How to Manage Labor Costs for a Restaurant

Restaurant Jobs

Restaurant Jobs

No matter how you cut it, running an existing restaurant or opening a new one is expensive. Besides the cost of food and beverages, labor is one of the most expensive aspects in running your business.

A fully staffed restaurant is a must, regardless of budgetary constraints. Finding qualified, responsible employees is far from an easy task and you won't make things easier by hiring people who are willing to work for less.  You may be trying to cut costs but you can't cut corners.  Restaurants are a people run business. The best employees keep customers happy and coming back for more.

So how can you manage your new restaurant’s costs while also getting what you need?

Below are some tips for managing staffing costs in a way that both satisfies your employees needs and keeps your new restaurant running smoothly.

Focus on the costs you can control

There's not a lot you can change when it comes to labor costs. Insurance, taxes and other factors will likely be dictated to you instead of by you, but there are areas where you have more control; such as pay rates, employee scheduling and work attire. Managing labor costs starts with knowing where you can and can't make changes. Invest your time and energy on the areas where you can legitimately cut costs.

Evaluate schedules regularly

One item restaurant managers can examine to cut costs is scheduling. Overbooking your concept will inflate the cost of doing business. Take a look at the shifts at your restaurant:

  • Do the number of staff members suit the amount of business?
  • Do you really need X amount of servers during the slow mid-afternoon hours, or can you work well with less?
  • Can the employees who have been cut from the slower shifts be moved to a busier time period?

Finding places where you can reduce employee hours will be a huge money saver.

Another thing to consider is the the financial differences between full-time and part-time employees. Full-time employees may require costly benefits, however, they may be more committed to your business. You will save with lower turnover and having to replace full time workers less. Part-time employees won’t require benefits, but they’ll be more likely to leave your business and will need replacing. Most restaurants need a blend of both types of staffers to be sustainable. It is imperative to weigh the difference in cost for your restaurant and its needs. Finding the most economical solution is key.

Boost employee productivity

Productive employees are the best type of employees and they are crucial in terms of lowering labor costs because they bring the most value to your business. Keeping employee productivity high is important. To boost productivity, consider the following:

  • Proper Training: Your restaurant becomes a well-oiled machine when each staff member understands how to do his or her job well. That’s why it's important to train every employee thoroughly. Regular staff meetings, to brief everyone on new menu items, restaurant policy changes, VIP's, and such, help keep the team on the same page.
  • Smart restaurant design: There’s more to restaurant design than just aesthetics. While you want your concept to look it's absolute best, good restaurant design will not only provide that, but also go a long way toward boosting your staff’s productivity. Great design saves time, adds convenience, and prevents unnecessary bottlenecks in the workflow. 
  • Efficient equipment: The right restaurant equipment will cut down cooking times, lower your bills, boost restaurant productivity and empower your staff. Regardless the appliance, the equipment you purchase for your restaurant should match the needs of your cuisine and menu while adhering to all food safety codes. Before deciding on which items to buy, think through all the needs and goals of your restaurant and choose equipment to suit them. If your restaurant is already in operation, you will have to consider upgrading your equipment if the equipment currently in use could be improved to enhance the way your team works. You could always ask the chef what equipment would make a difference.

The restaurant business is tough. It can be hard to find a balance between low labor costs and full service, but using the tips outlined in this article is a great way to manage expenses and set yourself for success.

Do you have any tips for managing labor costs? What worked for you, and what didn’t? Let us know in the comments section below.

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