Managing Your Labor Pains Part One: Utilizing a Staffing Grid
After the first year of operation, labor is running 5% of sales higher than you think it should. When confronting the restaurant manager you hear things like: “Tina needs hours or she will find another job, and Andy will quit if I ask him to work less.” The list of personnel with “special circumstances” is endless. Overscheduling is the main driver of excess labor costs. In our recent May 19 seminar, “Spotlighting Profits”, I made the point, “Managing labor requires use of your heart and your head.” Reducing labor costs does not necessarily mean that Tina, Andy or the manager need to be replaced (but it might).
There are two main planning approaches to managing labor; staffing (head) and scheduling (heart). Staffing is a strategic approach that asks the question, “What does the business need given the projected sales volumes?” Scheduling asks, “Who should work where, when and at what tasks?” The main problem with labor management is that, gradually, managers resort to their hearts (schedule) to run the business rather than their heads (staffing). Staffing allows you to set standards to measure labor productivity. Without standards it is difficult to measure what level of labor productivity is acceptable or ideal. Schedules, on the other hand, are often written with what the crew needs first rather than what the business needs.
To effectively manage costs, build a staffing grid using a spreadsheet, and then staff the needs of the business at different sales levels. Begin with a skeleton crew at the lowest sales volume and work up to the highest sales level incrementing sales appropriately ($5,000-$10,000/week). Do this by day of the week, hour of the day, position and hourly rate without names for a week and extend the totals. You will have grids for each projected sales level that are designed to hit your targeted labor cost.
Once the staffing grid is built, write the schedule to match given the planned sales volume for the next week. Use a schedule that can provide costs by person and in total. Never use a standing schedule. Sales volumes are volatile and scheduling should reflect them. An additional benefit of staffing the business is the “right sizing” of the crew. It is generally better to have fewer employees working more hours than more employees working fewer hours. Once your schedule reflects the implemented staffing grid you’ll save that 5% and then some.
P.S. Watch the first and last hour of each shift for productivity, remember $30/day is $11,000/year. Look for future articles on "Managing Your Labor Pains".
We have worked with scores of restaurants on labor management tools.