OPERATIONS: Cross-training lowers labor cost, boosts morale

March 19, 2003

Jim Moran is a pizza and restaurant industry veteran, and an industry consultant and speaker with Restaurant Trainers, Inc.

If you are running higher than 20 percent labor (including manager's salary) in your operation, then you could probably see great results -- i.e. cost savings, a morale boost -- from cross-training.

In January, I was sent to do some on-site consulting for a full-service Italian restaurant in Southern California. They were doing very well in sales but ran higher than 26 percent in labor in 2002!

Prior to my arrival, the owner insisted that there were no opportunities to save labor with cross-training. In fact, lowering his labor was not supposed to be on my agenda. My job was to audit his store for general suggestions, give customer service and goal-setting seminars to his employees, review his profit and loss (P&L) statements, and help with his marketing plan for 2003.

That sounded fine to me, but during my audit I saw so many cross-training opportunities that I could not possibly list them all here.

Jim Moran

This gentleman was a single-store owner-operator who was doing a lot of good things, had high sales and was making money. In this case, he needed a fresh eye to point out to him how much time his employees spent standing still.

There were countless opportunities, including pizza makers that only made pizza; none touched a submarine sandwich or a pasta dish.

His wait staff was not allowed behind the bar, despite the fact that they were all older than 21. (Interestingly, nobody on staff could tell me who invented this rule or why.) I also noticed that 99 percent of the alcoholic drinks this restaurant served were either beer, wine or single-liquor drinks (i.e. rum and Coke, gin and tonic).

When I asked the owner why he isolated so many tasks, he gave me the most common answer in the book: "This is the way we've always done things."

When I pointed out the benefits he could realize by expending some time and effort on cross-training, he had another common response: "If they can do more tasks, I will have to give them all raises."

Then I gave him the good news: He was absolutely correct. And the better news was that those raises will actually save him money!

You see, it is much better to pay 10 cross-trained employees $7 an hour, than to pay 14 single-task employees $6 and hour. And the benefits go far beyond the lower overall labor cost.

Cross-trained employees stick around a lot longer because they are making more money doing a more challenging and rewarding job. Employees don't enjoy performing the same task over and over again for long; they burn out. They do enjoy, however, learning new skills and performing in a more high-energy, challenging environment.

The result is reduced turnover, which means that you are required to spend less time and money hiring new employees. Woo-hoo!

I suggested that the operator hold three two-hour cross-training classes for his employees. As a result, two weeks later, after his staff was better skilled, he was able to eliminate his four weakest staff members without sacrificing service.

You see, it is much better to pay 10 cross-trained employees $7 an hour, than to pay 14 single-task employees $6 and hour. And the benefits go far beyond the lower overall labor cost.

I had a very similar experience when I was managing the Domino's Pizza in Falls Church, Va. On less than $18,000 a week in sales, my store ran a yearly labor of 15.6 percent, which included the manager's salary. The importance of cross-training to running that kind of labor percentage was most evident during the Friday night rush. Even though we typically exceeded 200 orders from 6-8 p.m., I only needed to schedule two team members to assist on the inside of the store. Everyone else on the schedule was a driver who could also answer phones, make pizzas, prepare side dishes, and operate the ovens.

Eventually, that success with cross-training was a key factor in my being able to win Manager of the Year.

On consulting jobs, I always ask the employees what they do. And the most common answer is, "I am just a driver," or "I'm just a server." My team members at the Falls Church store were never just anything. In fact, five of them have gone on to manage their own stores.

Cross-training may be one of the best ways to lower labor, but it sure isn't the only way. Next month we will focus on several other great ways to lower your labor and put more of the sales that you work so hard to generate in the bank where they belong.

Topics: Operations Management

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