Cost Reduction

Get Labor Costs Under Control with These Four Best Practices

As a restaurant operator, labor is the most expensive and variable aspect of your business. Sure, you can control it, but most restaurant managers simply focus on the hours paid and don’t appreciate the myriad ways you can impact your labor cost.

In discussions with our clients we have developed these four simple strategies to improve your labor control by more than just remembering to cut labor when it’s slow. While the schedule itself is crucial to successful labor management, you can’t assume that it’s enough to get your labor costs under control. So, enjoy these peer-built best practices and save money by implementing them.


Reduce Overtime & Other Pay Overages

Wage and overtime costs can be a big strain on your restaurant’s budget. We’ve used part-time employees and temp workers to assuage the issue, but that can only go so far. For example, a tool like ZipShedules can alert you when you have a team member that is approaching the overtime threshold. That allows you to respond before the fact rather than paying the premium after.

Your team riding the clock and being paid for time they aren’t actually working (whether on purpose or not) can be an easily avoided expense. By integrating your scheduling software into your POS, you can control when a staff member can clock in, so they can’t do it early – unless you direct them. Also, you can better reflect staff breaks to ensure everyone gets a rest, but no one takes advantage of your business when they do it.


Review & Adjust Current Compensation Plans

By evaluating our companies’ salaries, wages, and benefits, we found several opportunities where restaurants can cut costs. Using websites like GlassDoor, we were able to ensure we weren’t over- or underpaying our staff by comparing our pay to the average market value for a comparable restaurant. When we found a slight overage, it was much easier to keep track of and scale down with our new hires, so we were closer to market level. We also implemented revenue-driven pay raises, so our top servers were more accurately and properly compensated when the time came.


Reduce Labor Costs by Optimizing Schedules

We all know this challenge all too well. Either you end up overscheduling for a shift that ends up being slow or under-scheduling for a busy shift that puts everyone in the weeds. It is a nightmare on both ends that can kill your margins or hurt your guests’ experiences.

To help stave off this issue, we started using an employee scheduling software that can labor forecast when we input our old POS sales data and employee availabilities. This way, we schedule the correct number of employees for the shift. Thanks to this, we were able to cut down on overscheduling and had far fewer shifts where we were unexpectedly short staffed!


Reduce Employee Turnover

Losing an employee is awful; it also hurts your budget significantly. Spending countless hours interviewing, training, and correcting mistakes made by new hires is avoidable if you focus on staff retention. It’s as simple as keeping your team happy and well trained.

We started more heavily cross-training in order to grow our legacy employees’ skill sets. This allows staff members to be more flexible and cover more than one position (when needed). We also empowered them to train newer team members on their skills, which in turn, saves our management their ever-so-valuable time! Cross-training also gives us the added bonus of not having to rush to replace employees if one does leave. It makes for a more successful and sustainable business. This new model combined with our new scheduling software saved us so much time and money we don’t know how we ever were able to do it any other way.

While these four best practices represent opportunities to improve your labor controls, it still always comes down to the schedule. By creating, deploying and managing a great schedule, you can avoid most of the labor cost pitfalls you will face. That’s where great software like ZipSchedules fills an obvious need. The software improves your minute to minute awareness of labor issues while ensuring you can predict and prepare better for the upcoming work week.

We hope these best practices will help you even further refine your costs, so your profit can soar!



Cost Reduction
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