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6 tips to better control restaurant labor cost


Some things are simply unavoidable. You can't control the weather, the cost of gas, or the person driving in front of you. And, a restaurant owner can't control the competition, the fluctuating economy, or rising COGS. But one thing that you can control is your labor cost, at least to a certain degree.

Labor cost is a big portion of your operational costs, and increased wage rates will only make it more difficult to manage So, how can you balance those costs with the rest of your expenditures? Here are six tips to better control restaurant labor cost.

1. Balancing your managers

It can feel safer to have depth and double management coverage during peak periods, but it’s also more expensive. When you’re overstaffed, managers will have to do tasks that your normal crew usually does. This means you’re paying a manager’s wage for tasks that can easily be done by the normal crew. So, how can you make sure you have enough managers while not overdoing it? A good rule of thumb is that there should never be more than two or three managers on duty at the same time.

2. Control overtime

With wages on the rise, it can be a struggle to keep labor costs under control. One way you can offset the impact of rising wages is by controlling overtime. Other than last-scheduling needs, it's difficult to justify spending an additional 50% for work that could have been handled more affordably.

Set realistic overtime goals with your team. While it might be unreasonable to shoot for no overtime, a 25% reduction might be more doable. Help your team reach these goals by showing them alternative solutions to using overtime that will save you money. A lot of restaurant back-office systems offer an “approaching overtime report” which can help you control hours and avoid overtime. Use these tools to help reach your goal.

3. A business-first schedule

It’s great to try and keep your team happy by working with their schedule, but it’s also important to make sure the needs of your business are being filled. To do this, you need to balance the needs of your business with the availability of your team. For example, an employee may have availability from 9 a.m. to 2 p.m. But having them work for that whole time could mean that they are working when you don’t need them. It may work better for your business to schedule them from 10 a.m. to 2 p.m. or 9 a.m. to 1:30 p.m. Just because they have certain availability, doesn’t mean they have to work the entire period.

4. Train! Train! Train!

A well-trained, cross-trained team is more productive. Period. A well-trained team also tends to stay longer, resulting in less turnover.

Training can also increase your speed of service, which can really pay off. What if improving your speed of service could put 20 more guests through your door per day? On an $8 check average, that could mean nearly $5,000 more in sales per month, with no additional labor invested. A well-trained team can have a serious impact on your margins.

5. Complete no-service tasks while open

If your employees are working outside of business hours, you're losing money. To minimize your loss, schedule as few people as possible for prep and closing shifts. Then, aim to have employees complete most no-service tasks while you're open for business and generating revenue.

To help identify these opportunities, ask yourself:

  1. Can some of these tasks be completed while my restaurant is open?
  2. Am I overstaffed for opening and closing shifts?

Remember, restaurant labor cost is 100% when there is no revenue to pay for it.

6. Maximize sales while reducing employee errors

Employee errors and missed sales also affect your bottom line. Using a loss prevention tool, like Delaget Detect can help you be proactive instead of reactive for ensuring your employees are maximizing sales. By minimizing errors, you’ll take control of all missed opportunities with prescriptive coaching to correct actions.

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