Reducing Turnover Increases Profits – No Matter the Industry

In a recent study by  Cornell University, it was found that the number of restaurants failing in the first year is close to 60 percent. (Some sources say it’s closer to 90%). This isn’t the case at San Francisco based Zazie.


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Jennifer Piallat, the restaurant’s owner, realized a fatal flaw that most companies overlook – employee turnover. The fact of the matter is, the cost of employee turnover is detrimental to business growth and can set organizations up to fail. It’s estimated that the financial cost of exiting an employee within 18 months of hire is roughly three times the employees’ first year salary – never mind the cost of lost productivity. This is a model that many businesses, no matter what industry, should be able to fully recognize.

To reduce turnover, Ms. Piallat implemented a plan that charges a $1.25/person surcharge for every guest, which helps to provide full benefits for their staff.

For those that are familiar with the instability of the restaurant industry itself, how can Ms.Piallat’s employees possibly have $1 million in savings with full benefits and a 401k plan? I don’t remember cashing out with that kind of dough when I left my waiting position at a local restaurant in high school. Zazie must be making zero profits, right?

Wrong. Zazie is coming in with 22 percent profit. This business is part of one of the most hectic and unstable industries out there and they’re profiting at 22 percent. Either they’re secretly charging $50 refills on drinks, or their system based on eliminating employee turnover is working.

Making retention a core focus for the top talent in your business organization will reinforce your hiring and development investment. The revolving door of many companies are proving the fact that 68 percent of hired sales professionals will seek a new job within the next year. Some of the highest-performing organizations utilize talent assessments to identify what environment motivates their talent, and the best ways to recognize and reward them like Zazie did with incentivizing their employees with benefits that they value. If you watched the video, Zazie has a dishwasher that has been with the restaurant for about 20 years and if that doesn’t say something then I don’t know what will.

Using best practices for retaining star talent in a way that recognizes their preferred styles, areas of strength, and motivating environments help keep employees like the ones at Zazie from leaving without locking the doors.

For more information:

Retaining Your Top Sales Professionals 

Hire and Retain Your New Employee                         

The Importance of Retaining Your Executives