How to Lower the Turnover Rate in Your Coffee Shop
Lowering your turnover rate will promote a positive work environment in your coffee shop and save you money. Read on to learn why employees leave, how to determine your current turnover rate, and what you should do to retain your staff for the long term.
Recommended: Read our full, in-depth How to Start a Coffee Shop Business guides, inspired by coffee professionals, they will help make your coffee dreams real, from sourcing beans to hiring baristas, choosing a POS system, forming an actual company, and everything in between.
Top Reasons Employees Leave
Employee turnover is expensive, time-consuming, and bad for any business. Yet, food, beverage, and hospitality businesses face a far lower chance of retaining their employees than companies in other industries. Turnover rates at restaurants and hospitality companies topped 70 percent every year since 2014, according to the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS). In 2018, that rate rose to nearly 75 percent — the highest since the Great Recession. That’s a big deal when you compare it to other private sector jobs, which average annual turnover rates of around 46 percent.
An employee’s decision to leave their job is personal — unique to each individual and their experience in that position. However, people often leave a job for one of these common reasons:
- Lack of Training: Without proper training, employees may feel lost and unprepared for their role. Ultimately, this can set them up to fail.
- Different Work Than Expected: If the job doesn’t match the initial description, you could soon face an unhappy employee.
- Issues With Management: This can lead to a lack of respect for the business and its policies. If these feelings spread among your staff, they can lead to a toxic workplace.
- Lack of Communication: Businesses that fail to clearly communicate with employees about expectations and workplace changes miss the opportunity to engage workers in conversations that likely would increase their company loyalty.
- Lack of Qualifications: Someone underqualified for a position may experience constant feelings of stress in that role.
Determining Your Turnover Rate
The process of replacing employees is both inconvenient and costly. Losing a frontline employee costs a business an average of $5,864, according to the Center for Hospitality Research at Cornell University. Most of this cost stems from lost productivity while the position remains vacant.
Before you can implement strategies to boost your employee retention and measure your progress, you first need to know your starting point. Follow these steps to determine your business’s current turnover rate:
- Divide the number of employees who left your coffee shop recently* by the average number of employees you need to operate with a full staff. (*This could be at the end of a busy season or during the last six months — use whatever’s appropriate for your business.)
- Multiply that number by 100 to calculate your current turnover rate as a percentage.
Determining your turnover rate can help you assess how much of an issue turnover really is in your cafe. It also provides a baseline against which you can measure the success of the steps you take to reduce turnover.
Tips for Reducing Turnover and Improving Workplace Quality
Once you understand why your employees left, how do you prevent it from happening again? Follow these tips to start lowering your turnover rate and enhancing your employees’ overall experience at work.
Hiring isn’t a perfect process. A candidate that interviews well doesn’t always become a great employee and vice versa. However, optimizing your hiring process can help you minimize turnover and increase your retention rate. To do that, you should:
- Rethink Your Vetting Process. Don’t just look for employees with the most experience. Sometimes, the best baristas are those who learn how to make coffee in a way that best suits your shop’s specific needs. It’s also much easier to train a beginner than to convince a seasoned barista to unlearn bad habits.
- Ask the Right Questions. During the interview process, asking the right questions can give you insights on how your candidate will work within your business. A few good questions to ask include, “How do you respond to criticism from management?” and “How did you reach out for additional responsibility in previous jobs?” You also may want to ask applicants about how they function as part of a team.
- Share Your Employee Handbook and Expectations Upfront. From your dress code to policies regarding employee conduct, clearly convey your expectations of employees with job candidates during the hiring process. Have each staff member sign a document that acknowledges they received and read your employee handbook to encourage them to hold themselves to that standard.
- Implement a Grace Period. Finally, implement a grace period of 60 to 90 days. This will give each new employee time to settle into their role while you assess their fit within your business. Once an employee’s grace period ends, conduct a check-in meeting with them to discuss how things are going and next steps.
While challenging for many small businesses, offering benefits — if you can do so — will improve your employees’ quality of life and give them an incentive to stay. For cafe roles, employee benefits typically include medical, dental, and vision plans as well as paid time off. Here’s how you can make employee benefits advantageous to both you and your team members:
- Offer Health Benefits to Full-Time Employees Only. How you define a full-time employee will depend on your company policy, but this benefit provides a pretty good trade-off. It not only helps you reward employees for their dedication, but also encourages them to clock more hours in return for a health care plan.
- Require a Grace Period Before Providing Benefits. Implement a grace period that all new hires must work before they qualify for employee benefits. This will give each of them time to settle into their new position while you decide if they’re a good fit for your business. Three months is typical for this type of grace period because many employees who don’t plan to stay long term will jump ship during this time.
- Offer Paid Time Off, If Possible. If you can afford to offer paid time off, do so because it’s a great employee motivator. Many small businesses will offer a week of paid time off as a holiday or annual gift. A week can mean a full workweek or the number of days an individual employee typically works each week. If an employee only works three days a week, for example, you could give them three days of paid time off.
Train Your Employees
A lack of training is one of the top reasons people leave a job within their first year of employment. It may seem simple, but small business owners often overlook the need to effectively train new employees to do their jobs during the onboarding process. This can lead to job stress, poor performance, and a lack of loyalty. To prevent these negative consequences, you can:
- Hire a Trainer. With a trainer as part of your staff, your employees have full access to hands-on training specifically developed for your business. This also will enable your employees to continue training, as needed, after they complete their initial training session.
- Revamp Your Training. Give your employees space to express their need for more training without worrying it’ll reflect badly on their job performance. Scheduling regular training updates with your team members will not only help them refresh their skills, but also reconnect with their roles.
- Start From Scratch Every Time. Start every new hire’s training from the beginning — for both newbies and experienced baristas. This approach will help fill any holes in their knowledge and ensure they understand how you want tasks done at your cafe.
- Cross-Train Employees on Multiple Roles. Your employees should know how to complete all necessary tasks rather than having to wait for someone else to complete them. Cross-training helps employees take responsibility for their jobs and keeps your cafe running smoothly.
Treat Employees Well
How you treat your employees defines their experience in your work environment. Paying attention to employees’ experience in your cafe — and actively working to make it positive — can boost your retention rates. Consider adopting these best practices to accomplish that:
- Treat Employees With Respect. Your employees are valuable assets for your business — and you should treat them accordingly. Being kind and gracious to your staff members can go a long way toward ensuring they’ll turn into long-term employees.
- Promote Open, Ongoing Communication. Touch base with your employees regularly about their job performance, individual concerns, and any changes occurring within your business. Setting up quarterly or monthly check-in meetings with each of your employees gives them an opportunity to communicate with you and vice versa.
- Create Work Schedules That Avoid Burnout. Keep an eye on your employees’ schedules to ensure you don’t overwork anyone. Try to give each employee a full weekend — at least two days off in a row — and avoid scheduling someone for an opening shift after they work a closing shift.
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Invest in Your Equipment
Equipment that doesn’t work properly is a common source of on-the-job frustration. If your espresso machine or coffee grinder constantly has issues, for example, your employees may have to scramble to complete basic tasks. That type of situation may make them less likely to stick around. To avoid this, remember to:
- Schedule Regular Maintenance. Coffee equipment requires routine maintenance in order to work properly. Proactively scheduling regular maintenance checks for your equipment will make each piece last longer and keep your employees happy.
- Hire Professionals to Maintain Your Equipment. Espresso equipment is complex and requires a specific skill set to maintain. While hiring a professional will cost more than completing maintenance tasks yourself, it’s important to make repairs correctly or your equipment could stay offline for longer and cause you to lose business.
- Fix Issues Promptly. Temporary fixes are necessary as you wait for a repair, but they shouldn’t be a long-term solution. Frustration can quickly develop when employees must work around a temporary fix rather than using fully functioning equipment.
- Choose the Best POS System. A POS system that can track your inventory, produce sales reports, and offer loyalty programs goes a long way in making the life your employees comfortable.
If It’s Too Late ... Conduct an Exit Interview
If you want to understand an employee’s reason for leaving, simply ask them. Conducting an exit interview gives your departing employee the chance to communicate their reason(s). It also will give you an opportunity to learn so you can make adjustments that will prevent additional departures. If you face a high turnover rate despite taking steps to increase employee retention, this is the best way to learn what you can do differently to improve your work environment.
Taking steps to reduce your turnover rate will, ultimately, lead to a more positive workplace for you and your employees. It also can save you money along the way.