Labor Cost

Labor Cost

Operating a restaurant involves many expenses. Essentially, you incur labor costs when you have employees working for you. Labor is an operational expense in just about any restaurant, predominantly including hourly wages for staff members.

Labor Cost Awareness

Labor costs are typically understood as a percentage of sales. To figure your labor cost, use this equation:

Many restaurants hope to run a labor percentage below approximately 20 percent. When the costs begin to climb, anxiety levels rise as well. Still, simply paying your employees less will not solve labor cost issues. The keys to controlling labor costs are improving workplace productivity and scheduling your employees wisely.

Control Your Labor Costs with Improved Worker Productivity

Increasing productivity improves your overall operation by building employee skills and confidence. Take time to provide your staff with sufficient training and communication.

Cross-Train Your Staff

Cross-training is beneficial to both the employee and the business, since the worker will have a wider range of skills and be able to help in multiple areas of the restaurant. This allows the manager to schedule fewer workers while still being able to achieve the same production and service standards. Some suggestions for cross-training include:

• Train your prep cook to handle the grill
• Train your hostesses to work as back-up servers
• Train bussers to help run food to customers

Conduct Frequent Staff Audits and Reviews

Another great way to help improve productivity is to perform regular audits. Take the time to watch and assess your employees’ performances. If you find that a large portion of your employees’ work days includes inordinately long breaks or downtime, it might be wise to revise your schedule. Conducting face-to-face reviews with each member of the staff will help communicate your thoughts and concerns.