Labour Shortage & High Turnover in The Restaurant Industry

1. The Problem

The restaurant sector in 2025 is grappling with twin crises: widespread labour shortages and persistently high staff turnover. Despite a rebound in customer demand, full‑service restaurants still lag behind pre‑pandemic staffing levels—nearly 4% (≈228,000 jobs) short of where they were in early 2020 (Gierran, 2025).

Meanwhile, turnover remains staggering. In 2023, the annual employee turnover rate in restaurants was about 74%, making it among the highest across all sectors (Emerging, 2024). Toast’s data shows ~900,000 separations (quits, layoffs, etc.) occurred in a single year—major industry churn, even though over 1 million jobs were also filled annually.

These staffing gaps force restaurants to reduce hours, simplify menus, and lean heavily on automation, but these measures come at a cost: dipped customer experience, reduced sales, and slimmer margins. Some establishments have been forced to close early or shut entirely on slow days because manpower simply isn’t available, further squeezing profits.

2. Why It’s Happening: The Root Causes

2.1 Post‑pandemic labour market shift & demographic change

After COVID‑19 layoffs, many restaurant workers found alternate paths — whether in higher‑paying retail gigs, remote roles, or other industries (Eater, 2025). As restaurants recovered, they struggled to bring staff back. On top of this, older generations are retiring, and younger generations (Gen Z and Millennials) are not replacing them at scale. These cohorts prioritize work‑life balance, flexible hours, and better benefits over traditional hours in restaurants (NetSuite, 2025).

2.2 Rising expectations and competition

Today's restaurant workers expect more than hourly pay—they want career development, health benefits, paid time off, and a respectful, safe work environment (SoundHound/Restaurant Business, 2024). They often trade higher pay for improved work‑life quality (Gierran, 2025). Restaurants also compete with retail, delivery, and gig jobs, which often offer better stability or flexibility (NetSuite, 2025).

2.3 Stressful working conditions & poor management

Restaurant jobs remain physically demanding, with irregular hours (nights/weekends/holidays), long shifts, and heavy lifting—all of which take a toll (NetSuite, 2025). Absenteeism and turnover are frequently linked to poor management, lack of recognition, and low training levels. One Cook/Toast survey noted staff cited poor pay (47%), lack of recognition (44%) and bad managers (37%) as key reasons for leaving (Toast, 2025). Many workers receive two weeks or less of onboarding—despite data showing longer training boosts retention (Toast, 2025).

2.4 External pressures: wages, legal/climate fears, and inflation

Restaurants face rising labour costs, with 92% of operators reporting increased wage expenses in the past year, and nearly 89% expecting further rises in the next 12 months (SoundHound, 2024). Then there are legal and immigration pressures—for example, ICE enforcement in Washington, D.C., created fear among immigrant workers leading many to stop showing up, accelerating staffing crises (Washington Post, 2025). Similar immigration policies unsettled U.S. restaurateurs nationwide, worsening labour supply (FT, 2025). Macro pressures like the cost‑of‑living crisis, supply‑chain disruptions, and surging prices for ingredients and energy further compress margins (Institute of Hospitality, 2024).

3. Solutions: What Restaurants Can Do

Here’s your roadmap from crisis to resilience, with actionable strategies tailored to the root causes identified above.

3.1 Invest in competitive pay + meaningful benefits

Wages alone aren’t enough. The most successful UK employers—like Greggs (n.d.), Wagamama (n.d.), and Nando’s (n.d.)—couple competitive pay with paid leave, pension schemes or private-medical options, training and clear career ladders that let staff see a path from entry-level to management roles. Wagamama, for example, promoted 569 colleagues last year as part of a drive to fill roles internally — a practical illustration of how visible progression routes can support retention (The Times, 2025). Sign-on and referral bonuses can speed recruitment, but industry advisers recommend pairing those short-term incentives with sustained wage and benefit improvements and stronger people practices to avoid token gestures that create resentment (Talos360, 2025).

3.2 Foster a positive culture and strong management

Employees leave managers, not jobs. Cultivating a respectful, inclusive, supportive workplace—and training managers accordingly—is crucial. Baker Tilly emphasises how culture drives performance which drives guest satisfaction and retention (Baker Tilly, 2024). Policies that support flexible scheduling, predictable hours, and work‑life balance empower staff, directly improving retention (Tarro, 2025).

3.3 Elevate training and onboarding

Though most staff get under two weeks of onboarding, evidence shows that investment of two or more weeks leads to better sentiment and stronger retention (Toast, 2025). Implement structured cross‑training—so staff can move between roles—while providing career-growth opportunities (Lockton survey, 2023‑2024; Restaurant employee retention strategy, 2022).

3.4 Embrace technology and automation

Using scheduling software, AI‑driven recruitment platforms, and automation in back‑of‑house processes reduces workload, improves efficiency, and frees staff to focus on higher-value tasks (Business Insider, 2025). Integrate self-service kiosks or tabletop ordering to streamline service and reduce pressure on front-of-house teams (Gierran, 2025).

3.5 Revamp recruitment strategy

Stand out in a competitive labor market: highlight flexible scheduling, competitive wages, culture, and benefits in job ads. Use staff testimonials to show the reality behind your pitch (Baker Tilly, 2024). Leverage referral programs, existing staff networks, and engagement with local communities to find quality hires (Baker Tilly, 2024).

3.6 Tailor strategies to local & regulatory realities

In markets affected by immigration enforcement, develop trust‑based communication, reassurance about rights, and clear HR guidance to reduce worker fear (Washington Post, 2025; FT, 2025). Track local macro trends like wage mandates, energy costs, and supply disruptions, and adjust your operations accordingly (Institute of Hospitality, 2024).

4. Summary & Key Takeaways

Taken together, to survive and thrive in 2025, restaurants must shift from reactive hiring to strategic retention. That means prioritising culture, compensation, flexibility, training, and smart adoption of technology.

5. Keeping It 100!

Let's face it! Running a restaurant is gruelling. The current labour crunch isn’t just a staffing hiccup—it’s a call for transformation. You can’t attract people with a sign in the window alone! You need systems, culture, respect—and a vision that shows people they can build a meaningful career in your business.

Done right, this is an opportunity. Your team becomes more stable, your margins more predictable, and your guest experience more joyful. That’s how you turn a crisis into a future you can build on.

Ready to turn today's staffing crisis into tomorrow's competitive edge?

If you’re looking to implement the systems, culture, and strategies that actually attract and retain great people, we can help. Reach out to us and let’s build the kind of future your business—and your team—deserves.

References

Baker Tilly. (2024, April 10). How labor shortages are affecting your restaurant's profits. Baker Tilly. https://www.bakertilly.com/insights/labor-shortages-affecting-restaurant-profits?utm_source=chatgpt.com

Business Insider. (2025, May). Paid leave, bonuses, and 401(k)s: How some restaurants are tackling staffing shortages. Business Insider. https://www.businessinsider.com/restaurants-taking-steps-to-attract-and-keep-workers-hiring-2025-5?utm_source=chatgpt.com

Eater. (2025, March). Five years after COVID, the restaurant labor market has yet to recover. Eater. https://www.eater.com/24385730/restaurant-job-market-covid-pandemic-effects?utm_source=chatgpt.com

Emerging. (2024). Restaurants With Some of the Highest Employee Retention Rates. Emerging. https://emerging.com/insights/employee-hiring/restaurants-with-some-of-the-highest-employee-retention-rates?utm_source=chatgpt.com

Financial Times. (2025, June 8). Donald Trump’s immigration restrictions threaten restaurant labour shortage. Financial Times. https://www.ft.com/content/9a54216c-4e06-40d7-8352-19aeed366803?utm_source=chatgpt.com

Greggs. (n.d.). Rewarding you — Colleague benefits. Retrieved 2025, from Greggs Careers website: https://careers.greggs.co.uk/rewarding-you?utm_source=chatgpt.com

Gierran, R. (2025, July 7). Restaurant Labor Shortage: Causes, Solutions & Strategies 2025. Oysterlink.com

Institute of Hospitality. (2024, April). Cost of Living. Institute of Hospitality. https://www.instituteofhospitality.org/wp-content/uploads/2024/04/Cost_of_Living_April_2024.pdf

Nando’s. (n.d.). Why Nando’s / benefits. Retrieved 2025, from Nando’s Careers website: https://nandos.careers/why-nandos?utm_source=chatgpt.com

NetSuite. (2025, around January). The Shortage of Restaurant Workers in 2025. NetSuite. https://www.netsuite.com/portal/resource/articles/human-resources/restaurant-labor-shortage.shtml?utm_source=chatgpt.com

SoundHound/Restaurant Business. (2024, November). Restaurant Labor Trends 2025: Rising Wages Drive Need for Retention, AI. SoundHound/Restaurant Business. https://www.soundhound.com/voice-ai-blog/restaurant-labor-trends-2025-rising-wages-drive-need-for-retention-ai/?utm_source=chatgpt.com

Talos360. (2025, June 4). How to improve hospitality staff retention (context on why progression, pay and benefits matter in UK hospitality). https://talos360.co.uk/resources/improve-hospitality-staff-retention/?utm_source=chatgpt.com

Tarro (2025). Restaurant Labor Shortage: How to Thrive with Limited Staff. Tarro. https://www.tarro.com/articles-guides/restaurant-labor-shortage?utm_source=chatgpt.com

The Times. (2025, May 23). 26 Best Very Big Places to Work 2025 (summary noting Wagamama’s internal promotions). https://www.thetimes.com/best-places-to-work/very-big-companies/article/best-very-big-companies-uk-2025-tdbnxnk50?utm_source=chatgpt.com

Toast (on‑line blog). (2025). How to Handle the Restaurant Industry Labor Shortage. Toast. https://pos.toasttab.com/blog/on-the-line/how-to-handle-the-restaurant-industry-labor-shortage?utm_source=chatgpt.com

Toast (on‑line blog). (2025). See through the shortage to the crisis of employee churn. Toast. https://pos.toasttab.com/blog/on-the-line/restaurant-staff-retention?utm_source=chatgpt.com

Washington Post. (2025, May 14). After ICE visits, D.C. restaurants fear labor shortage. Washington Post. https://www.washingtonpost.com/food/2025/05/14/dc-immigrant-ice-restaurants-labor/?utm_source=chatgpt.com