Why You Can’t Afford to Ignore Manager Turnover in Your Restaurant

Why You Can’t Afford to Ignore Manager Turnover in Your Restaurant

Did you know turning over a manager in your restaurant can cost your business over $30,000? 🤔

Yes, you read that right. The financial impact of losing and replacing a manager is significant, and it’s something that every restaurant owner and operator needs to consider carefully. Let’s break down the numbers and understand why this cost is so high, and more importantly, why keeping an underperforming manager might be even more costly.

The True Cost of Manager Turnover

When a manager leaves, the immediate costs start to pile up. Here’s a closer look at what happens:

1. Increased Food and Labor Costs

Without a manager present, we know food and labor costs creep up quickly. If your restaurant is doing $700,000 in sales, even a modest 2% increase in food cost and a 2% increase in labor cost over the three months you’re hiring and training a new manager can add up to $7,000.

2. Training Costs

If your new manager earns around $50,000 per year (this number varies by concept and size), the three-month training period where they’re learning the ropes costs your business over $10,000. This period is crucial for getting the new manager up to speed, but it’s also a time of increased expense.

3. Turnover Costs

When a new manager comes in, there’s always some turnover as the management style changes, especially if the previous manager was underperforming. This turnover will cost you an extra $3,000 to $5,000. New managers often need to rebuild the team and establish their own methods and standards, which can lead to short-term instability.

4. Performance Slips

With a lack of leadership, performance slips. This means sales dip as well. Even a 3% dip in sales over three months can cost you $5,000. The absence of a strong leader can lead to inconsistency in service, quality, and overall guest satisfaction.

5. Recruitment Fees

If you’re really stuck in a bad position, you may even need to use a recruiter whose fees often start at $6,000. Recruitment services can be a valuable tool for finding the right candidate quickly, but they come at a significant cost.

Adding these numbers up brings you to a staggering $33,000. But here’s the thing: this is just the start.

The Hidden Costs of Keeping an Underperforming Manager

Even more expensive than manager turnover is keeping an underperforming manager in place. Here’s why:

1. Continuous Increase in Food and Labor Costs

The increase in your food and labor costs isn’t just for three months; it’s ongoing. Over the course of a year, even a small percentage increase can accumulate to significant amounts. Poor management often leads to inefficiencies and waste, driving costs up consistently.

2. Persistent Sales Dips

That dip in sales doesn’t just last three months; it becomes a permanent issue. An underperforming manager can damage your restaurant’s reputation, leading to a decline in guest satisfaction and repeat business. The ripple effect on sales can be devastating over time.

3. Ongoing Turnover

An underperforming manager often leads to higher turnover rates among staff. The constant need to hire and train new employees adds to your costs and disrupts the consistency of your service and kitchen operations. This turnover can be a vicious cycle that’s hard to break.

The Annual Cost of Poor Management

When you factor in these ongoing issues, keeping a poor manager in place can be costing you over $60,000 per year. This figure doesn’t even include the manager’s salary! The hidden costs of inefficiency, poor guest experience, and high staff turnover add up quickly, impacting your bottom line significantly.

So, What Can You Do?

The financial implications are clear: you can’t afford to keep underperforming managers. But finding and retaining good managers is also costly. Here’s where strategic management and support come in:

1. Invest in Training and Development

Regular training and development programs for your managers can help them stay on top of industry trends, improve their leadership skills, and become more effective in their roles. Investing in your managers’ growth pays off in the long run.

2. Performance Reviews and Feedback

Implement a system of regular performance reviews and feedback. This helps identify issues early and provides an opportunity for managers to improve before problems become too big. Constructive feedback is crucial for ongoing development.

3. Foster a Positive Work Environment

A positive and supportive work environment reduces turnover and boosts morale. Happy employees are more productive and provide better service, which in turn improves sales and guest satisfaction.

4. Utilize External Support

Sometimes, bringing in an external consultant or using recruitment services is necessary to find the right fit for your restaurant. While these services come at a cost, they can save you money in the long run by ensuring you have competent, effective managers in place.

Conclusion: You Can’t Afford Not To

The numbers speak for themselves. The cost of turning over a manager is high, but the cost of keeping an underperforming manager is even higher. Investing in your management team’s development and ensuring you have the right people in place is crucial for your restaurant’s success.

Don’t let the fear of change keep you from making necessary adjustments. Your bottom line, your team, and your guests will all benefit from strong, effective leadership. Isn’t it time you started to think about how to improve your manager’s performance and start reducing the turnover rate? You can’t afford not to.

To learn more check out all of our services here: Services – Pinnacle Hospitality Consulting


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