Controlling Your Labour Costs
Learn the benefits of implementing technology software into your business to make every shift run like clockwork.
New week, New schedule
Every week is different and your schedule should reflect this. Don’t just recycle last weeks schedule. Ensure you have checked the availability of your staff for the coming week. Check last weeks schedule to see where you may have been overstaffed and look ahead to any large events that may be planned. Don’t leave yourself struggling to cover shifts at the last minute.
Cost & build
Costing as you build allows you to really see where you can save. If you wait until the end then it becomes a mad dash to cut hours and stay on budget, which always leads to inefficient schedules.
Set clear targets
Without clear targets there is no way to ensure a steady labour cost. Work out what your current target labour cost is based on this weeks schedule and see if you can reduce it by 5% for next week.
Target sales per labour hour (SPLH) is a great key performance indicator (KPI) to track for your business. If you have target sales of £2000 and target hours of 40 then your SPLH is £50. Try and maintain a steady SPLH throughout the week and don’t let it fluctuate with sales patterns. This will also ensure you have adequate staff cover for each day.
Do all your staff arrive at the same time for each scheduled shift? Do you need all your staff to be in at the same time? Most shifts require a bit of prep work which usually only takes one or two people. If you adjust your shifts to start in 15 or 30 minute increments then your staff will arrive as you need them.
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Are labour patterns reflecting sales?
When your sales increase your
labour cost may increase but when sales decrease do your labour costs decrease? In order to achieve a reduction in costs you have to schedule accordingly and anticipate periods of low sales as well as high sales.
Low service levels and too many staff?
Remember sometimes service levels can be affected by having too many staff. Too many staff can often be worse than too few staff. Remember the old saying “the devil makes work for idle hands”.
End of week comparisons?
Before launching head first into another busy week, it is important to reflect on what happened last week. Try comparing scheduled labour costs against actual labour costs at the end of every week. You will quickly see if changes are
Time & Attendance
Have you got any buddy punchers?
Buddy punching is when an employee has a co-worker punch them in early or punch them out after they leave. It is a common practice that is extremely hard to detect. A common deterrent for buddy punching is a clock in machine with a fingerprint scanner. These however are notoriously slow, easily broken in a fast paced environment and can actually result in employees being late for work. We experienced this in our restaurant and replaced them with our own iPad clock in app called Timestation. This allows a quick picture to be snapped each time someone clocks in or out, a simple and effective solution. Obviously there are other great apps out there so find one that suits your business, but know that eliminating buddy punching can dramatically reduce labour costs.
Are you comparing actual against scheduled times at the end of every shift/day?
Is there a pattern emerging with staff leaving later on certain days regardless of how busy you are. It is important to emphasise to your managers that they need to stick to the schedule and ensure their teams finish on time. Try to ensure that staff only sign in when in uniform and sign out before changing.
Set clear times for actual breaks
Your staff should know when their break is and how long they are entitled to take. Allowing your staff to take breaks “when we’re quiet” leads to longer breaks as there is no pressure to get back to work. Also for staff who smoke, this should only be done on their actual break. Do not offer
“Smoke Breaks” to staff.
9/10 Salaried restaurant employees started as hourly workers
Pre & post service team briefing
A quick meeting before and after every shift gives you an opportunity to teach and listen. You can also take the opportunity to share targets with your employees at these shift meetings.
All hands on deck
Are all hands on deck at your busiest times. There should never be anyone taking their break or working in the office in the middle of service. Ask yourself, are all your staff fully utilised – at all times? If not what prep work could people be doing.
Don’t just assume that your staff don’t have the time to do the job. Sometimes it is just a case of working smarter. Often the time it takes to do a job is directly related to the time you have available to do the job. Think about what every job your staff members are doing. Are there more efficient ways of doing the same job?
How many employees does it take to change a light-bulb?
Watch out for tell tale signs of too many staff – For example two people to clean a fridge. Write a clear job description for each employee. A job description is a detailed definition of a job and a list of the specific tasks and duties the employee is responsible for daily, weekly and monthly. The more complete the job description, the simpler the task of training. Remember, staff with a confirmed list of duties will be less inclined to “fill time.” Sample job descriptions may be available from your HR department. You could also get started with a quick Google search.
Insure that there is an absenteeism policy and take proactive steps when employees are absent. Try to keep an absenteeism chart in their office, to easily monitor patterns.
You’re no angel…
As a manager you must examine your own work practices too. Do you come to work grouchy? Do you have sloppy or careless work habits? Is your appearance unprofessional? It is essential that you obey your own standards and rules and do not avoid addressing problems when they arise. Are you showing respect? Mutual respect plays and enormous role in good leadership. Share your goals with your employees, remember lead by example.
A place for everything and everything in its place – staff will not have to waste time looking for anything.
Can you rearrange work areas. The fewer steps that people have to take, the faster they can do the job. Create mini work stations where all necessary food, utensils and prep spaces are close at hand.
Break the kitchen activities into self-contained workstations where ingredients, tools, equipment and supplies are within easy reach. This will eliminate excessive bending, lifting and reaching. Its also important to remember your left-handed employees when setting up workstations.
Check that there are no equipment problems that are affecting labour. Ensure knives are sharp, and train your staff how to use them.
Increase productivity by having 3 types of storage. Active, back up and long-term. Active storage is accessed repeatedly throughout the day and should be near the work station. Back up is used to refill bulk items and long term should be out of reach and locked away.
Do we need to change the menu, is it too labour intensive or are there too many offerings? Always ask, are you selling enough of a specific item to warrant the labour required to prep, prepare and serve it.
Self serve options
Explore labour saving ideas of self service restaurants – buffets, tea/coffee machines etc. Could you make this work for your business, perhaps with a unique twist?
Are the dishes causing problems?
Always check how many dishes are returned after each service. Know the reasons why each was returned and how much it cost to comp or replace meals. More often than not it is the same one or two dishes that are causing problems for your customers and obviously your chefs. While the problem may lie with the cook, you may also reduce wasted labour and food
costs by making some small changes to the dishes or removing them from the menu entirely.
Better prep work
Can you do more prep in advance and perhaps batch cook some dishes? This will allow the chef to serve and observe portion control etc. You may look at sous-vide cooking as a labour saving option for your food prep.
“There are many features of Bizimply I found useful.
It is extremely easy to monitor staff breaks along with being user-friendly”.
It’s quicker when you know what you’re doing
Do you invest in training? Ensure that the staff are trained in the jobs they are doing. Allocate time to properly train your employee. Regularly review your current employee training needs.
Who’s the trainer?
Maybe you could appoint a trainer in your unit. Untrained employees will cost you more in low productivity, poor service, waste and inefficiency.
A flexible workforce
Cross training staff and multi skilling. Teach your employees how to do
jobs other that their own regular jobs. Employees can be moved around
and fill in while other staff are absent. Supervisors could serve or do cash. Chefs could man the counters if required.
A smarter workforce
Lack of training can lead to employees having poor attitudes to various aspects of the business and will most definitely lead to many staff developing poor work habits. Proper training will lead to greater employee productivity. It’s your job to teach them how to work smarter, not harder.
Look for more
Remember your business success is based upon your success at gathering together a group of workers with different skills and experiences to produce a quality product. Search for the right person to fill the job. Look beyond the basic skills for
a person who will be the face of the restaurant and will work well with your team.
Hire on tasks, not on talk
Before you hire an employee – Keep in mind the tasks the employee must accomplish. Is this person suited to talking to important customers all day or doing a lot of back office tasks? Remember the cost of employing a worker is far greater than his or her net pay, regardless of the worker being salaried or hourly.
It is never the right time to hire the wrong person
Resist the temptation to “panic hire.” Don’t in desperation, hire the first person you interview. Hold out for the right person.
Your current team has great potential!
Try to promote from within your own business. Develop a succession plan for your business if you have not done so already.
What % of your budget comes from agency workers?
What % of your budget comes from overtime?
What is your labour/sales ratio for every day… better still by the hour?
Instead of looking to employment agencies, ask your employees first if they can recommend anyone.
Cut Staff Turnover
High staff turnover costs more than money!
High turnover of staff is very costly to the business. Re-staffing and training costs your business in productivity but also has a huge impact on customer relations. Any relationships fostered between your staff and your customers will be hard to recover, should that team member leave. Other costs include lost uniforms and obviously the time spent hiring in the first place.
Know why they leave so you can improve
Remember exit interviews are valuable information gathering opportunities. Make sure that you get a chance to spend a few minutes with any staff member leaving before they move on. This will be your only opportunity to hear their honest opinion of their time with you and your team.
Don’t throw money at the problem
While offering greater benefits and pay rises will undoubtedly attract more potential employees and help to retain existing employees, this will not solve the underlying reasons for a high staff turnover. On a daily basis there are simple things you can do to ensure the workplace is a supportive and enjoyable environment. Hardworking team members should be praised for their work in front of their peers. This helps to show others that you respond well to a job well done. After busy weeks or great team efforts small gestures like a gift cards or movie passes can be great to let your team know their efforts are not going unnoticed.