How To Reduce Restaurant Labor Costs

Anyone in the restaurant business knows that serving up great food is only one piece of the success pie. To truly make it in this challenging industry, restaurateurs need to be able to combine kick-ass culinary skills with business savvy – and a key area of the business that can eat up a big chunk of profit is restaurant labor costs.

Often cited as the second highest cost to running a restaurant behind food and beverage costs, labor costs are a major concern for three out of four operators today. The problem with managing labor costs in a restaurant is there is no one-size-fits-all solution. Where increasing minimum wages and new labor laws may be the culprit in one area, others may find their restaurant labor costs are out of whack due to inefficient employees or overstaffing. The good news is there are a few simple steps that restaurateurs can take to help control the labor costs in restaurants.

SCHEDULE STAFF ACCORDINGLY

Create your staff schedule based on projected sales volume and trim labor during unexpected slow times. As sales fluctuate, it’s critical to maintain a labor cost percentage that allows you to turn a profit. A “set it and forget it” approach to your staff schedule can lead to unnecessary extra hours during the slow times and a dip in service levels as peak times change. There are many restaurant scheduling tools on the market today to help ensure your staff schedule and labor hours meet projected sales volumes.

QUICK TIP:  Don’t just copy and paste last week’s staff schedule. Looking at sales data and taking some extra time to plan for the week could save you hundreds of dollars.  

HOLD MANAGERS ACCOUNTABLE

Your management team is an extension of you and should have a solid understanding of your business challenges and goals and what their role is in helping to achieve them. Incentivize your management to meet labor goals. Your managers can't help with controlling your restaurant's labor costs if they don't know where they stand. Hold managers accountable to a labor percentage and bonus them when they exceed expectations. Overtime is another unnecessary additional expense that your managers should be required to avoid.

QUICK TIP: Help your managers understand the business of running your business and give them incentive to keep your restaurant labor costs in line.  

HIRE GOOD PEOPLE

This seems like a no-brainer, but hiring the right people makes all the difference. Invest in your employees. Hire good people and train and treat them well. Turnover can be fatal for a restaurant that is already struggling. Implement a system to hire good people and help recruit, screen, interview, onboard and train new staff. Well-trained employees will work more efficiently, stay with you longer and provide a more consistent level of service to your customers.

QUICK TIP: Invest in your employees. Celebrate your staff. Cross-train employees so they can learn new skills, fill in for no-shows and be ready to take on new roles. Have pre-shift meetings and family meals to build comradery and show your staff they’re valued.

For more tips and tools for addressing restaurant labor costs and managing a business, visit usfvalueaddedservices.com. If you’re interested in an in-depth analysis of your business, schedule a visit with a US Foods^® Restaurant Operations Consultant.

About the Author:

David Eschler is a chef who has worked in kitchens across the country. Today, he leverages his culinary experience and passion for the restaurant industry as the head of the Restaurant Operations Consulting group for #usfoods where he and his team of nearly 100 consultants help US Foods customers find new ways to be successful, grow their businesses and otherwise #wehelpyoumakeit in the restaurant industry.