This is the first line in an article about the fast food industry: “With the fast-food industry facing 150% annual turnover rates, brands are turning to Miso’s AI-powered kitchen robot, Flippy, to help increase profits…” How can you have more than 100% turnover? Thank you.
In: Economics
I cannot figure out how to add to my original post. So, i will have to put my thanks here and hope people see it.
Thank you all so much for the explanations. I didn’t even consider that the calculations needed to include the current number of employees and how they could also leave during the year and need replacing. So, thank you for the information and the SPEED at which you all replied. Thanks again.
Employee turnover rate is how many employees left you vs. how many employees you normally have. So if your company normally has 100 employees, and you lost or fired someone 50 times last year, then you had a (50/100 =) 50% turnover in that year.
150% employee turnover means that if your company has 100 people, you lost or fired 150 people total over the course of the year. This is more common in companies that are really unstable (so people don’t stay in the job long and get frequently replaced), or companies that employ a lot of short-term workers, or companies that aren’t seen as good for long-term careers (a lot of people will work fast food only temporarily while they find a better job).
It might seem confusing at first, but having a turnover rate over 100% is actually possible, especially in industries like fast food.
Here’s a simple way to explain it: Turnover rate refers to the percentage of employees who leave a company within a certain period, typically a year. So, if a company has a 150% turnover rate, it means they’ve had to replace their entire workforce one and a half times over that year.
For example, imagine a fast-food restaurant employs 100 people. A 150% turnover rate means that over the course of the year, 150 employees left their jobs. This could happen because some positions were filled and vacated multiple times perhaps some roles saw several different people come and go.
High turnover rates are common in industries with lots of entry-level positions, part-time work, or roles that are physically demanding or offer lower pay. Employees might leave for better opportunities, causing the company to hire replacements frequently
Over 100% turnover essentially means that you have repeat quitters. Ie, I quit my job, you replace me, my replacement quits, and so on.
That could be that everyone in your company quits and then half of the replacements quit. It could be that 10% of your company quits every month, etc.
It’s total quits divided by average headcount.
It can also reflect me not hiring back as many people (possibly because i cant or just didnt want to)
If i start the year with 200, they literally all quit, but i only hire back 100……..I’ve had 200 quits, and my average headcount is 150 (to keep it simple). So that’s over 100%.
You have one job. But everyone you hire quits after 3 months, so you end up hiring 4 people for that one job. That job has 400% turnover.
100% percent turnover means if you employ 10 people, you have 10 leave their job and have to hire 10 people over course of a year. 150% turnover means you employ 10 people, but you lose and hire 15 people per year.
The word “annual” renders the turnover rate as per year, so it includes people who were there less than a year. If it was a monthly turnover rate, the number would be different.
Because you can go through more than one employee per position in a year.
Might help to imagine a just single position. If you have to replace that employee in a year, then you have 1 hire for 1 position. 1/1 = 100% annual turnover for the year. If you have to replace that employee twice, that’s 2 hires for 1 position. 2/1 = 200% annual turnover.
If you look over multiple years, e.g. 3 years and you replaced that position 4 times, that’s 4/3 = 133% turnover.
If you look at a single year again, but the entire sales team of 6 employees, and you had to hire 8 replacements throughout the year, that’s 8/6 = 133% turnover.
This has been used to try and sell chef-bots for years, mostly getting a “meh” reaction from the restaurant/fast food industry (who are deeply averse to capital investment in new technologies). That doesn’t mean that they won’t push ahead in future but some of the attempts have been comical at best, and a mega-brand (McDonalds etc.) would have to roll it out for it to catch on.
TL;DR a low-pay, replaceable guy with a spatula > expensive, maintenance-heavy technology.
The key word there is “annual.” If you have ten employees at the start of the year and they have all been replaced by the end of the year that’s a 100% annual turnover rate. Now let’s say you have ten employees at the start of the year, all ten have been replaced by July, and then by the end of the year five of those replacements have also been replaced. In one year you will have hired 15 people for 10 positions. That’s a 150% annual turnover rate.
Latest Answers