Don't Wait Until Pay Day to Learn Your RESTAURANT LABOR COST is TOO HIGH!

Ask a restaurant owner what their biggest cost concerns are today, and their labor cost will likely rank first or second on the list.

Surprisingly though, many operators aren’t even aware they’ve had a spike in restaurant labor cost until it's too late. Only after paychecks have been issued do they realize their labor costs are out of line.

Monitoring and controlling restaurant labor cost should be a DAILY undertaking. Many of our successful member on RestaurantOwner.com follow some or all of these practices for consistently staying on top of their restaurant labor cost:

• The weekly or bi-weekly labor schedule is based on a worksheet showing projected daily sales (or customer counts) by meal period. This is used to help determine staffing needs for each department or job category based on how busy or slow the restaurant is expected to be (NEVER use a fixed schedule that is repeated week after week).
• From the schedule, a labor cost budget is prepared that shows the targeted labor hours and restaurant labor cost for each day.

  "Creating a labor budget, monitoring guest counts, using tools and forms on a daily basis are but a few of the systems and controls a restaurant operator must have to maximize their profit potential."
  - Joe Erickson

  This is used as a daily labor hour/labor cost target to keep them on track with the budget.
• Each day, shift managers carry a listing of scheduled employees for each shift (shift roster) that shows who is working and their scheduled clock-in and clock-out times, and the total number of hours they are scheduled to work. As employees near their clock-out time, the manager ensures that pre-close duties are being performed early enough to get the employee off the clock at or before the scheduled time.
• Clock-in and clock-out errors are corrected as they occur. Employees hand their clock-out slip to their restaurant staffing manager (or time card) for approval, so inaccuracies can be corrected before they leave. Many POS systems with time keeping functions allow editing. This practice also prevents employees from clocking one another out.
• Have a contingency plan for slower than expected sales. Many employees are willing to leave early when not busy. Certain employees can be sent home early in the event they’re not needed to offset restaurant staffing costs.
• Employees are cross trained to handle multiple jobs. Having a few employees that can do many things is better than many employees doing a few things.
• By checking labor hours daily, it's easier to spot those employees that have worked more hours than they were originally scheduled. Those employees may have their schedules adjusted to compensate for the added hours to avoid increasing your restaurant labor cost with overtime.

By incorporating one or more of the above best practices in restaurant operations into your day-to-day routine you'll avoid surprises on pay day, improve your labor productivity and have a lower overall labor cost.

Want a way to prevent your restaurant labor cost from rising overnight? Review our How to Create the Ideal Labor Budget training course to learn how to cut costs. Following that by downloading our Labor Scheduling template to develop an effective labor cost budget strategy.

Have a profitable week!

The RestaurantOwner.com Team