Just about any way you look at it, restaurant labor management is directly tied to profitability. Wages and other expenses related to labor are a big cut of a restaurant budget, typically 30% to 35% according to Chron, with labor costs for hourly employees totaling about 20% to 25%. Keeping those costs under control is vital to your business, but with rising minimum wage and bigger price tags on benefits, you may see those percentages start to creep up. Here are four restaurant labor management strategies that can help keep a lid on labor expenses without making customer service suffer.
1. Analyze What Labor Costs
With different job descriptions, different wages, and different levels of staffing in the front and back of house, it may be hard to get a handle on exactly what labor costs in each area. Divide employees by category—whether wait staff, kitchen, bartender, etc.—to see what each category costs. You can also see how to maximize the investment you make in labor. If you weigh productivity against labor cost, it may make sense to cross-train employees in different areas so even during slow times, your restaurant can still deliver its usual level of service.
As wages increase, it’s important to optimize schedules. That doesn’t mean randomly cut hours—that could result in understaffing and poor service, which can lead to lost customers and a loss of revenue. An optimal schedule is one that matches labor to the demand, so you aren’t paying for nonproductive employees on slow days and your staff is adequate to maintain the level of customer service associated with your brand. A state-of-the-art restaurant labor management solution will include labor budget capabilities that use staff ratings and availability and prioritized days or shifts to predict labor needs and produce more accurately planned schedules. A restaurant labor management solution can also provide you with reports to compare expected to actual labor costs to help you make adjustments in the future.
3. Schedule enforcement
Another area to evaluate is whether you are paying for time that employees aren’t actually working. A Software Advice survey showed about 40% of hourly workers punched in early or punched out late. The survey also showed that about 25% of hourly workers do it routinely, between 75% and 100% of the time. Using a timeclock feature on your point of sale (POS) system and requiring positive ID, like a fingerprint, can help keep employees honest and eliminate the possibility that a friend will punch in for them.
4. Minimize overtime
Overtime is sometimes unavoidable, but with planning you can minimize it. It’s not only a good move budget-wise, but also a policy that will help preserve the level of customer service your restaurant delivers. Workers who never get a break will tire and service may suffer. Optimize schedules with the help of your POS’s restaurant labor management features, but also have solid policies to cover shifts when a scheduled employee calls off at the last minute, rather than simply asking an employee to work overtime without checking the schedule. If you manage multiple locations, consider sharing employees to keep overtime costs low.
When labor costs rise, you may be tempted to cut staff, but before you hand out pink slips, make sure that decision won’t be detrimental to the dining experiences and customer service you provide. It may be a smarter strategy to control costs in other ways, like optimizing and enforcing schedules and minimizing overtime, that help you maintain your staff and the great experiences your restaurant is known for.