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UK Hospitality Industry Turns to Labour Solutions After Minimum Wage Hike

The retail and leisure sectors in the United Kingdom are labouring over wage changes this week after the latest increase in the National Living Wage. Effective April 1, 2016, the new minimum wage for staff over 25 years of age rose to £7.20. The Government also has plans to increase the wage to £9 by […]

The retail and leisure sectors in the United Kingdom are labouring over wage changes this week after the latest increase in the National Living Wage.

Effective April 1, 2016, the new minimum wage for staff over 25 years of age rose to £7.20. The Government also has plans to increase the wage to £9 by 2020. A similar increase played out across the pond in California, with the state approving an increase to their minimum wage to $15 by 2020.

Compared to the UK’s 2015 wages, the long-term goal to increase wages to £9 would represent a 38.5% rise in pay. Definitely not a small or insignificant amount of money for the sector, who for the most part, have been openly critical of the increase.

Some groups like Fuller’s and Five Guys Burger & Fries proactively raised rates in preparation for the wage raise. But most restaurants are still sitting on the fence.

According to a study by Alix Partners, less than half of UK companies in the retail and leisure sector said they budgeted appropriately to account for the wage increase.

The report warned that “the impact of the planned rise to £9 by 2020 looks far more difficult for companies and consumers to absorb and is likely to put significant pressure on many companies’ profitability.”

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Less than half of UK companies in the retail and leisure sector said they budgeted appropriately to account for the wage increase.

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– Alix Partners Study

There was also warning from the Federation of Small Businesses (FSB) that the increase could result in fewer jobs being created and fewer hours for staff already employed. To offset those costs, respondents say they plan to raise their costs, cut staff and introduce labour efficiencies.

While all of the talk and speculation is important to consider and weigh, when push comes to shove, hospitality operators have to make some decisions about how they’re going to handle the change – especially smaller businesses with low prices and low margins.

One option many restaurants are considering is moving away from old-school rostering to online rostering technology solutions that can help managers control their costs and stick to labour budgets – a move that could determine whether they keep the doors open and customers happy.

There are several ways an online rostering technology solution could offset the gradual increase in wages without having to pass large swings in costs along to consumers or cut hours for staff.

1. OPTIMIZE ROSTERS

The problem with old-school rostering methods like spreadsheets is that they don’t give managers a simple way to see or manage how much the restaurant is spending on labour relative to the patterns of activity during regular cycles like day parts, or weekly, monthly and quarterly customer cycles.

Online rostering solutions take into account your staff’s availability and schedules as well as your restaurant’s labour budget and sales goals. You can set goals or budgets and run reports to ensure you’re hitting those labour percentages across teams or by a single job category, like bartenders, servers or dishwashers.

2. MANAGE STAFF PAY RATES & VOLUME

The minimum living wage isn’t the only thing that will continue to change until 2020 – some of your staff will start to cross over into the 24+ category. With an online rostering tool, managers can track birthdays, and then easily change pay rates in the system. Those changes in pay rates will pump into the roster and the regular labour reports. The tool automatically multiplies pay rates and scheduled labor hours helping you calculate estimated labour costs for the day, week, month or quarter.

3. FORECAST & REPORT

You’ve heard the saying “garbage in, garbage out.” The same is true for labour data. Good labour forecasting starts with good labour data. Online rostering technology – especially those integrated with a point of sale system – give managers and operators the historical data you need to get your actual vs. forecasted rosters as close to mirroring each other as possible. And when they’re off for some reason – say you had more covers than anticipated or there were too many no-shows – you can account for that misstep and make corrections in a week instead of letting the problem persist.

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Online rostering technology – especially those integrated with a point of sale system – give managers and operators the historical data you need to get your actual vs. forecasted rosters as close to mirroring each other as possible.

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4. FIX STAFF LEVELS ON THE FLY

When you know your actual hours worked versus the rostered hours, you can easily spot large discrepancies and make changes fast. For instance, if during the winter months you consistently schedule servers to come in at 11 a.m. but you find you’re cutting two staff members for two weeks in a row, you can see that in the labour pro-forma report and decide to reduce your staff by two people for the lunch daypart during the winter months. And because you’re monitoring your labour percentage, you can see how that change in staff volume impacts your ability to hit your numbers.

5. PREVENT UNNECESSARY OVERTIME

Old-school rostering methods aren’t great at alerting managers when there’s a chance someone might hit overtime. Online rostering systems, on the other hand, show overtime alerts in the roster. It will alert you when a team member is in danger of hitting overtime before you schedule them. It also shows you the implications of overtime hours after you assign them a shift – because sometimes overtime is unavoidable.

6. TURN ON PUNCTUALITY CONTROLS

We all hope our staff isn’t buddy punching or clocking in too early or forgetting to clock out at the end of a busy night. But sometimes, it happens whether it’s intentional or not.

Turning on punctuality controls in an online rostering solution like HotSchedules prevents staff from clocking in or out too early or too late. All of those fifteen or 20-minute intervals of time saved does two things: (1) it puts labor savings back in your pocket immediately and (2) it saves managers time from having to edit all those time cards to reflect accurate clock-in times.

7. USE SAVINGS TO MANAGE WAGE INCREASES

All of these features, functions and automation rules in an online rostering system puts pounds back in your restaurant’s or bar’s pockets. Even a 2 percent savings on labor costs could help you raise your minimum wage without having to impact your profit margins.

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