Trick for Cutting Restaurant Labor Cost
Are you struggling with the current labor shortage, which is hopefully at the tail end of the pandemic? Are you like many restaurants who just can't seem to get people to show up for interviews, let alone actually show up to work? Did you know that cutting labor could be your answer? Here I'll share an easy trick to cutting restaurant labor during a labor shortage.
Before I get into it, I'm making two assumptions for this tip to work for you. One, you have a point of sale system. Two, you know, your average ticket per person, food and beverage combined, and individually.
I wanted to fit this into a quick and easy video tip, so what I'm about to share with you is a down and dirty version of something called dollars per labor hour worked. I'm going to teach you how it's done for the kitchen alone.
First step: Run a sales report for food sales only that's broken down by hour for each day of the week. Note that some POS systems break it down into 15-minute increments, so change your math if that's the case for you.
Second step: Run an hour-by-hour labor report for all kitchen positions: cooks, prep cooks and dishwashers. You’re going to see how many hours were worked in each one of those hours.
Third step: Line them up on a spreadsheet. Your sales by hour and the hours worked by hour right next to each other. Take this spreadsheet, with the total hours worked by hour in the kitchen and its corresponding sales by the hour and divide that into your sales. Take your hours divided into your sales to come up with your dollars per labor hour worked.
For example, if between the hours of noon and 1 p.m. you had five cooks on the line, on that hour you have five man-hours worked. Then, next to it, let’s say you have $500 in food sales in that same hour. Divide five into 500 and to get $100 dollars per labor hour worked.
That means the efficiencies for each cook that was on the line in that hour you produced $100 in sales. Since there are five of them, that's $500 in that hour.
Fourth Step: Now that you have that, divide your dollars per labor hour worked – that $100 – by your average food ticket. Let’s say that's $20 per person, take $20 divided into a $100 to come up with the number five.
What is the number five? This represents how many entrees each person on the line, or each person in the kitchen, would produce in that single hour. What that means is if in that that hour we produce five entrees per hour, per person working, that’s 25 total. But the fact of the matter is, each person on that line in theory, put an an item on the stove, on the flat top, in the fryer, etc., and watched it. Then they took it off the grill, out of the fryer, put it on a plate, put it up, and then they put another order on and they did that all over again. They literally had plenty of time. They just watched 10 minutes go by at a time, if you will, and just did one thing at a time. Never pressed, never busy. You can use this information as a common language with your chef or your kitchen manager when you start talking about efficiencies. They're going to tell you they need the five cooks and they very well need the five cooks.
But first, let's see what happens when you look at that by hour by hour by hour. You may find another hour that they were doing $500 per labor hour worked or $1,000 per labor hour worked. When you divide numbers like that by 20, you see a number that is much higher: 15, 20, 30, even 40 entrees an hour per person on the line.
They’re crushing it with these numbers and that is where most chefs or kitchen managers focus. But when you look at those slower hours and see two to five entrees an hour, that’s when you can identify the times where you’re slower and we can make a change.
Your fifth and final step: Identify those hours where your productivity is so low that you can start to stagger start your team members for each shift or completely cut somebody from a shift because you can see every hour how many people you need because your efficiencies are either high or really low.
This helps you use and maximize your labor, the labor that you have, while still giving your guests the best experience possible. You can hone in and reduce hours from people, but still give them the same number of hours because you’re sharing it along the week in the right times. This is how you become more efficient. This is how you can start to do more with fewer people.
I want to finish this with a big warning, and I want you to listen to this. If you're short staffed because your workplace does not have a positive work environment, or your menu is too large and too complex, you have a much bigger problem. In cases like this, cutting a few hours here and there is not going to be your answer.
If you would like to learn how to own a restaurant that doesn't depend on you being in it to be successful, watch this free video course that teaches you three key principles to running a successful restaurant. If you're ready right now to make some serious changes in your restaurant, you can also book a 60-minute call with me where we talk about your challenges and figure out exactly what is holding you back from having a restaurant that doesn’t depend on you being in it to be successful.
Be sure to visit my YouTube channel for more helpful restaurant management video tips.