Six Tried-and-True Ways to Optimize Your Labor & Control Costs
Under pressure. If you’re a restaurant operator, David Bowie has summed up in two words the way you’re feeling about your profit margins. In this industry, that kind of pressure is not an unfamiliar sensation – we know our margins are slim – but right now, you’re feeling the squeeze more than ever. That’s thanks […]
Under pressure. If you’re a restaurant operator, David Bowie has summed up in two words the way you’re feeling about your profit margins.
In this industry, that kind of pressure is not an unfamiliar sensation – we know our margins are slim – but right now, you’re feeling the squeeze more than ever. That’s thanks in large part to rising wages and the seemingly persistent wave of legislative actions impacting your labor costs. Add in the fact that traffic is slowing down and well, you can’t help but sweat a little.
During these times of tightening, operators tend to dig into the numbers even further (is that possible!?) and scrutinize every dollar spent and every dollar saved.
Here are six areas where operators can cut unnecessary costs to optimize your people, schedules and labor spend.
1. Stop Paying for Early Clock-Ins
Five minutes here, 15 minutes there. Every time one of your team members clocks in too early it’s like skimming a tiny sliver of profit off your bottom line. On average, without time clock enforcement, 15-20% of a restaurant’s staff will clock-in at least 10 minutes early/day. Additionally, staff can ride the clock at the end of their shift, translating into increased overtime and increased labor hours paid out. The solution? Enforced clock-ins through an integration with your POS-system. You configure the POS system to only let employees clock-in five minutes before their shift, and an online scheduling system like HotSchedules goes to work making sure your employees punch in at the appropriate time.
2. Reduce Schedule Creation Time
Writing a schedule can take managers four hours or more. On top of it all, there are endless phone calls and texts to keep up with and communicate schedule changes. Online scheduling solutions can reduce the time it takes to create schedules by 75% because managers can copy schedules from week to week using scheduling templates and make tiny tweaks instead of always starting from scratch. Employees are instantly updated through an employee scheduling app any time a change is made and can request edits to the schedule pending a manager’s approval. All of that automation and ease-of-access saves your manager’s’ time (and you payroll costs!) while reducing expensive scheduling errors.
3. Reduce Unnecessary Overtime Hours
Uncontrolled overtime is a huge labor expense. With an overtime report, managers can see which employees have scheduled overtime as well as the overtime costs for each day and week. Using the overtime reports, managers can make adjustments to schedules throughout the week or month and monitor the impact on things like labor costs, labor percent, and volume. In HotSchedules, for instance, the Overtime Warning Report can be configured by schedule, job code or employee. Once generated, managers can see actual employee hours plus how much is scheduled, then the date and time that the overtime could potentially start.
4. Avoid Overstaffing
Overstaffing is pretty easy to spot. Servers are standing around and people are getting in each other’s way in the kitchen (at least more than normal). Managers tend to overstaff to account for those “just-in-case” peaks in volume. There’s a general thinking that overstaffing and cutting people is better than understaffing and having employees on-call. The two biggest problems with overstaffing are the costs that comes with paying people to stand around and the low productivity that comes as a result of the all that standing around.
5. Avoid Understaffing
Understaffing appears to keep everyone busy. But at some point, you have to wonder at what cost? Understaffing could lead to employee burnout. It could also lead to poor customer service and shortcuts that could be harmful for guests and employees. Building a schedule based on sales or guest volume data that also takes into account variables like weather, events and marketing initiatives is the best way to optimize labor spend.
6. Stagger Arrivals/Departures
When you have a labor forecast based on actual labor data, you are able to stagger arrival times and departures. Instead of having block schedules where everyone arrives at the same time and leaves at the same time, managers start to learn which positions can arrive and leave at different 15 or half-hour increments to optimize your labor spend. Over time, that extra 15 or 30 minutes adds up to significant labor savings.