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How to Lower Restaurant Labor Cost

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For many of us as soon as the weather cools down and the seasons change, we unfortunately see a decrease in overall business. The need lower restaurant labor costs begins and we constantly start looking at our clocks to see how much we are losing in labor.

Labor is a major area from which restaurants can bleed profitability. Why? When the clock goes tick, you owe! With food, if you buy too much, as long as it’s not wasted, spoiled or stolen, you can use that food tomorrow. But if you bring in too many people, bring them in too early or underschedule, you can’t tell those employees that the hours they just worked don’t count. This makes it vital to have controls in place to manage your labor costs.However, we have good news and you can be sure to rest easy knowing that there is a way to reduce the flood gate of hours going down the drain and we are going to share with you how to do so.

Follow these 3 tips to alleviate the fear of labor cost pains!

1. Schedule less. There’s a myth in the hospitality industry that by bringing in more staff, you will give your guests better service. The challenge with this is it’s actually the complete opposite. You want to give your guests a great dining experience, so you bring more servers in to be the most attentive and offer “wow” customer service. Or you bring in an additional cook for faster ticket times. But when you have too many people working and not enough work, they can tend to talk with each other and end up giving less-than-great customer service. I would argue that when you are staffed to a level where you think you could use one more person on the floor, your guests get the best experience you can deliver because your team doesn’t have extra time to get distracted by each other. They only have time to stay focused on the guest. The end result is happy customers, higher sales and lower labor costs.

2. Schedule based on a sales forecast. There is a way to know what the right number is without relying on your gut feeling. It’s extremely common for restaurants to schedule like they always do, even when their sales are lower than expected or when they are coming out of a busy season. This practice can rob you of your profits faster than anything else in your business. Changing this practice starts with making your best guess as to what you think your Monday-to-Sunday gross sales are going to be for the upcoming month by the 20th of the current month. This enables you to adjust your schedules to take care of the needs of your guests and your business without losing money.

3. Track labor on a daily basis. Yes, you should track your labor costs every day. You have the tools you need as long as you have a POS system. All you need to do is run a daily report in your POS system each day to see how much you’re paying your employees who worked that day, and divide that by that day’s gross sales to know what your labor cost is. Then as each day goes by, just add the labor costs together and the sales together and divide them, continuing to total and divide to get your running labor cost.



2016-10-29 00:00:00
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