Business and Operations
marketing insights: Your people, your profits
Without talented people serving your customers, a dining experience will become a vending experience.
Without talented people serving your customers, a dining experience will become a vending experience. However, labour is a cost and, like any other cost, it needs to be deployed effectively. While labour spend varies from place to place, there are some important aspects to measure, monitor and adjust in order to find the healthy balance for your business.
Establish your ideal weekly spend
Your payroll for the week divided by your total sales for the week equals your labour as a percentage of total sales. Many restaurants stick to a general rule of spending less than 20 per cent of sales on labour. Only you can determine what the best target is for your operation. If your guest experience calls for servers to spend more time at the tables speaking about menu items or wine pairings then your labour may regularly track higher. Presumably, a higher cheque average will more than compensate for the investment in time. Track your labour as a per cent of sales for a few weeks to get a sense of what “normal” is for your restaurant. With this baseline, you’ll be able to see if you’re veering off target fairly quickly.
Deploy your team effectively
List your staff members and their hourly pay rates. There are probably some people on your team who make more than others because of tenure or other skills. When business is slower, you’ll want to schedule these people carefully, as their associated labour costs can add up quickly over a few shifts. These veterans may be quite valuable because they bring a variety of skills and expertise to the business, but this also means you must be extra diligent about how and when you utilize them. These experienced team members can add value by mentoring less experienced employees. It may be a win/win to let younger, less expensive team members take a larger part of the load. If you’re hesitant to cut back their hours because these employees have been with you a long time and have been loyal, you may be surprised to find out they’re at a stage in their lives when a shift or two a week is just right.
Plan your schedule weekly for all employees instead of posting the same schedule every week. Relying on a fixed schedule week after week doesn’t take into account the shifts in projected sales, variations in weather or other factors that can affect your business. If you’ve created a business plan for the year, you should have your projected sales, which can be broken down by week. Forecast your projected labour spend as a percentage of your projected sales and you’ll know how many employees to plan for. Adjust the number of staff scheduled each week to keep compliant with weekly budget constraints. Don’t skimp on training in an effort to control labour costs. New hires and core team members need that time outside of the dinner rush for coaching.
For your kitchen staff, make sure the labour hours are being directed to those key menu items that are profitable and sell at a high volume. Are there value-added frozen dough products that could be used strategically? Although your signature items should be made from scratch, perhaps there are smaller categories where a frozen dough or par-baked product could fit the bill?
Make the tough calls
Make sure you have some flexible team members who don’t mind being sent home if it’s slow, or conversely, don’t mind being called in at the last minute if it gets busy. We can’t always predict traffic patterns so there will be times when an extra pair of hands could help generate more sales or fewer hands could mean more efficiency. Being able to give employees stable schedules is important, but so is the health of your business. Tough calls have to be made.
Ensure your team has transferable skills
If you have fewer than 20 employees, chances are you’ll need a good team of generalists. If any one of your staff doesn’t feel comfortable opening, closing or using your POS system, you’ll have to bring another person in to address these gaps. Try to train everyone to be capable of handling a customer transaction adeptly from start to finish. Also, try not to succumb to hiring under the pressure of being short-staffed. You need to be thorough and patient when hiring staff in order to get a desirable team together.
Know when to fire yourself
It can be tempting to give more shifts to yourself to control labour costs. This is a short-term solution because as the business leader, your skills are better directed elsewhere. If you’re too busy working in the restaurant to focus on working on it, you may need to fire yourself from that hourly position so you can grow the business.
Your brand is your reputation. Remember that your team is a huge part of that reputation. A well-balanced labour strategy honours both service and costs at the same time. That’s why it’s called “human resources.”
Michelle Brisebois is a marketing professional with experience in the food, pharmaceutical, financial services and wine industries. She specializes in retail brand strategies.