How to Get the Most Out of Restaurant Labor Forecasting

One of the easiest ways for restaurant operators to find immediate savings is by understanding how accurate forecasting impacts the bottom line over time.

It’s no secret that restaurants are having a tough time hiring and attracting employees. In May, the hospitality and leisure industry added about 292,000 jobs, including 186,000 employees in the restaurant and bar spaces. However, restaurant hiring hasn’t been enough to keep up with how quickly the United States is reopening.

According to the U.S. Bureau of Labor Statistics, in the months before the pandemic, more than 12.3 million people worked in the restaurant industry. Today, the industry is recovering, with about 1.5 million jobs still unfilled; however, the results have left many restaurant operators shaking their heads.

Team management platform 7shifts has been crunching the numbers to track recovery across the restaurant industry. Their data shows that although restaurant sales across the U.S. and Canada have returned to pre-pandemic levels, the number of employees has not recovered as quickly. In mid-April, the company reported that scheduled shifts were down only 17% compared to March 1, 2020.

Restaurants are known for having a turnover rate of about 73%, which is higher than other jobs, but the impact caused by a lack of workers has never been felt like it is now. As a result, operators already facing the squeeze of lost revenues due to COVID are exploring ways to best utilize their workforce to unlock potential productivity they’ve been missing out on. One of the most effective ways of increasing productivity is through restaurant labor forecasting.

The Need for Labor Forecasting

One of the easiest ways for restaurant operators to find immediate savings is by understanding how accurate forecasting impacts the bottom line over time. Jordan Boesch, CEO of labor scheduling platform 7shifts, says getting employee scheduling wrong leaves money on the table.

“Proper scheduling and forecasting can lead a restaurant to profitability and efficiency,” Boesch said. “Restaurants must plan their schedules and staff according to accurate forecasts to ensure they are not under or overstaffed. An understaffed restaurant can negatively affect customer satisfaction. An overstaffed restaurant can cost the restaurant more money than they needed to spend. With that said, restaurants have become more reliant on forecasting to optimize their operations.”

For decades, restaurants tackled the process of labor forecasting with varying degrees of success. Sure, when everything works out, restaurants hum along with happy employees generating unforgettable guest experiences. Of course, when the balance is off and a restaurant is short-staffed, the situation can quickly frustrate and stress out even the most determined employee.

The result of miscalculating labor demands is often immediate and severe. Too many employees on-shift end up with you paying people to sit idly by waiting to get cut. Too few, and staff are scrambling to cover every base. If either situation becomes a long-term problem, customers become upset, employees leave, and it hurts future sales and the bottom line.

And if that isn’t enough to worry about, Boesch notes the myriad other factors that make labor forecasting necessary.

“Each staff member is subject to change in their personal and professional lives, so various factors can play a role in labor forecasting,” Boesch explained. “A major factor concerns shifts in staff availability, such as sudden resignations and the need for replacements. Employees themselves hold a huge influence on forecasting, but so do the organizations. If the business is growing rapidly or looking to reduce in size, these factors will need to be considered when forecasting. Finally, there are external factors like the weather and the economy that can further impact labor forecasting.”

Instant Impacts and Lasting Ripple Effects

While it’s easy enough to simply acknowledge that forecasting is good for all members of a restaurant team, the benefits run much deeper. With appropriate staffing levels, managers are rewarded with a more efficient operation that properly addresses customer demand.

Employees face fewer scheduling conflicts, understand their roles better, and ultimately, are retained longer. And the customers? Happier staff and better operating standards mean better guest experiences, leading them to increased spending and higher frequency.

“With better forecasting comes a better understanding of the projected earnings of the restaurant over time,” Boesch said. “Restaurateurs can create and allocate their budgets accordingly for recurring expenses and notice sudden changes in spending and saving. Restaurants can see a far greater impact in the long run as their forecasts become more accurate in helping them plan and predict their earnings. This information can help restaurant owners make better decisions that will lead their business to profitability and security.”

Better and more accurate workforce forecasting helps relieve an additional problem most restaurants face; keeping everyone on the same page. Did you know the average quick-service restaurant employs about 16 people? Using historical data and long-term sales information to schedule employees makes it easier to give everyone enough hours while keeping load management in check.

When everyone is being forced to “do more with less,” forecasting helps managers and operators prepare for issues that might pop up and maintain conversations with every employee.

“It is imperative that restaurant operators constantly communicate with their employees to determine how they feel on the job and prepare them for their future expectations. It is easy for a restaurant owner to miss signs their employees are feeling stressed or overwhelmed and must encourage their staff to share how they feel about their workload. Operators can then establish more trust with their employees and build schedules that will satisfy their business and their staff.”

Simple Changes, Huge Results

The case for appropriate restaurant labor forecasting is pretty easy to make; better decisions, more engaged staff, and happier guests mean a brighter financial future.

It doesn’t stop there. When POS system data is combined with a scheduling platform’s forecasting ability, managers and owners see the bigger picture. They can begin to look further into the future, plan for upcoming local events, employee vacations, limited time offers, and even seasonality.

Communication improves dramatically as well. Depending on the solution, scheduling information can also be made available to any employee who wants to see it, right through their phone. This simple action can reduce the number of no-call/no-shows and improve on-time arrivals.

Mobile capabilities also give employees a direct line of communication. This allows staff to trade shifts, request time off, and perform other actions quickly – all without causing a headache during peak hours.

Restaurants are dealing with enough issues these days. By utilizing the data they have at their disposal and combining it with a scheduling platform, restaurants can immediately flip the switch and change how their locations work for good.

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