Easing The Burden Of 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 savvy business knowhow – and a key area of the business that can eat up a big chunk of profits is 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 labor costs is there is no one size fits all solution. Where rising minimum wage and changing labor laws may be the culprit in one area, others may find their labor costs are out of whack due to inefficient employees or overstaffing. The good news is, there are a few simple steps that every restaurateur can take to help make labor costs most manageable.

Right size your staffing.

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

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

Hold management 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 keep costs in line if they don’t know where they stand. Hold them 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 incent to keep costs inline.

Hire great people

This seems like a no-brainer, but the right people make all the difference. Invest in your staff. Hire great people and train and treat them well. Turnover can be fatal for a restaurant that is already struggling. Implement a system to recruit, screen, interview, onboard and train new hires. 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 and celebrate your staff. Cross train your 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 labor costs and managing your 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 US Foods where he and his team of nearly 100 consultants help US Foods customers find new ways to be successful, grow their businesses and otherwise #makeit in the restaurant industry.