Equipment, utilities, food products, point-of-sale (POS) systems and labor make up the 5 largest branches of restaurant costs. Some are easier to control than others. You may be able to purchase an older version dishwasher or grill. Food prices can be adjusted. But then there are labor costs.
Controlling your labor costs can be much more difficult and require more than one quick approach. Restaurant labor costs tend to rise consistently due to minimum and living wage increases. In order to keep profit margins steady, restaurant managers and owners must make attempts to control labor costs.
New cafe and restaurant owners may initially jump to cutting employee incentives or even letting employees go. These actions may reduce labor costs in the short term, but chances are the problem won’t be solved and these efforts will cause mocancare damage to profit margins in the long run. Let’s look at 5 ways you can reduce your restaurant labor costs and grow your profits.
1. Control Attrition and Employee Turnover
Employee turnover rates often get the most attention from employers but employee attrition is equally important to consider when looking for ways to control labor costs. The difference between attrition and turnover is why the employee leaves. Attrition represents the normal life cycle of employees; they move to different cities, attend school, retire, or leave to raise a family. Turnover applies to employees that leave the job because they aren’t fulfilled by it or are terminated. They often take a new job that pays more, move to a new career, quit because there is no room for growth, or feel overworked.
Creating growth opportunities, offering incentives, and building a positive work culture can help immensely to control labor costs. When your employees are happy and fulfilled, they stick around longer, which means lower recruitment and training costs for you. This article will show you how to increase employee productivity amid high turnover.
2. Invest in a Scheduling Tool
Larger restaurant chains can take scheduling for granted. Having hundreds of employees requires a smooth and efficient system. It’s expected, especially with the level of technology available today.
If you’re a small business restaurant owner or manager, you likely spend hours on end:
- Creating schedules in Excel or simply writing them out by hand
- Constantly adjusting schedules when availability changes
- Risk service quality and efficiency by understaffing shifts
The right scheduling tool will help you solve those problems and reduce your time investment. It’s common during the holiday season to hire more part-time staff to cover the large surge in business. Many tools offer tracking so you can be sure you’ve covered your shift staffing needs on every important occasion and save those additional labor costs for when they’re truly necessary.
3. Review Operating Hours
Restaurants, cafes, bars, bistros, bakeries, food trucks all aim to fit their customers’ eating habits. Food trucks usually operate only during peak lunch and dinner hours because the amount of food they can produce and sell is limited. Cafes may be open all day, but with increased staff in the morning and during lunch hours when they see the most traffic.
Your restaurant may be losing money when there’s a lull and you’re overstaffed. Keep track of sales and traffic during every business hour and adjust as needed.
4. Improve Processes with Checklists and Audits
A well trained staff knows their duties and how to prepare for the busiest times of the day, but there is always room for improvement. Relying only on your staff to remember every small detail that makes a rush go smoothly can lead to items being missed, prep not being completed, and inefficiency across the board. That means money wasted on labor cost and reduced sales.
Invest in brand standards software to ensure consistency and quality assurance during every meal service. Operational Technologies like the Action Card app, get rid of outdated paper checklists, audits, and muscle memory.
A system like ours integrates easily and helps create efficiency and accountability for every employee. Your staff is hard working, but everyone gets off track at some point. The right checklist system can help your team get every prep detail right, and be ready for the busiest shifts.
5. Cross Train Your Staff
An easy way to reduce labor costs is to cross train staff, and prepare them to fill in at different stations when the need arises. Your hosts may be great at placing tables and keeping traffic flowing. If they can also take a few orders when the house is packed you’ve maximized your labor costs and likely pushed a few extra sales too! Don’t be afraid to ask a little more of your employees and give them the opportunity to show you how adaptive they can be. You’ll likely be surprised how good they really are.
Knowing the right place to make cuts or how to get a little more work done is challenging for restaurant owners. It’s important to remember there is always more than one way to lower labor costs without raising prices or firing good employees. Creating a structured culture, investing in technologies to aid staff, and regularly reviewing processes and business trends are just a few ways to keep labor costs under control. Action Card may be the answer. If you’re interested in seeing how you can upgrade your employee accountability and processes, request a free demo of our app!