Seven Proven Ways to Control Labor Costs and Optimize Staffing Levels

Under pressure. If you’re a restaurant operator, David Bowie has summed up in two words the way you’re feeling about your profit margins.

In this industry, that kind of pressure is not an unfamiliar sensation – we know our margins are slim – but right now, you’re feeling the squeeze more than ever. That’s thanks in large part to rising wages and the seemingly persistent wave of legislative actions impacting your labor costs. Add in the fact that traffic is slowing down and well, you can’t help but sweat a little.

During these times of tightening, operators tend to dig into the numbers even further (is that possible!?) and scrutinize every dollar spent and every dollar saved.

Here are seven areas where operators can cut unnecessary costs to optimize your people, schedules and labor spend.

1. Stop Paying for Early Clock-Ins

Five minutes here, 15 minutes there. Every time one of your team members clocks in too early it’s like skimming a tiny sliver of profit off your bottom line. On average, without time clock enforcement, 15-20% of a restaurant’s staff will clock-in at least 10 minutes early/day. Additionally, staff can ride the clock at the end of their shift, translating into increased overtime and increased labor hours paid out. The solution? Enforced clock-ins through an integration with your POS software. You configure the POS software to only let employees clock-in five minutes before their shift, and an online scheduling system like HotSchedules goes to work making sure your employees punch in at the appropriate time.

2. Reduce Schedule Creation Time

Writing a schedule can take managers four hours or more. On top of it all, there are endless phone calls and texts to keep up with and communicate schedule changes. Online scheduling solutions can reduce the time it takes to create schedules by 75% because managers can copy schedules from week to week using scheduling templates and make tiny tweaks instead of always starting from scratch. Employees are instantly updated through an employee scheduling app any time a change is made and can request edits to the schedule pending a manager’s approval. All of that automation and ease-of-access saves your manager’s’ time (and you payroll costs!), while reducing expensive scheduling errors.

3. Reduce Unnecessary Overtime Hours

Uncontrolled overtime is a huge labor expense. With an overtime report, however, managers can see which employees have scheduled overtime as well as the overtime costs for each day and week. Using the overtime reports, managers can make adjustments to schedules throughout the week or month and monitor the impact on things like labor costs, labor percent, and volume. In HotSchedules, for instance, the Overtime Warning Report can be configured by schedule, job code or employee. Once generated, managers can see actual employee hours plus how much is scheduled, then the date and time that the overtime could potentially start.

Big Data

4. Use POS Data to Forecast Sales and Project Optimized Labor

In a recent research report with Hospitality Technology, HotSchedules found that 89% of operators said their labor percentage data is the most valuable. After labor, came food costs and voids. The findings suggest that although restaurants are faced with other challenges like customer experience or design upgrade needs, the basic principles of running a profitable restaurant apply.

One of those basics is sales forecasting. It’s vital for profitability and the best restaurant managers consistently do it. Gut instinct forecasting is no longer effective in today’s more complex operating environment. It’s how you can accurately project your sales volumes, control your labor costs and make sure you have the right amount of people working at the exact times you need them.

The right sales forecasting solution that integrates with your Brink POS Software can help control your labor spend and achieve employee scheduling efficiency. And, when integrated effectively into your regular business best practices, it can actually help your business drive revenue instead of simply save money.

5. Avoid Over-staffing

Over-staffing is pretty easy to spot. Servers are standing around and people are getting in each other’s way in the kitchen (at least more than normal). Managers tend to over-staff to account for those “just-in-case” peaks in volume. There’s a general thinking that over-staffing and cutting people is better than under-staffing and having employees on-call. The two biggest problems with over-staffing are the costs that comes with paying people to stand around and the low productivity that comes as a result of the all that standing around.

6. Avoid Under-staffing

Under-staffing appears to keep everyone busy. But at some point, you have to wonder at what cost? Under-staffing could lead to employee burnout. It could also lead to poor customer service and shortcuts that could be harmful for guests and employees. Building a schedule based on sales or guest volume data that also takes into account variables like weather, events and marketing initiatives is the best way to optimize labor spend.

7. Stagger Arrivals/Departures

When you have a labor forecast based on actual labor data, you are able to stagger arrival times and departures. Instead of having block schedules where everyone arrives at the same time and leaves at the same time, managers start to learn which positions can arrive and leave at different 15 or half-hour increments to optimize your labor spend. Over time, that extra 15 or 30 minutes adds up to significant labor savings.