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How to Optimize Your Restaurant’s Labor Costs

4 Minutes

Labor Costs
Labor Costs

Labor is a huge portion of a restaurant’s overall costs. The other primary cost in restaurants is food and beverage. Labor costs are much harder to control and are constantly the number one concern of most restaurant owners and managers. Usually you see restaurants give a minimum of 30% of their total revenue to labor, and it’s usually split where management receives 10% and the rest of the employees receive 20%. Here are some tips on how to improve and optimize labor costs in your restaurant.
1. Prevent Turnover
In most restaurants there will always be a high level of turnover. It’s just the way it has always been, but the more you can prevent it, the better. This high turnover is mostly due to young people, and part time or seasonal employees. A high turnover rate in restaurants can be very expensive for restaurant owners. Remember that hiring young and expensive workers can take a lot of training, and the longer the training the higher the cost. As a restaurant owner or manager, you should try to hire smarter, and be a little picky about who you add to your team. It’s never a good idea to jump at hiring an employee at your restaurant, because remember they are the backbone of your entire restaurant operations. Look for a decent work history that shows experience or a good loyal personality. The wrong hire may not last long, and someone with experience could take a less amount of time to train.
2. Avoid Over Staffing
Over staffing can easily make your costs add up quickly. If you bring in more staff, that doesn’t mean you will automatically have better service for your customers. Having too much staff can lead to staff socializing more, and resulting in a poor customer experience. You should have just enough staff to make you think you need just one more person to be successful. Your employees should only have time to focus on their tasks at hand. It’s important that you over analyze your sales for every hour, each day of the week you are open. If you have busy Saturday nights, and usually a slow Wednesday night, you don’t want to schedule the same amount of employees for each day.
3. Invest in Top-Quality Training
If you make a substantial investment in your employees up front, you will appreciate it down the road. If you train them right the first time, you don’t waste money and resources down the line for poor service either.  You should start with a set of procedures that are thorough, and constantly monitor that they are always carried out. Whenever you implement something new, especially technology, you should also ensure that both new and current employees understand how the system works before implementing it into the day-to-day work flow. Also, you should consider cross training your employees. When you have staff that can do more than one job duty, you therefore have a smaller sized staff that can do more. You never know when a waiter will call in sick at the last minute, or a cook gets injured. Why not teach your hostess on being a waiter? Or being a busser? Or vice versa? That way, you can have them step in if something unexpected happens rather than hiring someone part time who would step in for these types of scenarios. Your staff might even appreciate the extra training and learning something new that can add to their professional experience.
4. Make an Effective Schedule
Scheduling staff is an easy thing that can get out of hand. It’s a complex process that should be correlated with past and forecasted sales. Everyone on your payroll has their own pressing issues, and it can be tough to make a schedule that is profitable while also making everyone you employ happy. If you want an effective schedule that is profitable you should never use the same schedule week-over-week and put your employee’s priorities over the needs of the restaurants. That does not mean making an employee come in to work if they call in saying they are ill. You should also consider getting an automated scheduling system. With an automated scheduling system, you can integrate your sales data, and have weeks designed for you automatically. Keeping the same schedule week or week does not account for sales and changing foot traffic like for holidays and special events. Would you schedule the same amount of employees on Thanksgiving as you would the Thursday before? An effective schedule will keep the right amount people at the right time in your restaurant.
5. Always Be Tracking Your Labor
As an owner or manager, one of your primary duties should always be watching the clock and tracking your labor. You should be watching your employees at all times from when they clock in to when they clock out. If you have an employee who constantly clocks in way to early and is one who clocks out on the later side, you should tell them to either wait when they clock in or make sure they go home on-time. You can even invest in a POS system that can alleviate some of the duties for you. A POS system can highlight certain employees who are taking advantage of the time clock, and alert you right away. This can save you time and monitor your labor costs more efficiently.
If you are looking to get your labor costs where they need to be, it takes a strong combination of having the right amount of employees, superior training, having an effective schedule, and analyzing effective labor reports. Having steady labor costs, will improve your restaurant’s overall profitability and bring up your bottom line.

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