Controlling-Labor-Costs

CONTROLLING
RESTAURANT
LABOR COSTS
Learn how to cut costs, while improving service
The complete guide to
A PUBLICATION OF BIZIMPLY.COM

Staff Scheduling
Time & Attendance
Shift Management
Work Ergonomics
Staff Hiring & more...
Bizimply Timestation
App for iPad
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3
In this 2014 edition
you will learn tips
and tricks to help
you better manage
your labor costs
Whether you manage 1 or 100 locations, this eBook
can serve as your essential guide to better managing
your labor costs, step by step.
CONTENTS
Staff Scheduling p.05
Time & Attendance p.08
Shift Management p.10
Work Ergonomics p.13
The Menu p.15
Staff Training p.17
Hiring Staff p.19
Reducing Staff Turnover p.20

OVER 10% OF A
MANAGERS TIME
CAN BE SPENT
MANAGING THE
SCHEDULE

5
The Schedule
Okay lets get started. Always remember – control your
labor costs through better scheduling, not lower wages.
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 labor cost. Work out
what your current target labor cost is
based on this weeks schedule and see if
you can reduce it by 5% for next week.
Monitor targets
Target sales per labor 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.
Arriving together?

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.
9/10
Salaried restaurant
employees started
as hourly workers

6
Are labor patterns
reflecting sales?
When your sales increase your labor
cost may increase but when sales
decrease do your labor 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 labor costs
against actual labor costs at the
end of every week. You will
quickly see if changes are
needed.

13.5 million
people work in
US restaurants

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Time & Attendance
Most labor savings can be made at the start and end of each shift.
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 labor 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.

4% of U.S. GDP
is created by the
restaurant industry

Shift Management
Before, during and after service there are some practical things to do.
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
utilized – at all times? If not what prep
work could people be doing.

Work smarter
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.

Spot patterns
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.

11
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.

7 out of 10 U.S.
restaurants are single
unit operations

Ergonomics
Simple changes can increase productivity and reduce waste.
Eliminate clutter
A place for everything and everything
in its place – staff will not have to waste
time looking for anything.

Easy access
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.

Workstations
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.
Problem equipment
Check that there are no equipment
problems that are affecting labor.
Ensure knives are sharp, and train your
staff how to use them.
Clever Storage
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.

One-half of all adults
have worked in the
restaurant industry

The Menu
Where in the menu can we save time?
Hidden labor
Do we need to change the menu, is
it too labor intensive or are there too
many offerings?
Always ask, are you selling enough of
a specific item to warrant the labor
required to prep, prepare and serve it.
Self serve options
Explore labor 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 labor 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 labor saving option for your food
prep.
BIZIMPLY
The Breakfast Menu
Wheat cakes with maple syrup or honey
Prep 10 mins | Cook 10 mins
Classic eggs Florentine
Roasted kabocha squash toast, fresh ricotta
and apple cider vinegar
Scrambled eggs on toast

72% of consumers
are more likely to
visit a restaurant
offering healthy
options

Staff Training
You won’t do it better if you don’t know how to do it right.
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.

1.3M new positions
are projected to
be added by U.S.
restaurants in the
next decade!

Staff Hiring
Hire once, hire right, retain.
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.
ASK YOURSELF
What % of your budget comes from
agency workers?
What % of your budget comes from
overtime?
What is your labor/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
Hire once, hire right, retain.
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.

Start controlling your costs today
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THIS IS A PUBLICATION OF BIZIMPLY.COM
All stated facts are courtesy of The National Restaurant Association. See more on restaurant.org
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