State of the Fast Food and Quick Service Restaurants (QSR): Hiring and Retention Trends

Hasnain Naseer -

A fast food restaurant, also known in the industry as a quick-service restaurant (QSR), specializes in serving fast food cuisine with minimal table service. QSRs focus on preparing items quickly from a limited menu to ensure consistency and efficiency. This operational model is characterized by standardized processes that reduce lead times while maintaining the quality that customers expect.

As of 2024, the global fast food and QSR industry is valued at an impressive $972.5 billion, according to Statista, reflecting the sector's resilience and growth despite global economic challenges. The US remains a significant player, accounting for nearly 40% of the global market with a size of approximately $389 billion, as reported by Grand View Research in 2024. The annual growth rate of the US market has averaged 3.2% from 2019 to 2024, driven by consumer demand for convenience and the expansion of delivery services.

Turnover Rates in Fast Food and Quick Service Restaurants

High turnover rates are a well-known challenge in the fast food industry, which continues to have the highest turnover of any industry. According to the National Restaurant Association in 2023, the turnover rate in the industry was 72.4% in 2023, with a significant portion, 50.1%, quitting voluntarily. This trend has been exacerbated by the pandemic, with turnover rates rising to 80% in 2022 and early 2023, compared to a 49% average across other private-sector jobs.

For the 2021–2023 period, the Bureau of Labor Statistics reported an official turnover rate of 83.6% for the food service industry. However, industry estimates suggest the turnover rate could be as high as 150%, underscoring the sector's ongoing struggles with workforce stability. According to the BLS, in July 2023, a seasonally adjusted quit rate of 5.8% was recorded for the accommodation and food services industry, the highest rate among all industries.

Labor Shortages and Turnover Costs

Since the pandemic, QSRs have faced significant labor shortages. Factors contributing to the spike in hospitality workers quitting include low wages, lack of benefits, long hours, challenging work environments, and demanding customers. The pandemic has also heightened employees' desire for better work conditions and greater job satisfaction.

Fast food chains often employ a workforce with little prior experience, including a large proportion of teenagers and students working part-time or seasonal hours. This demographic characteristic contributes to the industry's higher turnover rates compared to other sectors.

Financial Impact of Employee Turnover

Employee turnover is costly for fast food and QSR businesses. According to a study by Cornell's Center for Hospitality Research, the average cost of turnover for a front-line employee is approximately $6,109 per person per year. This figure includes various costs such as productivity loss, recruitment, and training.

Here's a detailed breakdown of the turnover cost:

  • Loss in Productivity: $3,199
  • Pre-Departure Costs: $184
  • Recruitment Costs: $1,215
  • Selection Costs: $681
  • Orientation, Training, and Onboarding Costs: $830

While $6,109 may seem manageable on a per-person basis, it becomes substantial when considering multiple replacements throughout the year. For example, losing a server every two months would amount to a $36,654 annual loss, funds that could otherwise be invested in renovations, marketing, or employee incentives.

Strategies to Reduce Staff Turnover

Given the high turnover rates, QSRs must adopt strategies to retain their employees and reduce the associated costs. Here are some effective approaches:

  1. Offer Flexible Scheduling: Flexibility is increasingly important to today's workforce. According to a 2024 survey by FlexJobs, 43% of employees left their jobs due to inflexible schedules. Offering flexible work arrangements can enhance employee satisfaction and reduce turnover.
  2. Increase Internal Mobility: Promoting from within can increase employee retention. Workers in organizations with high internal mobility tend to stay longer and are more engaged.
  3. Provide Innovative Benefits: While raising wages might be challenging due to slim profit margins, offering unique benefits like on-demand pay or financial wellness programs can alleviate financial stress and improve job satisfaction.
  4. Regular Communication: Maintaining open lines of communication helps address employee concerns, reduce stress, and improve overall job satisfaction. This can prevent issues from escalating to the point where employees feel compelled to quit.

Conclusion

The QSR industry remains a significant contributor to the global economy, but it faces persistent challenges related to high employee turnover. By investing in employee retention strategies, QSRs can reduce turnover costs and build a more stable, productive workforce, ultimately enhancing their profitability and long-term success.