Labor Will Make or Break You

I have been thinking a lot recently about my own operation. How could I continue to find new opportunities to be more efficient and reduce expenses without affecting the guest? As most of you know, labor is our biggest expense; fixed labor is often a financial burden in slow times but necessary when busy. So how do you create the correct staffing model for your operation?The first step is to look at it as an outsider. If you were critiquing someone else’s operation as a consultant, what decisions would you make? The difficult part is that most of us think of positions as the people who work them, not as a tool or expense. I am not suggesting that you reduce your staff members to numbers, but as an exercise, try making your schedules with positions, not names. If you’re adding hours to cover shifts for staffers who are not up to the expected level of productivity, something is wrong.Secondly, look at the shift times. Can you stagger start and finish times? Can you move staff to different areas as needed? Forget about titles, station boundaries, and lines of delineation. Kitchens and dining rooms must utilize all staff at its highest productivity level to maximize efficiency. No one should be sitting while others are working unless they are on an official scheduled break. If people are hesitant to participate, cut their hours and send them home once they are no longer needed. They will get the message. I have a spreadsheet built into my schedules that calculates budgeted hours for the week. Anticipated cover counts, average check price and banquet revenue are all tied into the computation which displays the percentage of budgeted hours available for the forecasted revenue. On a slow week, I may use 140% due to minimum staffing levels, but on a busy week I am shooting for 70%. The point is, you can’t manage what you can’t measure. Find a system that works for you.Third, are you using fixed labor to its highest potential? Are salaried chefs and managers working fewer hours than hourly staff? How much time are they spending in the office or on the phone instead of on the floor? Proper planning is extremely important and necessary. We could not exist without it, but there is a time and place for everything. I would guess that most tasks, calls, and projects could be accomplished in half the time. It has always amazed me how efficient people can be when they are motivated by the need to leave early for personal reasons, the start of a vacation, or just a shorter day.In conclusion, I read somewhere that 20-30% of employees at many companies really do little or nothing all day, and their organizations could operate without them. I don’t think this statement really applies to our business, but there is some truth in it. The point is that these low-value-add workers should be the first to go before you start considering additional cuts, as real talent will eventually leave (real talent is always in demand as there isn’t much of it). If this last sentence makes you feel uncomfortable, you may have some work to do. The effects of the recession may soon begin to slow down, and the tables will begin to turn. Emerging from the recession with the best people should be your goal; you will need them.
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  • I've often wished that nightly cash outs and other sales data could be repackaged in a format that would speak to the FOH staff in a language they'd understand.

    Why not present the FOH with wine sales info for the month? Why not break down entree sales and cocktail trends. There must be a way to convert these numbers into charts and graphs (visualize the data) so that servers can make them a conscious part of their sales strategy.
  • I think its very important to show both positive and negative P&L results. Many orgainizations have different rules about specific numbers and that is their personal decision. I think that if you have an open and honest enviorment, it can only help if everyone understands the results of their efforts.
  • Great post, Chef!

    At any point, do you feel that it is ever wise or worth it to explain your labor costs to your hourly employees? I mean, would it perhaps put things in perspective for them? I find that most hourly employees are clueless as to how they factor into the overall performance of the business, hence, they become largely self-focused and unaware of how their actions (or lack thereof) affect the bottom line.

    What are your thoughts?
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