This guide will discuss the foundational practices that need to be in place to track and lower food, labor, and overhead costs.
- Part 1: Budget
- Part 2: Reducing Labor Costs
- Part 3: Reducing Food Costs
- Part 4: Reducing Overhead Costs
Part 2: Reducing Labor Costs
Labor is the second biggest cost (after food cost) in the restaurant industry. Fortunately, there are some tips and tricks out there to help you keep it in line.
Hire flexible employees. Restaurant turnover is ridiculously high and training costs are expensive. Employees who can easily pick up or drop shifts are invaluable. Flexible employees are also likely to stay around longer since schedule issues are one of the top reasons employees leave.
Look for sales trends. Balancing good service and low labor is difficult but it can be done. It is important to review your sales history to know what to expect on any given shift. Also, be aware of local events that have historically caused an unexpected spike or drop in sales. Be sure you are adequately covered for peak hours but be careful not to over schedule as this will quickly cut into your profits.
Check your POS reports hourly. Restaurant managers are insanely busy, but this is important. Did every employee clock in and out on time? Is anyone at risk of going into overtime? Are sales tracking to forecast?
Cross train employees. Increase productivity by cross training employees so that they can be utilized in other areas of the restaurant when you are short-handed or need extra help during a rush. For example, train a few waiters how to jump behind the bar during happy hour when the bar is full and the restaurant is empty. Train your busser to run food when all of your tables are full and there are none to clean.
A few extra tricks… Here are a few less obvious tricks that can help as well. Some of these may sound counter intuitive at first, but if you start experimenting a little you can figure out how to make them work for you.
Find star employees. While you might tend to think that paying everyone minimum wage would help you hit a lower labor percentage, this is not always the case. If you take a few stand out employees and pay them a few dollars more per hour, they will feel more motivated and loyal to their job which is a win-win scenario. First, be sure to let the employee know that with more money comes more responsibility and make sure that they are willing to accept that.
Pair these star employees with weaker or less experienced employees (start with slower shifts until you learn the right mix). For example, if you were to schedule four average performing line cooks on a shift at $11 per hour you are spending $44 per hour on line cooks. But what if the shift runs just as smoothly when your star line cook who makes $17 per hour is working with only two other $11 per hour cooks. You are only paying $39 per hours. You save $5 per hour, which can add up quickly over time.
Boost productivity. Another trick is to boost productivity by carefully analyzing each task that is being performed and by knowing how long it takes. Sometimes you can actually save money by coupling employees in creative ways. Let’s say that one employee can dice 15 lbs of onions in one hour. However, because these are human beings and not machines, the same person can only dice 10 lbs of onions the second hour. You pay $20 for 25 lbs of onions to be diced. But if you change to two employees dicing onions for one hour instead you end up with 30 lbs of onions for the same $20.
Labor costs are hard to control. But a little hard work and creativity can help keep it at bay. Keep trying different options until you come up with just the right mix for your business.