The hospitality sector is facing a retention crisis and this is why

Jonatan Marc Rasmussen
Last updated:
February 5, 2023

Hospitality is one of the largest business sectors in the UK, employing approximately 2.4 million people. These employment figures, however, are shrinking significantly, creating major issues for companies. So, what is causing high staff turnover in hospitality and what measures can be taken to curb the crisis?

Although the industry has always faced high employee turnover rates, for the first time, hospitality vacancies exceed unemployment. Office of National Statistics (ONS) data reveals that there were 173,000 vacancies recorded in the accommodation and food services activities alone between April and June 2022 – a staggering 34% increase from last year and the largest increase of any sector. Notably, from August to October, there were still 152,000 vacancies.

The biggest external factors impacting the talent pool are:

  • Covid-19: Hit first and hit hardest, hospitality is still recovering from the coronavirus pandemic. During the restaurant, bar and hotel closures of 2020, staff found themselves exploring new career prospects and leaving the sector permanently. On top of this, lockdown forced a considerable portion of workers to return to their own home countries – many of whom have not come back to the UK since.
  • Brexit: While staff shortages in hospitality has become a global issue, the UK’s departure from the European Union has certainly intensified the problem. Unsurprisingly, the number of EU nationals working in accommodation and food services notably declined from 2019 to 2021 as a result of changes to immigration policy. As of now, EU employees make up only 28% of the hospitality workforce, compared to 42% post-pandemic.
  • Cost of living: The UK is facing a cost-of-living and cost-of-doing-business crisis. Ongoing fixed costs, rising debt and the Chancellor’s decision not to freeze VAT at 12.5% are all major concerns for the hospitality industry. Low revenues and low cash reserves following the pandemic may not allow businesses to offer wage hikes to retain staff.

Staff shortages in hospitality are costing the sector up to £21 billion in lost revenue. Consequently, there is a lot of work to be done to facilitate the industry’s path to recovery. Earlier this year, UKHospitality (UKH), a trade association representing the broad hospitality sector across England, Scotland and Wales, published its workforce strategy. Focusing on five key areas – recruitment, skills and training, working lives, image of the sector and infrastructure – it sets out to solve the main challenges faced by hospitality and level up the workforce.

Addressing retention and recruitment challenges

Hourly paid front-of-house, waiting and kitchen staff, as well as cleaners and delivery drivers, are among the hardest positions to fill, and many workers in these roles have seen their pay rise accordingly. According to a survey from Barclays Corporate, businesses have awarded housekeeping staff an average wage increase of 7.4%, bar staff 7.3%, waiting staff 7.1% and cleaning staff 7%.

Staff shortages have a huge impact on business operations but hiking up wages isn’t the only response. Employers and HR departments need to do better. It's a competitive job market and there are various ways hospitality businesses can widen their appeal to candidates and retain hourly paid employees.

Tips for reducing employee turnover

  • Support employee wellbeing: Does your company encourage a healthy work-life balance? Do you talk to your employees about health and wellbeing and offer them support when they need it? Considering the current economic pressures we are facing, financial wellness is particularly important.
  • Provide perks: These days, it’s not just about pay rises. Employee benefits come in lots of different forms – from flexible shift patterns and bonuses to discounts and free meals. Develop a tailored package together and get imaginative with it!
  • Acknowledge and reward staff: Do you appreciate your staff? Well, how do you go about showing it? Employee incentives and rewards for excellent performance will improve job satisfaction and keep your team motivated.
  • Streamline recruitment and onboarding: Give your new workforce the best possible welcome by ensuring recruitment and hiring processes are up to scratch. Be clear about the role and your expectations upfront, integrate new starters into the company culture and give them all the necessary support they may need.
  • Offer growth and career development opportunities: Employees are more likely to stick around if they can advance within your organisation and develop an attractive career path. Prioritise in-house promotions, provide regular feedback and invest in upskilling staff by sending them on relevant training courses.

Where All Gravy comes in…

Hospitality and retail firms with hourly paid employees using All Gravy can reap the benefits of a 20% increase in shifts taken and a 15% reduction in staff turnover. Our app is an all-in-one solution to boost financial wellbeing. It gives your employees a complete overview of their finances and the money they are earning per shift, providing earned salary access to help improve financial stability and make managing finances easier.

From an employer’s perspective, there’s the opportunity to take the pulse on your business and really understand how team members are feeling. On top of providing easy-to-access data into retention and hiring trends, All Gravy regularly collects feedback to create a live picture of the nuances that influence the happiness of employees. Combined, these valuable insights enable HR leaders to identify key areas to focus on and get ahead of any problems, should they arise.

It shouldn't be ‘us vs them’ with your employees. Get a tool that puts you both on the same page. With All Gravy, you can look forward to heightened employee motivation, which, in turn, will scale down your hiring needs – saving you time and money.
Join the likes of McDonald’s, 7-Eleven, Let’s Sushi, Le Bab and many others and experience All Gravy. Book a demo to learn more about how we can help you attract and retain talent.

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