How do you make a profit when times are financially tight?
How do you make a profit when times are financially tight? If you want to avoid going the route of increasing prices, you’d do well to focus on managing your labour costs.
It is becoming increasingly difficult to control labour costs. In order to survive, one has to be a very savvy manager who uses each opportunity to its maximum capacity. At the end of the day, those whose businesses remain successful are very efficient when it comes to the management of time and people.
One of the simplest ways to better use labour is to put more emphasis on upselling. This simple tactic could increase your total revenue by quite a bit. This might involve specific training for all employees about various techniques that could be used to offer such add-ons as salads, pop and bread sticks. In general, all it requires is you telling customers that for a minimal increase in price they could enjoy, for example, a fresh salad with their pizza.
Some businesses take it a step further and introduce it as a sales contest among employees. You might find that your employees will be more motivated to incorporate this new approach during their conversations if even a small reward is offered, for example, a gift certificate for coffee. A higher percentage of customers add more items to their order if prompted to do so. Train your employees to turn time on the phone with customers into additional sales.
Another important task that allows you to effectively manage labour costs involves a regular monthly review of your sales and activities. This review will indicate monthly sales patterns that could be used to properly schedule work hours for all employees. In turn, managers can use this information when creating weekly work schedules for employees. It will quickly become apparent that the pizzeria could operate efficiently with fewer employees on some days, while it may require full staff on others. This helps you better plan shifts and make decisions about letting employees go home early.
It is good practice to minimize the number of employees who need to stay until closing hours and assign specific cleaning duties to each person throughout the evening. This way, some of the cleaning could be completed earlier during less busy times. Ultimately, this will help keep labour costs to a minimum because fewer people will be required to stay until closing time to clean.
It is also a good strategy to end individual shifts half an hour or one hour apart instead of letting most of your staff go home at the same time. Keep in mind that proper staffing always leads to exceptional customer service as well as great employee satisfaction.
Another way to help keep labour costs down is to provide a great working environment. Retaining employees helps minimize labour costs. A happy employee is more productive and ends up working for you for a longer period of time than someone who is unhappy. In the long run, it costs more money to fire someone who has already been trained and hire someone new to replace them. In these situations, it becomes expensive for managers to train someone new, usually during slower times of day, because their time could be used more effectively doing other things. Before you decide to invest time and money to train new employees, it is important to understand not only why they want to work for you but also for how long.
If all of the above fails, and as a last resort only, you might be forced to offset high labour costs by deciding if you need to increase your current pizza prices. This strategy requires careful review of your books. Take a closer look at the operations and management of the business to identify the problem. Keep in mind that regular price increases could potentially drive your customers to your competition.
Whatever strategy you choose to manage the labour costs, never sacrifice the quality of your product and customer service. Both must be maintained at the top level to ensure customers stay loyal and continue supporting your business.
There are many ways to manage labour costs without negatively affecting your business, but it is best when the process appears seamless to customers while the product and customer service stay exceptional.
Tom Stankiewicz has been in the pizza business for more than 15 years. He has been the proprietor of Bondi’s Pizza in London, Ont., since 2000 and is president of the Canadian Pizza Team.
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