A Restaurant’s 2nd Highest Cost of Sales Labor Controls A Restaurant’s 2nd Highest Cost of Sales

What is “Labor”? The total of all costs associated with maintaining a workforce This includes Payroll The gross pay received by an employee in exchange for his or her work. Payroll is only one part of labor expense

Other expenses of Labor FICA Taxes Unemployment Taxes Worker’s Compensation Health Insurance Pension Plan Payments Employee Meals Vacation/Sick Leave Employee Incentives and Bonuses

Payroll Fixed Payroll Variable Payroll The amount an operation pays in Salaried Employees (Receives the same income per week or month regardless of the number of hours worked.) Variable Payroll Those dollars paid to hourly employees. Added in relation to the number of guests anticipated to be served. Management has nearly 100% control over variable labor expense.

Steps to Controlling Labor Know your peak periods of business Place your best employees where they will be most productive Watch time in’s and time outs Cross-train your staff Monitor labor costs hourly Communication with FOH

Scheduling Payroll 4 Steps to managing Payroll Costs Determine Productivity Standards Forecast Sales Volume Schedule employees using productivity standards and forecasted sales volume Analyze results by comparing the actual costs to the budgeted cost

Forecasting sales volume… What you need to know: PPA # of chairs & table turns Hours of operation (shifts) Days open for business Bar? Example: https://www.quora.com/Whats-the-typical-revenue-for-a-small-independent-restaurant

Productivity Standards A productivity standard is management’s view of what constitutes an appropriate productivity ratio. For Example, a productivity of 100 means that for every hour worked for each employee, $100 in revenue is generated The Productivity Standard helps you figure out how many hours you have to schedule

Scheduling Calculate the number of hours available to schedule Budgeted Sales / Productivity goal = # of hours available to schedule Ex. $56,000 / 70 = 800 hrs

Scheduling Next, divide the hours available into the days you are open for business. Use more hours on busier days Write your schedule, not exceeding the number of hours allotted Insure you have enough labor to properly care for the guest.

Average Workforce FOH Dining Room Manager Host Waitstaff – 1 per 15 guests (or 4 - 4 tops, staggered) Bartender – 1 per 30 guests Busser

Average Workforce BOH Executive/Head Chef Sous Chef/Assistant Grill Cook Saute Cook Fry Cook Salad/Prep Dishwasher

Averages Cooks - $7.25 to $15.00 Dishwashers - $7.25 to $9.00 Waitstaff - $2.13 + Trainers - $4.00 + Hostess - $4.00 + tip or $8.00 Bartenders - $5.00 + Managers - $40k Average General Managers - $50K+

Overtime Any hours worked past 40 is time and a half

Turnover rate Turnover rate (# of employees separated / # of employees in workforce) = Turnover Rate