Regardless of theme, size, geographic location or target clientele, all restaurants have one major concern in common: labour costs. Finding a balance between enough staff to cover the dinner rush and keeping your budget in check is not an easy task. Plus, businesses have to increase revenue in a competitive market, while the cost of labour continues to rise. So how do you ensure quality staff while still being mindful of profit margin? There are a few main ways to lower restaurant labour costs without sacrificing quality, talent, and customer service.
First, it’s critical to do what you can to prevent turnover. The restaurant industry experiences one of the highest turnover rates for hourly and supervisory-level employees. In fact, the turnover rates are currently the highest they’ve been in decades. You spend time, money and resources to train new employees and when they turn around and quit, that expense is wasted. One way to prevent turnover rates is to hire smart by looking for quality candidates with loyal and dedicated work history. Try to hire people with experience, they’ll require less training and they’ll catch on faster to your procedures.
Make sure you schedule fairly and that you have a good combination of both part and full-time employees. Avoid overstaffing as the extra wages add up and you know what they say about too many cooks in the kitchen; it gets pretty crowded.
Both seasoned and brand-new employees will cost you money if they’re not meeting certain standards of quality and efficiency. When you improve training, you can hire fewer people because the ones you already have are well trained and skilled. Cross-train staff so that everyone can chip in when certain stations are lagging or someone is ill. Hold regular staff meetings and keep staff updated on current procedures and methods. An open line of communication between everyone will ensure everyone is on the same page.
A good method to stay on top of labour costs is to run the food cost formula on every menu item. Get out the calculators for this step. Yes, it’s time-consuming. But yes, it’s essential for cutting restaurant costs. Here’s the formula:
Food cost percentage = Total cost of ingredients / Menu item price
Your food cost percentage will tell you how much you are spending on ingredients compared to the price of each menu item. An ideal food cost should be between 15-30% (which means your gross revenue per item is 70-85%). If your trim the food cost percentage, you can spend a little more on labour.
Another way to decrease labour costs is to streamline the efficiency of your kitchen. You can do that in a number of ways. The easiest and quickest solution is to adjust how you’re doing your food prep. Using a food labelling system will speed up your food prep. Food labels are colour-coded and easy to remove and place on containers. Food rotations systems help you improve inventory management, monitor expiration dates, avoid cross-contamination, ensure customer safety, assure health inspectors that the kitchen is within code, reduce waste and save you time and money.