Operations

7 ways to lower restaurant labor costs

David Scott Peters, an author, restaurant coach and speaker who teaches restaurant operators how to take control of their businesses, shares best ways to cut labor costs and streamline restaurant operations.

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April 22, 2021 by David Scott Peters

Whether your restaurant is going into season, or coming out of the pandemic, the principles to controlling labor costs are the same. Here are seven ways to reduce your labor costs and control them no matter what you're up against in your restaurant.

Don't let employees clock in too early

Check that your employees are not clocking in too soon. Every 15 minutes extra they add to their time is one step closer to overtime. If they don't think you're watching, employees will ride the clock. You have to pay attention to the process and establish a system. Managers should know what time somebody is coming in and then ensuring they're not clocking in too early.

Have employees clock out when you tell them

When you let people off early, either by request or necessity, make sure employees clock out at that time. Otherwise, their "clocking out time" can also include having a smoke, eating, flirting with a server or generally dragging their feet. They're not working — they are milking the time clock. If an employee comes in early, stays longer, makes their side work take much longer, they're making money and you're losing money.

Audit your time keeping

Make sure that your employees are punching in with the right job codes. Pay rates differ based on the job description. An employee can be a server and a server trainer but the server trainer pays $2 more an hour. One employee could be a dishwasher and a prep cook, but as a prep cook, they make $2 more. Make sure employees are punching the clock according to the right job code. If you don't pay attention, your employees will take advantage.

Audit sales every half-hour in your POS

If you don't have a POS system, go get one. It is one of the most important pieces of equipment you'll ever purchase. POS systems have a half-hour or hour-by-hour sales report. When you have a full restaurant, you don't need to cut employees, but once people are eating desserts and drinking coffee, sales go down and you can start cutting people. Have employees watch other people's sections and get ahead of your labor.

Schedule staff according to sales.

If you're going to be really, really busy, make sure that's when you're bringing people in. Now, there is a little nuance to that, because sometimes on a Monday, after a really busy weekend, you have extra prep that has to get done. For a lot of restaurants, Monday is the slowest sales day of the week, but it requires the most production. Some adjustments can be made, but make sure you're scheduling based on the sales you have in general.

Avoid overtime at all costs

If you're scheduling one of your employees overtime every single week because you don't want him or her to get a second job, understand you're giving them time and a half and if you were staffed properly, that half-time would be in your back pocket. You'd only be paying somebody else single time. Now, an asterisk applies to seasonal businesses.

For example, I worked with a restaurant owner who had a sports bar in Augusta, Georgia, that is blocks away from the Masters. When the Masters Tournament comes in every year, they have incredible overtime. But you know what? Their sales are through the roof. They don't want to or need to hire new employees for a week-long event. So, that one week they have overtime. You might have it from time to time if your sales will pay for it because it creates the efficiencies.

Make selection and training a priority

If you find good people and you don't train them, they can make bad employees. These employees are costing you in workers' comp, wasted food, unhappy guests and more importantly, reduced sales. You both deserve to know how to do a job the way you want it done.

About David Scott Peters

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Known as THE expert in the restaurant industry, he uses a no-BS style to teach and motivate restaurant owners to take control of their businesses and finally realize their full potential. Thousands of restaurants and bars have used his formula to transform their businesses. To learn more about David Scott Peters and his formula, visit www.davidscottpeters.com.

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