The Hidden Costs of Undertrained Restaurant Staff: Why Investing in Training Pays Off

Did you know that undertraining could cost underperforming restaurants as much as 40% of annual revenue? 

That figure’s attributable to costs like turnover, low productivity, and high error rates associated with undertraining. Proper staff training isn’t free, but many successful restaurants view upskilling as an investment rather than an expense. 

In this article, we’ll break down the costs associated with undertraining and what business owners can do to implement successful training and education programs.

Breaking Down The Hidden Costs Of Undertraining

Maintaining healthy profit margins is a chief concern for most restaurant owners. With an average 3-5% pre-tax profit margins, restaurants can quickly feel the pain from small errors and inefficiencies, leading about 30% of restaurants to eventually fail. 

With food and rental costs expected to continue climbing, it’s become increasingly important to tighten up labor costs. Breaking down the costs of undertraining highlights how investing in staff training could help the bottom line. 

Turnover Is Expensive–And Undertraining Could Be Fueling It 

Turnover is a notorious problem in the food and drink service industry, with an average tenure of 2.0 years for the hospitality industry in 2024, compared with 3.5 years across all private sector employees. Inadequate training is a major contributor to high turnover rates, as it drives dissatisfaction and burnout—a problem that may affect 56% of the restaurant workforce. Overall, 41% of employees say that they will leave their job if it doesn’t provide adequate training opportunities. 

The cost of turnover varies significantly, but you can use this chart as a guide: 

Training-Related Turnover Cost

Employee Type	Average # of Staff1	Average Annual Turnover Rate	Average Pay (U.S.)	Average % of Salary to Replace2	Average Cost to Replace One Staff Member	Annual Turnover Costs	Training-related Turnover Cost (33%)3
Front of House (FOH)	20	20 x 41% annual turnover4 = 8.2	$44,0005	40%	$44,000 x .40 = $17,600	$17,600 x 8.2 = $144,320	$144,320 x .33 = $47,625
Back of House (BOH)	10	10 x 43% annual turnover6 = 4.3	$37,0007	40%	$37,000 x .40= $14,800	$14,800 x 4.3 = $63,640	$63,640 x .33 = $21,001
Management	5	5 x 20% annual turnover8 = 1	$73,0009	200%	$73,000 x 2 = $146,000	$146,000 x 1 = $146,000	$146,000 x .33 = $48,180
Total cost of undertraining							$47,625 + $21,001 + $48,180 =	$116,806

¹National Restaurant Association, National Statistics
² Gallup, 42% of Employee Turnover Is Preventable but Often Ignored
³ Restaurant 365, The Ultimate Guide to Restaurant Staff Training
⁴ OysterLink, High Turnover in Hospitality: Employees Leaving Even Quicker in 2025
⁵ Glassdoor, How Much Does a Front of House Make?
⁶ OysterLink, High Turnover in Hospitality: Employees Leaving Even Quicker in 2025
⁷ Glassdoor, How Much Does a Back of House Make?
⁸ OysterLink, Restaurant Manager Demographics and Statistics in the US – 2025
⁹ Glassdoor, How Much Does a Restaurant Manager Make?

This provides a rough estimate, but you should consider filling in the specifics based on the number of employees you have, their pay, and your turnover rates. Based on these estimates, approximately $116,806 in annual losses could be attributed to undertraining.

Low Productivity Is a Major Labor Cost Driver

Low productivity can lead to higher turnover, reduced revenue, and increased labor costs. 

Most restaurants aim for labor costs that are around 20-30% of total revenue, but 98% of restaurant operators rank labor costs as a ”moderate” to “significant” challenge, according to the National Restaurant Association’s 2024 State of The Restaurant Industry report. 

The average restaurant earns $486,000 in average annual revenue, spending about 25% ($486,000 x 0.25 = $121,500) on labor, though this can vary based on restaurant type. For each 5% extra spent on labor, the restaurant would lose an additional $24,300 ($486,000 x 0.05). For restaurants with labor costs over 35%, that could amount to $50,000+ in excess ($121,500 + $24,300 + $24,300).

To do this in your restaurant, calculate your average annual revenue and annual labor costs, then divide labor costs by revenue to find the percentage of revenue spent on labor. You can use this chart as a guide:

Cost of Labor Inefficiencies 

Average Annual Revenue1	Target Labor %2	Target Annual Labor Cost	Extra 5% of Revenue Spent on Labor	Cost for 35% Spend of Annual Revenue on Labor	Excess Costs for 35% vs 25%
$486,000	25%	$121,500 ($486,000 x .25)	$24,300 ($486,000 x 0.05)	$170,100 ($486,000 x 0.35)	$48,600 ($170,100 – $121,500)

¹ Blue Book services, Report: Restaurants hit record revenue but payroll outpaces gains
² Restaurant 365, How To Calculate Labor Costs: Key Metrics For Restaurants

Proper staff training can help restaurant owners reach or outperform the 30% labor cost goal. For example, full staffing might cost 20% of gross revenue on busy shifts, but 50% on slow shifts. Upskilling BOH staff on pastry or managerial skills could reduce staffing needs and save on payroll costs during slower shifts. 

I would rather pay a person 20 an hour that knows three stations and is a good salesperson than pay someone 15 an hour that knows one station and doesn’t sell.

(Source)

Mistakes Add Up: High Error Rates Could Cost Six Figures

A restaurant’s Prime Cost = Total Cost of Goods Sold + Total Labor Cost. 

The prime cost is the key indicator of efficiency, and high error rates can significantly contribute to both elements. 

First, the cost of goods is increasing dramatically: With food costs increasing 29% from 2020 to 2024 and continuing to rise, restaurants need to order only what they can sell and take extra steps to minimize food waste. 

Second, mistakes made by staff can contribute to both higher goods costs and higher inefficiency and labor costs: Order mistakes cost about $30 per order,  which works out to $108,000 per year for a 20-table restaurant handling 6,000 orders per month at a 5% error rate (0.05 x 6,000 x 12 x $30). Training staff to use POS systems, for example, could lead to a 25% increase in order accuracy. Based on these estimates, restaurants could save $27,000 annually in POS systems training alone (.25 x $108,000). 

Cost of Errors Associated With Undertraining

Cost of Order Mistakes, Per Order1	5% Error Rate for a Restaurant Handling 6,000 Monthly Orders2	Annual Error Cost	Error Reduction Rate Using POS Systems3	Annual Savings
$30	5% x 6,000 orders x $30 per error = $9,000	$9,000 x 12 = $108,000	25%	.25 x $108,000 = TOTAL = $27,000

¹ Menu Tiger, Restaurant Failure Rate Statistics: The 2025 Data
² Menu Tiger, Restaurant Failure Rate Statistics: The 2025 Data
³ Alexandria Computers, The Impact of Restaurant POS Systems on Efficiency and Customer Satisfaction

These numbers add up. If we consider the costs of turnover, low productivity, and errors associated with undertraining, we find a total of nearly $200,000 in excess annual costs—an estimated 40% of the average restaurant’s annual revenue. 

Estimated Excess Annual Costs Associated With Undertraining

Turnover	Low Productivity	Errors	Total Cost Associated With Undertraining
$116,806	$50,000	$27,000	$193,806

Sources: Turnover (1,2,3,4,5,6,7,8,9), low productivity (1,2), errors (1,2). See sections above for how these sources were used to calculate these figures.

Employee Training: An Investment Rather Than An Expense 

It might be easy to view staff training as a waste of time and money when you’re the one paying the bills, but there’s a mismatch between how employers and employees view these benefits. According to an edX survey, 51% of executives think that their learning and development programs are a waste of time, but many workers really value them. In the same survey, more than 75% of employees said they’d stay with an employer long-term if they offer good training and development benefits. 

When you factor in the costs associated with undertraining, offering relevant training and education opportunities may start to sound more like a solid investment rather than a waste of resources. 

Employers are Starting to See Training as an Investment

While training isn’t free, it can lead to significant return on investment (ROI). For example, in a Lumina Foundation case study, their client, Cigna, invested in tuition assistance for their workforce. For every dollar spent on tuition assistance, the company achieved an ROI of $2.29. In another case, Discover Financial Services gained 144% ROI from their education assistance program, mainly due to reduced absenteeism, higher retention, and internal promotions. 

Hidden Costs To Training Your Staff During Work Hours

While career development is important to many employees, there’s a cost to internal training. Training staff during work hours means you’re paying for their time while they’re not directly contributing to business operations. 

According to some estimates, training a full restaurant staff could be equivalent to two full weeks of payroll. Extrapolating based on the average $486,000 in annual revenue and 25% labor costs, restaurants may pay more than $5,000 in direct labor costs for full-staff, in-house training, not counting continued education costs. 

Out of House Training Can Save Time and Money

Offering education perks can save restaurant operators valuable time and money, and in some cases it may be a tax benefit. 

Through Auguste Escoffier Global Solutions, employers can access a suite of culinary and hospitality development solutions. With tools that can help make hiring and training easier and more effective, Escoffier Global aims to link great employers with hard-working employees to support the overall health of the hospitality industry: 

• Work & Learn: In this program, employees stay employed while working toward their degree or diploma through Escoffier’s online program, or at Escoffier’s Boulder, CO or Austin, TX campus. Work & Learn packages start at $500 per year for employers, no matter how many employees participate.
  
  When employers partner with Escoffier Global, employees are automatically eligible for a $1,000 scholarship upon sign up, with potential employer-matching tuition assistance up to $5,250 per year. 
  
• ESource: ESource is a learning platform through Escoffier Global that includes quick, on-the-spot training and deeper, assessed learning. Your employees can explore new techniques or brush up on existing ones, or dive deeper into self-directed micro-courses and comprehensive courses.

Want To Attract and Retain Top Talent? Invest in Their Career

The restaurant industry is the second largest private sector employer in the U.S., with approximately 12.4 million employed and 150,000 in annual projected job growth. But still, nine out of 10 restaurants say understaffing is a moderate to significant problem for their business, leaving about 88% of restaurants competing to hire quality staff. 

To stand out in a competitive labor market, employers need to differentiate themselves. Education perks can be a powerful differentiator, with 61% of employees saying that upskilling opportunities are an important reason to stay longer at a company, and 70% of full-time staff say they would switch jobs for better company benefits. Overall, education benefits are one the five most popular benefits among employees, so if you want to attract and retain career-oriented employees, training and education perks may be a good place to start. 

Three Tips For An Effective Staff Training Program

A successful staff training program is an investment in both employee’s career development and the company. Here are some tips that can help you choose and implement an effective program for your staff. 

1. Assess The Status Quo

Conduct performance reviews, evaluate point-of-sale (POS) systems data, observe staff in action, and provide self-evaluations to determine where skills could be improved. For example, note how much more efficiently a chef could prepare dishes if they had stronger knife skills, or the costs of food wastage due to improper inventory management training. 

2. Prioritize Flexible Training 

After identifying skill gaps, employers may choose a solution like Escoffier Global’s ESource for on-the-spot self-paced training and mini courses, and/or Escoffier Global’s Work & Learn for employees interested in diploma or degree programs. Unlike in-house staff training events–which comes with direct labor costs–these solutions support employees’ independent learning. 

3. Communicate Clearly and Track The Results 

Education perks only work when employees know about them. Be sure to clearly communicate the perks you offer to prospective and current employees.

Using tracking software, like point of sales (POS) systems, can make it easy to track turnover, staffing needs, error rates, absenteeism, and performance. Other key performance indicators (KPIs), like internal hiring rates, staff satisfaction surveys, and education perk utilization rates, can help you ensure you’re making the most of the benefits you offer. 

There are three key considerations for employers when it comes to their benefits lineup. First, benefits play an essential role in recruitment and retention so they should be seen as investments, not cost-drivers. Second, the priorities of employees are as diverse as the workforce, making it vital to provide a range of options. Lastly, benefits offered are only as powerful as the way they are understood by the employees, highlighting the importance of clear communication and education.

(Source)

Invest In Training And Your Bottom Line Could Thank You

Providing staff with training and personal development opportunities can be key to reducing turnover, staffing needs, and error rates. In addition to creating a more fulfilling work environment for their staff, employers offering education perks may find their profit margins benefit, too. 

Escoffier Global can help businesses attract and retain top-quality talent. Get in touch for more information on partnering with Escoffier Global to strengthen your workforce through customized training solutions, externship connections, and Work & Learn. 

Want to see more of what Escoffier Global has to offer? Check out these articles next:

• 2025 Employee Recruitment & Training Statistics: The Power of Continued Education
• How to Attract the Best Employees for Your Restaurant
• How to Train and Retain Back of House Employees