In the restaurant business, where you’re watching every dollar, the ability to trim your labor costs down to the dollar is critical. And controlling labor can be the key to a profitable week. Let’s look at at how to optimize labor, and why it’s so critical to get our labor costs under control.
We know that fixed costs such as rent and utilities are beyond our control, while labor is a cost we can control. But there are lots of moving parts to consider.
Are you setting labor targets, and scheduling to achieve them?
Start to optimize labor by reviewing the sales forecast from your point of sale system every week. You’ll need to break it down by day part and then compare projected delivery sales versus carryout and dine-in or catering.
Note differences by hour. And be aware of other factors in the coming week that could change the forecast: look at special events, weather, road construction, and big pre-orders that could have an impact—and adjust the totals. To optimize labor, it’s important to be accurate with your sales forecast, because it’s the basis for the week’s labor targets.
To speed up scheduling, check to see if you have staff availability defined in the POS system by day and shift. And for accurate labor cost tracking, remember to record overhead costs like payroll taxes, worker's compensation, and benefits in the POS system too.
You can also set Employee Restrictions in your POS to control costs and ensure compliance. Set limits on overtime and breaks, and limit hours and days of work for younger staff as required by labor code.
A dashboard view of labor performance provides important insight into where you can trim costs:
- Watch your labor dashboard metrics throughout the day and send staff home during slow times.
- Compare labor vs. sales frequently to stay on top of actual costs.
Labor Controls - Set limits, controls, and alerts in the POS to deter time theft and control costs:
- Set limits on early and late clock-ins to prevent staff trying to cheat the clock.
- Force a manager override for exceptions, so you can be sure you’re paying only for the hours scheduled and actually worked.
- Control logins with fingerprint security, building accountability and deterring time clock abuse.
- Track different pay rates for different jobs. This may apply if, for example, you want a driver to prep or clean between runs. This can reduce not only payroll costs, but potentially also cut your Worker’s Compensation costs, as drivers on the road are in a higher risk rate class.
Look at ways you can automate or eliminate manual jobs.
Twenty years ago, when restaurants first began to move from pen and paper ordering to digital cash registers and POS systems, one key benefit was time savings. Restaurant operators found they were able to optimize labor and handle more business with the same staff—and the savings were substantial.
Today, the shift to online ordering is having a similar impact. So—how much more business could you handle by shifting phone orders online?
If you’re in Chicago or Phoenix or LA – you may be using GrubHub, Seamless, Eat24, or similar services to drive orders to your restaurant. If so, chances are you have staff spending hours each week (or even hours each day) manually entering orders from these services into your POS.
At Pizza Expo last year, we talked to a client who had two team members tied up for most of the day manually entering orders from five different ordering sites (on five separate tablets) into the POS.
If you’re in this boat, you need to get those orders flowing directly into the POS system.
Most 3rd party ordering sites don’t integrate with POS systems, but today there are services that can bridge the gap between these third party sites and your point of sale system. Chowly Inc. does this for SpeedLine.
What that means is that those hours of manual order entry are no longer necessary. Some restaurants have cut thousands of dollars in labor with this one change.
Find out more about effective labor management strategies:
Posted on Wed, Jan 11, 2017 @ 07:01 AM.
Updated on April 24, 2019 @ 6:55 PM PST.
Posted by Jennifer Wiebe
An occasional contributor to On Point, Jennifer led the marketing team at SpeedLine from 2002 to 2018. She loves books, yoga, playing at the beach, and commenting on bad TV with her family.| Author's website