4 biggest areas where labor costs can hurt your business

Labor costs are a big issue for restaurateurs. According to Senior Strategic Advisor for the NRA Dave Matthews, labor productivity has remained flat in recent years. From 2004 – 2014, the average annual percent change in output per labor hour has decreased between -0.1% for full service restaurants to -0.3% for limited service restaurants. How can you change the direction of this trend so that your restaurant can be more profitable?

Here are 4 areas that I have identified where labor costs can hurt your business the most:

1. Overtime costs

Get overtime costs under control. After all, overtime can cost restaurants mucho dinero … sometimes in the hundreds of thousands of dollars. It’s important that your POS system has employee scheduling tools built-in, which will alert managers if schedules they are creating will lead to overtime. Plus, if staff wants to swap shifts, you have the ability to quickly check the staff schedule, ensuring that you are not giving anyone unwanted overtime.

In addition, your POS system should make it easy for owners and managers to override incorrect information so that you do not have to pay unnecessary overtime. For example, if an employee forgets to clock-out, managers should be able to clock this person out and adjust their time card. Unfortunately, time theft is a big problem in this industry as well. Whether it’s taking longer breaks than permitted, clocking in before or after a shift or inflating hours worked, this behavior results in higher labor costs and lower productivity. Owners and managers should be able to easily correct for this in the POS system.

When you start to get these costs under control, you might find that it is worth it to measure the cost savings. You should be able to do this with your existing POS system, where you can give managers access to the specific metrics on their mobile devices.

2. Overstaffing

We’ve all heard it …“I’m overstaffing for the rush of customers.” And I can understand that, but just throwing bodies at a problem is a no-no. If you are always understaffed, however, customers will get irritated and, eventually, there will be no large volume of customers walking through your doors at all.

Instead of putting as many people on the schedule as possible (which by the way generally leads to fraternization among employees), you need to invest in a POS system that will give your operation more predictability and efficiency. Your POS system should be able to provide you with alerts that tell you you whether you will be overstaffed — or understaffed — based on past data about the business of that restaurant.

3. Employee Turnover

Ugh!!! We all know that in the restaurant industry there seems to be a revolving door of employees coming and going. If your POS system has an intuitive user interface, new employees can easily get up-to-speed, which is important in this high-turnover industry. Wait staff, bar staff and managers can be quickly trained and productive in a short period of time. This creates a stress-free environment for employees … and lets them focus on the job at hand, not the POS system.

4. Lack of labor reporting

Managing employees, tracking shifts, figuring out regular versus overtime pay, tips, and employees’ hours is an onerous task to say the least. You need to figure out a way to manage and track labor these items, letting you turn your attention to other things.

That’s why labor reports are crucial to restaurant owners and managers. With these workflow processes, you can view labor costs, employee productivity and payroll reports — as they happen! You can even review reports that show you when sales are dropping or picking up and then use this information to make an employee schedule that works with your labor budget. You can also figure out who turns tables the fastest, brings in the most tips, etc. (and who isn’t doing these things).

To sum up, labor costs are one of the biggest (but necessary) costs to businesses. Restaurateurs who cut down their costs will obviously increase profits. A POS system should be able to help you forecast labor costs, be more efficient and, ultimately, be more productive. With the landscape becoming more and more competitive than ever before, you need the best POS software to keep your restaurant cost-efficient and your customers happy.

 

 

 

Author: rmpos

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