Reduce Restaurant Expenses with Smart Labor Management

photo of kitchen staff in a restaurant with smart labor management

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In this blog post, we outline some ways that managers can reduce restaurant expenses. For any restaurant, the day-to-day expenses of food and beverages represent fixed costs. Depending on the market and other factors, it may prove impossible to reduce these costs significantly. However, you can potentially reduce your operating expenses through improvements to your labor management system.

One place to start is by improving your hiring and interviewing process. After analyzing your labor costs, optimize and enforce your schedules. Finally, reduce overtime and ensure that your most highly skilled team members are on the schedule for the shifts where they’re needed the most.

Refining the Hiring Process for Better Restaurant Management

Reducing turnover is one smart way you can improve your labor costs. Every time you have to hire and train a new employee, this affects your ability to focus on other important tasks. Interviewing more carefully to ensure a good fit is one way you can reduce turnover.

Really think about your restaurant interview questions. Ask the applicant to describe a major challenge they faced in the past – and how they overcame it. Even if you’re in a hurry to fill a position, don’t pressure yourself to make a choice after one round of quick interviews. Additional interviews, even quick ones, can help you avoid problems down the road.

During interviews, look for more than just industry experience and food service skills. Working in a restaurant requires a level head and the ability to stay calm under pressure. Being a team player and resilient is also extremely important. You want people who will lift each other, not drag the whole team down with negativity.

Before you can reduce restaurant expenses, you must first get a good picture of your current labor costs. If you’re dealing with a wide variety of job descriptions, it can be tough to fully understand your labor costs in every area. To better understand where you are, divide your workers into several different categories. Categories might include waitstaff, kitchen staff and bartenders. During this sifting phase, you may discover new opportunities to reduce inefficiency through cross-training.

Whatever labor management practices you use, remember that good employee morale helps your operation run smoothly. Of course, optimizing restaurant scheduling doesn’t mean cutting employee hours at random. A careless approach can lead to understaffed shifts, substandard service, and a rough customer experience. This can, in turn, lead to a loss in customer loyalty and revenue.

Instead, optimize by ensuring that staffing always matches demand in your restaurant. Cutting edge restaurant labor management solutions provide plenty of tools for schedule optimization. You probably have enough experience to know that holidays can mean a rush, but a good labor management software can help you analyze historical data to determine other, less obvious trends.

By using tools like staff ratings and availability notes, you can cut hours more thoughtfully. These days, mobile apps are playing a bigger role in food service and hospitality management. With the right software, you can refine your weekly schedule throughout your day, wherever you may be, and your team members can interact accordingly. Shift swaps, bid shifts, and team communication tools can all help.

Update: Staying compliant with revised tip credit rules

In December of 2021, the Department of Labor revised the 80/20 tip rule. If you’re in a state that does tip credits, all of the above suggestions can help you get a better handle on your labor. This, in turn, can help you keep your restaurant expenses in check. Continue reading below for more advice, but we also suggest checking out our new article what is the 80/20 tip rule.

Enforcing Your Schedule to Control Restaurant Operating Expenses

It’s no fun to hound employees about clocking in on time. Nevertheless, keeping an eye on your time clock can save you a lot of money. Reducing labor cost often requires conscientious schedule enforcement. Many restaurants waste money paying workers for time spent not working.

A Software Advice survey found that roughly 25% of hourly workers routinely punch in early or punch out late. Though you may not be able to eliminate these practices immediately, setting clear expectations can help you work toward an improved status quo. You can reduce early clock ins and late clock outs by utilizing the time clock feature in your POS system.

Some restaurants go further and require a fingerprint ID to sign in. Whatever enforcement measures you implement, be sure to maintain an amiable, humane dynamic with your staff. A sensitive tone can prove all-important when introducing new policies.

Minimizing Overtime

Labor management best practices call for reducing overtime hours to a bare minimum. Though reducing overtime might not endear you to every employee, this measure is undeniably crucial. If necessary, remind your workers that reducing overtime adds to their safety. Accidents can proliferate when employees work too many hours, and you can get in hot water with labor laws if you’re not careful.

Naturally, overworked employees are also less likely to leave each customer feeling important. You can reduce overtime by using labor management software that tracks and reports overtime. If you need help in this area, you can utilize software that provides a restaurant scheduling template.

Restaurant labor costs vary greatly depending on the type of establishment. Even during times of overall economic strength, the restaurant industry remains quite competitive. When your labor costs are eating up your budget, you might feel pressured to start cutting staff, but there may be other ways to reduce restaurant expenses.

Reduce Restaurant Expenses with Smarter Task Management

When you set out to reduce your labor costs, there’s a lot you can do immediately. However, you may have to conduct some careful observation to uncover less obvious inefficiencies or areas ripe for improvement. If you look closely, you may find that some of your employees’ skills could be better utilized at different times of the day, or you may notice ways to improve the speed and efficiency of tasks. For example, by changing the order in which they’re completed as part of a task management checklist. (If you’re interested, check out our blog post on task management for restaurants!)

By distributing work tasks and work shifts thoughtfully, you can make the most out of your labor investments. If necessary, you can rely on your POS system’s restaurant schedule template to help reduce your labor costs, but software like TimeForge is literally built from the ground up to save businesses time and money. We can help you improve your hiring workflow, stream line your HR processes, build better schedules, manage day to day tasks, and more.

To learn more about reducing costs the right way through labor management software, check out our full suite of solutions.

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