Managing Your Labor Pains Part Two: Planning is the Key to Labor Control

There are two types of managers: The Planner and The Firefighter, which type are you? The former is concerned with looking ahead and trying to head off potential problems. The latter works hard, fights and puts out fires everyday. Restaurant managers are terrific firefighters and pride themselves on that fact. Whether it is a personnel issue, property need or problem with a guest, the thrill of stepping in and extinguishing a fire is exhilarating. In a restaurant environment, there will always be a certain amount of critical and necessary firefighting. Unfortunately, managers that work primarily from a firefighting mentality are usually poor at planning.

The Firefighter is incapable of moving a business forward. His/her reactive approach precludes him/her from being proactive and “running the business forward” to create results. Positive results usually “just happen” either by luck or other contributing factors. He/she is generally less efficient and effective than what is possible. On the other hand, the Planner learns to take control his/her business and dominate the cost environment. Planning allows a forward looking, proactive management style that seeks to create results not just let them happen.

Planning is the key to effective labor management. Money is lost by overstaffing (especially the first and last hour of each shift), understaffing, menu complexity, employee turnover, low employee productivity, overtime, absenteeism, slow guest turnover, etc. Build a habit of forecasting and many of these money losing activities can be nullified.

You must communicate! Require your management team (sometimes, that means me, myself and I) to meet weekly to:

  • Review the results of the prior week (including forecasted sales vs. actual sales and scheduled hours vs. actual hours)
  • Review the current week and make adjustments for the weekend
  • Forecast next week

To build a proper forecast, look at the big picture. Use enough data to get comfortable with the sales and labor pattern. Look at sales trends over the last several weeks taking each day as a whole, this will show the pattern for Fridays, Saturdays, etc. It also leads to an awareness of trends for each day, what were the hours used, what worked best? Look at last year at the same time. What is different this year? Remember the outstanding weather in Seattle last summer? Look at special events. Holidays are often the culprit of over/understaffing. Christmas is on a Saturday in 2004, last year it was on a Thursday. How will this affect you?

Once the forecast is agreed upon, use it to schedule labor. For example, if the sales forecast for next week is $40,000 the labor schedule must reflect the labor percentage and dollar expenditures that you have agreed upon with your team. If 18% direct labor is the target then make sure the schedule reflects no more than $7,200 ($40,000 x 18%). The best managers will ask his/her team to beat the target (in this case 18%) and write schedules to reflect it (as much as 20% below). Experience shows a tendency to be overly optimistic regarding sales and, therefore, overstaff.

Take control. Become a Planner not a Firefighter, be proactive not reactive. Run your business forward and you will create the results you desire.