages the integration of work and family life.

The average annual turnover rate for casual full-service restaurants like Bubba Gump Shrimp Company was 85% in 1999, down from 117% in 1995, and while the industry showed significant improvements, restaurants experience turnover rates more than double that of other retail establishments (Zuber, 2001). The high turnover rates contribute to the nearly $4.3 billion in annual foodservice industry training costs (Zuber, 2001), while Bliss (2001) estimates the cost to replace a manager to be between 200% and 250% of annual compensation, making the issue of employee selection and retention a critical business issue to control bottom line costs in the low-margin business. The Bubba Gump Shrimp Company’s choice to focus on management retention was a savvy decision, because in restaurants, ...

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Kacmar, K. M., Andrews, M. C., Van Rooy, D. L., Steilberg, R. C., & Cerrone, S. (2006). Sure everyone can be replaced...but at what cost? Turnover as a predictor of unit-level performance. [Article]. Academy of Management Journal, 49(1), 133-144. doi: 10.5465/amj.2006.20785670

Kinicki, A., & Kreitner, R. (2008). Organizational behavior : key concepts, skills & best practices (3rd ed.). Boston: McGraw-Hill Irwin.

Prewitt, M. (2000). Studies find operators create employee turnover problem. [Article]. Nation's Restaurant News, 34(36), 8.

Wharton, A. S. (1993). The affective consequences of service work: managing emotions on the job. Work and Occupations, 20(2), 205-232. doi: 10.1177/0730888493020002004

Zuber, A. (2001). A career in foodservice: High turnover. [Article]. Nation's Restaurant News, 35, 147-148.

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