‘We are tired of sucking’: Legendary Chicago restaurant abruptly closes after 63 years, blaming ‘insurmountable’ struggle to retain quality staff

Despite the gracious nature of Karzas's announcement, noting his "sad but satisfied heart," the shuttering of this established eatery highlights the challenges inherent in the restaurant business — an industry known for its razor-thin profit margins and high employee turnover rates.

Here’s a look into the issue of employee retention and what small business owners can do to retain quality employees in an increasingly tough economy.

Employee turnover

Employee turnover is when an employee leaves their role for another job opportunity, retires, or is let go. It not only impacts the business owner, but also the other workers who will have to make up for the loss of the employee by taking on extra work, if only temporarily. Turnover can also have a significant impact on morale, especially if the employee who left was with the organization for a long time and had a lot of knowledge that benefitted the team.

In the restaurant industry, employee turnover is an issue that almost amounts to a crisis. Restaurant management software company 7Shifts reports that the average turnover rate for the restaurant industry is 79.6%. For fast food restaurants, it’s a staggering 123%. To put these figures in real terms, the average restaurant will have to replace about four out of five employees each year. In fast food and other quick service restaurants, 7Shifts says, “it’s like replacing 31 employees when your average workforce size for the year is 25.” They report that the average tenure in the restaurant industry is just 110 days.

In the wider American workforce, the Bureau of Labor Statistics notes that the Great Resignation (an economic trend in which employees voluntarily resigned from their jobs en masse, beginning in early 2021 during the COVID-19 pandemic) saw employees leaving their jobs at a higher rate than ever before across the board, with a peak 3.5 million people quitting their jobs in February 2024.

With workers in the restaurant industry leading this trend, 7Shifts points to the issue being not just the low pay or irregular hours in this field, but poor hiring practices on the part of restaurant owners. They wrote, “when you hire someone who doesn’t share your team’s values, no amount of training or tips will make them engaged in their work. When values match, employee satisfaction increases and turnover decreases.”

Similarly, bad hires can lead to your other employees picking up the slack — both in customer service and with their other duties that keep the restaurant clean and functional. If employees feel overworked because they’re making up for a bad team member, it can impact their own morale.

The struggles of restaurant workers in America

Restaurant staff who depend on gratuities are facing significant financial challenges in the current economic downturn. With the federal tipped minimum wage frozen at a mere $2.13 per hour, these workers rely heavily on customer tips to earn a living wage.