10 HR Issues That Are Keeping Your Restaurant From Reaching Its Full Potential


Restaurant owners get into the industry because they are passionate about fulfilling their dream of delivering great customer experience with great food. However, many owners are forced to wear several hats just to keep that dream alive. In most cases, their main strengths are put on the back burner while they tackle other items such as accounting, PR/marketing, team management, recruiting or working the floor. HR is also one of those big challenges, causing restaurant owners to deal with problems such as high turnover, wage/tip requirements, and complicated scheduling. Dealing with these problems is overwhelming, frustrating, and puts the business at a much higher risk of failure. With your focus spread so thin, you might not have time to address HR problems the right way. The first step is to figure out which items you need to fix. We’ve outlined the top 10 HR problems that restaurant owners should start to address more strategically.

1. High Turnover

High turnover is the main problem for most restaurants. The industry has one of the highest turnover percentages in comparison to other industries. Based on the data from the Bureau of Labor Statistics, in 2015 annual turnover rate for the restaurant industry was 72%, up from a rate of 67% in 2014.

Hiring and retaining talent can be very difficult and complex. Having a skilled restaurant staff that can handle the challenges of delivering a great restaurant experience is essential to keeping your business healthy. Ensure that you devote enough attention to being selective with the candidates that you hire so you can find employees that are a great fit and help you keep your customers happy.

2. Onboarding

The quality of your onboarding process is key to ensuring your employees are happy and empowered to do their job. Good onboarding also significantly reduces costs as employees are trained correctly, which minimizes mistakes that can drain finances. Get your staff up and running smoothly and efficiently. Invest the time to develop standards in your onboarding process so that your new hires get up to speed accurately and are pointed in the right direction. An electronic onboarding system can help you stay consistent and eliminate the need for tedious paperwork.

3. Training

You can acquire the best talent, but without the proper training, your employees can’t do their job properly to reach their full potential. There are many ways to improve your training programs, however, it takes time. Once hired, your staff needs to be prepared immediately to deal with bad or good customer situations. To make an immediate impact, focus on the “low hanging fruit” to ensure your training program at least meets the minimum standards and tools. Focus on tools such as employee handbooks, training manuals, process checklist, user guides, and mentorship programs that can help improve job performance.

4. Poor Performance

Performance management needs to be a consistent process that includes ongoing conversations about an employee’s performance and a formal review at specific time in the year. When you manage performance in a way that is fair and clear, you’ll avoid issues later on if an employee fails to meet the standard that has been agreed on. Taking the correct steps to address poor performance in writing will also be beneficial when you decide to terminate someone. This is very important because the documentation protects you in the event that an employee wants to challenge their dismissal with a wrongful termination suit.

5. Benefits Offerings

Restaurant owners are much less likely than other business owners to offer benefits to employees. However, in this super competitive industry, when you offer a strong benefits package, you can attract and retain the top talent, managers, staff, and chefs. While benefits such as healthcare and 401k plans need an upfront cost, this kind of investment can have a very high impact on your employee loyalty and retention.

6. Workplace Harassment

As you know, a big part of being a business owner is to provide a safe working environment for all employees. This means that you’d address any harassment complaints in a thorough and consistent manner. Workplace harassment, especially sexual harassment, is a big issue in the restaurant industry and you need to take the proper measures to protect your business and most importantly, your employees.

7. Risk Management and Safety

There’s no doubt that restaurants need to be more prepared than most businesses when it comes to safety issues that can potentially harm their staff and customers. From kitchen injuries such as burns and cuts to sanitation issues, food-borne illnesses from the mismanagement of food, slips, and falls, there are a number of things that can go wrong. Risk management and safety programs are key to preventing workplace mishaps and illnesses which will reduce costs and protect everyone in the workplace, including your customers.

8. Complex Payroll and Reporting

Because restaurant workers can be paid several forms of wages that can vary with different tax and overtime requirements, payroll can be very time consuming. Factoring taxes for all the appropriate government agencies can also be complex, especially for restaurant groups that have locations in multiple states. For instance, missing a quarterly tax submission or a required report specific to a city, county or state could end up being a very costly mistake.

9. I-9 Compliance

The restaurant industry is susceptible to I-9 audits because of the high-percentage of immigrant workers and the high-turnover. There are so many opportunities to make a mistake between incorrect forms, errors on documentation, not completing them in the correct timeframe, submitting forms in Spanish, or discarding documentation records too soon. It’s crucial to maintain accurate documentation in conjunction with taking the appropriate steps to ensure you are not stuck paying large fines and penalties.

10. Fair Labor Standards Act Compliance

The FLSA (Fair Labor Standards Act) is a complex law that sets the policies for wages and hours worked which most US employers need to comply to. Many restaurants have a difficult time keeping track of compliance and are especially at risk of violating FLSA because of the long hours and lower wages for restaurant workers. Compliance mistakes can make you liable for taxes, penalties, back wages, and legal fees.