The Achilles heel of the restaurant industry: Retention.

Imagine360’s Chris Morocco shared three retention strategies in this recent article for Today’s Restaurant Magazine.
Restaurants have faced a number of challenges in 2023. Hiring has slowed. Employees are leaving the industry. Inflation continues to rise along with food and labor costs. But there’s still hope for restaurants that want to retain top talent. Imagine360’s Chris Morocco shared three retention strategies in this recent article for Today’s Restaurant Magazine.

By Chris Morocco

With the effects of the pandemic subsiding, consumers continue to resume leisure activities, including returning to restaurants. To recover from immense job losses during the pandemic and keep up with the increased demand from consumers, the hospitality industry headlined a rejuvenated job market in 2022, outpacing every other industry to be the fastest growing in the country.

Despite this great hiring, a National Restaurant Association survey at the end of 2022 found that restaurants were still below pre-pandemic staffing levels. More than half of operators (62%) felt they did not have enough employees, and the restaurant industry had the largest employment deficit in the country.

In 2023, the situation has grown more complicated. Hiring has slowed and owners are now facing employees leaving the industry, rising inflation and increased food and labor costs.

How can beleaguered operators combat this threefold challenge and retain their restaurant talent? Here are three retention initiatives that restaurant operators should consider.

#1 Professional Training and Development

Training and development are essential for restaurants looking to retrain staff.

Basic training for new employees is a common way to onboard staff. It shouldn’t be where training ends. Online training is inexpensive and underutilized by restaurants, and it keeps employees engaged while enhancing their abilities. Cross-training programs are another popular training option to offer employees that don’t require much added expense. These types of programs are great for helping employees diversify their skills and learn different roles. This option also presents leadership opportunities by letting employees in each department lead the training.

In addition to internal training, offering external professional development opportunities to employees is a great strategy for reducing turnover.

Restaurant owners who present development opportunities can improve morale and show that they value their teams. There are a number of external certifications restaurant employees can pursue. Certifications are mutually beneficial; employees get to hone their skills and the restaurant gets added credibility and a better dining experience for patrons. By empowering employees to pursue a professional certificate, restaurant owners show their commitment to their teams and a true interest in developing their skills.

Teams that feel valued by their management through development and training are more likely to stick around.

#2 Compensation and Rewards

This year, many restaurant owners are required to raise staff pay, with more than half of U.S. states increasing minimum wages. This could potentially pose a challenge for increasing wages further.

One reason for this is inflation. Food inflation has slowed as of late, but prices remain significantly higher than last year. Restaurants have countered by raising their prices. However, some customers have responded by cutting back on their restaurant visits, resulting in less revenue for restaurants. This perfect storm likely prevents many restaurants from raising their employee wages.

A fear for many owners at larger restaurants and chains is unionization. Unions have taken the labor market by storm in 2023, and the hospitality sector is at the forefront. High-profile cases, like at Starbucks, have started a movement among restaurant workers. Especially now when inflation may prevent higher compensation, restaurant owners should maintain open dialogue and communication with their employees.

Savvy restaurant owners are looking beyond wages to recognize and reward their staff. Gift cards are a great way to offer a type of monetary bonus to staff. Similarly, some owners are designating a stipend for workers. These can go towards health and fitness, streaming services, or even education purposes. Other owners are focused on scheduling. A common complaint from restaurant workers, offering flexible scheduling options could be the difference between retaining or losing an employee.

There’s no one-size-fits-all approach, but owners who recognize and reward their staff are less likely to see turnover.

#3 Benefits Beyond Compensation

Restaurant owners who can’t raise wages may need to explore other benefits they may offer their employees. One option is to explore health insurance plans.

One survey found that just 31% of restaurants offer health insurance to their staff compared to 70% of private industry. To prevent their staff from seeking employment at other restaurants or industries, owners must enhance their benefits offering for those employees who are currently covered.

Owners may have shied away from attempting to enrich their insurance plans in the past because of the high expense they would undertake. However, there are alternative health insurance options available that can generate savings for the company while also making their plans more attractive to their employees.

For example, Frisch’s Restaurants, a popular Midwest franchise, re-evaluated its employee benefits after being hit hard by the pandemic. The company decided to switch its health insurance to a reference-based pricing (RBP) model. As a non-traditional model, RBP eliminates hidden fees and enables its members to pay for the true cost of healthcare. This change saved Frisch’s $1 million in year one, which meant employees paid significantly less, too. Instead, employees saw no premium increases, giving them more financial flexibility. Frisch’s credits this change as a key reason for its strong retention rate.

Restaurants have been driving the labor market for more than a year. Restaurant owners who prioritize retention can ensure this isn’t just a passing phase but rather can serve as the foundation for a successful future. Employees are the backbone and face of restaurants, and it’s now on restaurant owners to demonstrate to them that they are valued.


explore other topics

A CEO and HR director work together on a laptop in a conference room building a robust and cost-effective health plan strategy with Imagine360.
A mechanic at Chapman Auto Group with health insurance coverage from Imagine360 works on a car in the garage.
Large, partial logo for Imagine360, a self-funded health plan solution for employers

Your health plan can do better. We promise.

Let's Talk