A new National Restaurant Association report puts a dollar figure on understaffing for the first time, and reveals why the operators winning today are the ones moving fastest, not the ones being most selective.
Joshua Secrest
Head of Paradox Marketing
Workday
Being short one employee costs a restaurant 7-8% of daily revenue per shift—as much as $1,500 in a single day. That number, from new National Restaurant Association research, is the sharpest evidence yet of something operators have felt for years: Restaurants don't have the luxury of making slow hiring decisions.
Open positions immediately translate to uncovered shifts, and that affects everything — from slower transaction times to guest experience to strain on remaining team members. And notably for the restaurant industry, since traffic is more predictable (particularly in QSRs), understaffing can often be directly tied to revenue. That measurable financial impact is why restaurants have been the first to adopt hiring or operations technology leveraging AI, and why the data coming out of this sector often serves as a bellwether for where investments are headed in other frontline industries (like manufacturing, retail, and even healthcare).
I saw this firsthand while leading global talent acquisition and strategy at McDonald's. If we weren’t consistently ahead of the curve in restaurants, we were behind it. But being “ahead of the curve” is a difficult task when you don’t even know where that curve is (i.e. what does “good” look like?)
Thankfully, there are some really smart people out there doing the research on exactly how the best restaurants are handling frontline hiring today.
In a recent Future of Work podcast episode, I sat down with one of those really smart people, National Restaurant Association SVP and chief economist Chad Moutray, to dig into their second annual hiring and staffing report.
Last year, the report focused on technology’s impact on hiring and labor. This year, it delves into the numbers that tie labor and staffing directly to revenue, and what they tell us about how to hire and retain in the frontline. Here are some of the takeaways from our conversation.
Report
Time-to-hire has always been a contested metric in HR. The argument against optimizing for it: Moving fast doesn't matter if you're making the wrong hires. That logic has real merit in professional and corporate recruiting, where you're evaluating a smaller pool of candidates over a longer process. But in frontline hiring, the data is pointing somewhere different.
Moving fast doesn't matter if you're making the wrong hires.
Frontline candidates aren't choosing between two offers while you deliberate. Fifty-four percent of job applications come in during evenings and weekends, and those candidates are applying to up to 15 jobs every week. The employer who responds first gets to select from a pool that slower competitors will never see. That means when you can screen, qualify, and schedule in hours rather than days, you can afford to be more selective about who you advance, not less.
The research backs this up. Companies that have adopted automated hiring tools—like AI-assisted scheduling and 24/7 candidate communication—are seeing better retention outcomes as a result. Speed isn't compressing the quality of the decision. It's improving the conditions under which the decision gets made.
That 7-8% figure is worth sitting with: Being short one person costs a restaurant that much of daily revenue per shift.
Woah.
We’ve been pounding the table for many years now about how understaffing impacts revenue, but it’s great to see an actual digit in front of a percentage sign to give that notion some backbone. Depending on the type of restaurant (e.g. fast casual, fine dining) and volume, that 7–8% translates to between $300–$1,500 in lost sales per day.
Being short one person costs a restaurant 7-8% of daily revenue per shift.
The dollar figure is obviously useful for getting a board's attention. But what operators know from experience—and what the research keeps confirming—is that the real damage is cyclical. One open shift means your best people are asked to cover more. Do that too many times and you burn out your best people first. When they leave, you lose the people who kept service standards up and ticket times down.
So, yes, understaffing costs you revenue today. But it also accelerates the turnover that makes tomorrow harder. Eight in 10 operators say understaffing is actively limiting their ability to grow, as they close table sections, turn off DoorDash, and halve menu offerings.
The financial case for fixing this is clear.
Building the infrastructure to do it? That’s a bit harder.
The latest average time-to-fill a restaurant position is 16 days. For a manager, it's 46 days. Both numbers are too high given what we know about the cost of vacancy—but they also mask a divide that's becoming more and more consequential.
Look beyond the average, and we actually see two distinct clusters: a group of operators hiring in 2–4 days and then a group of operators taking around 30.
What's driving the gap is largely technology, but the pattern of who's adopting it might be surprising. You'd expect smaller, nimbler operations to be the early movers—they don’t have large-scale processes in place that make change management difficult.
The data actually says the opposite: Larger organizations, the ones fielding millions of applications per year, are the fastest hirers (think Chipotle, Panda Express, Shake Shack, etc.)
Why?
Volume created urgency, urgency drove adoption, and adoption created compounding advantage. Independent operators should be paying attention to that.
Volume created urgency, urgency drove adoption, and adoption created compounding advantage.
The average annual turnover rate in the restaurant sector is 122%.
That means the typical operator is replacing their entire staff, and then some, every year. It's one of the most cited statistics in the industry, but it doesn't actually tell you what's going wrong or what's working.
Here are two more useful frames, built on two thresholds the research surfaced this year.
The first is the break-even point. On average, hourly employees become net positive contributors after an average of 31.8 days. Thirty-one point eight. If you can’t tell by now, I love specificity—and you can’t get more specific than a number with a decimal in the middle. If someone leaves before that point, the business loses money on that hire. Call it the “bad hire” rate—not a knock on the employee, but a more honest measure of hiring quality than the industry-standard turnover rate.
Hire more people who positively impact your business and fewer people who negatively impact your business. Report on your number of “bad hires” with your c-suite with programs and processes to bring this number down.
The second magic number is the retention point, or the point where employees become more likely to stick around for much longer. Anecdotally, most companies will cite this number at right around 90 days. While this varies by industry, the data from the National Restaurant Association report actually says it’s more like 70, and that 20-day difference matters. Get your employees to this mark consistently and you’ve turned staffing into a competitive advantage. Ultimately, our goal is simple: hire people who can do the job—and who will stick around to do it.
This is one part of the conversation I don’t want to skip over, because it rarely comes up in discussions about hiring technology.
The restaurant sector is one of the most diverse employers in America: 52% of employees are minorities, 28% are Hispanic, 23% were born outside the United States, and 3 in 10 speak a language other than English at home. Those are statistics worth designing around. A hiring process that requires English communication is filtering out a significant share of the available workforce before they ever apply.
The industry added 135,000 workers over the last 12 months (and hires 15.3 million each year). Even as consumers cut back in other areas, people still love going out to eat. The labor pool is there. The question is whether the infrastructure for reaching it is built for the people who actually make up that pool. Technology designed for this workforce needs to be multilingual, mobile-first, and accessible—meeting candidates where they are, not where we assume they are.
Understaffing carries steep, immediate costs that limit growth, hurt service, and reduce sales. Read the National Restaurant Association's report on how onboarding, managers, and technology drive restaurant ROI.
Report
A gap between effort and impact is the real ROI problem. Discover the solution.