Operations – Labor Costs

 In these tough times, how can you reduce costs without affecting service levels?  Bob Oros offers three ideas that work.

 1.  Change your week: When making a schedule, most people start their week on Monday and end on Sunday night.  By making one small adjustment you can shave dollars off your payroll.  Try starting your schedule on Wednesday and ending on Tuesday night.  Here is what will happen…if you get busy on Friday, Saturday and Sunday you will have to ask your employees to stay over and work extra hours.  If your schedule ends on a Tuesday night you will have the option to send some folks home early on Monday and Tuesday, saving the extra money.  This ONE technique has saved thousands of dollars for many restaurant owners.

2.  Dollarize your schedule: Most restaurant owners make their schedule, total up the hours and stop there.  By taking it one step further, you can determine exactly how much business you need to keep your labor costs under a certain percent of sales.  For example, if you have 150 hours on the schedule, and the average cost per employee is $10 per hour including benefits, that means that a 150 hour schedule is going to cost you $1500.  If your target labor cost is 30%, you simply divide $1500 by 30% and you will come up with the exact amount of sales you need to keep your labor cost at your target percent.  The common “rule of thumb” for foodservice operations is 30-30-30-10.  30% food cost, 30% labor cost, 30% operating cost and 10% margin.

 3.  Get the most from your employees:  When hiring a new employee it is important that you know exactly what is expected of them.  Without a clearly defined list of what you expect them to do, they will fall into the pattern of simply doing what everyone else is doing.  Unproductive employees can end up costing thousands of dollars a year in labor cost.

 See the June 2009 Delco Foods newsletter for a list of a few things that you should clearly explain when hiring a waitstaff person.

Bob Oros, CSP, CMC is the #1 sales trainer in the foodservice industry, helping restaurant owners, distributors, brokers and manufacturers increase their sales and profits.  [email protected]

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