Look Ahead: Use Short-Term Sales Projections to Control Hourly Labor Costs

There are lots of situations restaurant managers don't like and one at the top of the list is being caught in a rush and not having enough people on the floor. I personally know the feeling and agree that it's not my idea of a good time, either.

As a result of this, however, many managers overcompensate and take the easy way out by adding extra personnel and hours to the schedule, "just to be sure" they're covered. While this may make them feel more secure about being able to handle an unexpected rush, it's also one of the most expensive things you can do in this business. If the bump in sales doesn't materialize, you're left with too many people on the floor and on the clock. The hourly labor costs go through the roof.

What separates useful projections from throwing darts is the quality of the estimation techniques. To create a daily schedule for the upcoming week, you need daily projections. -- Jim Laube

Many independent restaurants end up spending a lot more for hourly labor than they really need because of this type of mind-set and the lack of a good labor scheduling discipline. Over the years I've had the opportunity to work with several sharp operators who have taught me a lot about stretching every labor dollar using a "budget" approach to prepare their weekly labor schedule.

They taught me to avoid using a fixed schedule that gets repeated week to week. Instead, I learned to use last week's schedule only as a rough guide. I built next week's schedule from scratch, by creating a projection of daily sales for the coming week.

This may sound like a lot of work but hourly labor costs add up to lots of money in all restaurants. Hourly labor is typically the second-biggest cost, behind food. When you add in payroll taxes and benefits, more than one out of every five dollars in sales are consumed by hourly labor costs. Operators who follow this type of scheduling process, report that it doesn't take much time at all to administer once the learning curve is over.