Boost Productivity to Control Labor Costs
Boost Productivity to Control Labor Costs by David Pavesic, Ph. D., FMP
You have two major “cost centers” at your restaurant. One is food and beverage. The other is labor. Which one do you think is most problematic?
If you said labor, either you’ve been running a restaurant for at least a few months, or you have some genuine insight into the challenges of running a restaurant.
Labor issues are still the No. 1 concern of most restaurant owners and managers. Food and beverage costs are held in check through price adjustments, portion controls and through purchasing efficiencies. On the other hand, labor costs are not controlled by paying low wages. First, the minimum wage sets the floor for the price of labor in the United States. Second, and more importantly, there is a matter of supply and demand. Most restaurateurs know there are simply not enough qualified applicants for the positions they need to fill.
Labor costs are controlled through sound scheduling and improving employee productivity. You increase productivity through training, better kitchen and dining room layouts, and the use of labor-saving equipment and products. That said, this article does not go into those human resource issues as much as it addresses cost-related issues and ways to increase employee productivity — the areas in which you have most control. It emphasizes the importance of scheduling in controlling labor costs and the ways to collect and analyze payroll data.
The Power of Numbers and Observation
It is very difficult to fly successfully by the seat of your pants in any complex business. Before you can develop appropriate and effective measures for labor cost control, you must gather the necessary information on which to make your decisions. Therefore, the accumulation and reporting of relevant labor cost information is critical. To do this, you need more than your calculator; you need to look around you.
Productivity and labor cost efficiency cannot be addressed
You have two major “cost centers” at your restaurant. One is food and beverage. The other is labor. Which one do you think is most problematic?
If you said labor, either you’ve been running a restaurant for at least a few months, or you have some genuine insight into the challenges of running a restaurant.
Labor issues are still the No. 1 concern of most restaurant owners and managers. Food and beverage costs are held in check through price adjustments, portion controls and through purchasing efficiencies. On the other hand, labor costs are not controlled by paying low wages. First, the minimum wage sets the floor for the price of labor in the United States. Second, and more importantly, there is a matter of supply and demand. Most restaurateurs know there are simply not enough qualified applicants for the positions they need to fill.
Labor costs are controlled through sound scheduling and improving employee productivity. You increase productivity through training, better kitchen and dining room layouts, and the use of labor-saving equipment and products. That said, this article does not go into those human resource issues as much as it addresses cost-related issues and ways to increase employee productivity — the areas in which you have most control. It emphasizes the importance of scheduling in controlling labor costs and the ways to collect and analyze payroll data.
The Power of Numbers and Observation
It is very difficult to fly successfully by the seat of your pants in any complex business. Before you can develop appropriate and effective measures for labor cost control, you must gather the necessary information on which to make your decisions. Therefore, the accumulation and reporting of relevant labor cost information is critical. To do this, you need more than your calculator; you need to look around you.
Productivity and labor cost efficiency cannot be addressed