Tag Archives: Labor

Measure Restaurant Sales to Determine Labor Needs

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By David Scott Peters

www.therestaurantexpert.com

Creating the schedule in a restaurant is like fitting together the pieces of a puzzle. A proper functioning schedule is vital to your business. But putting all the right people in all the right places is just part of writing a schedule. The other part is knowing what your true needs really are.

Here at TheRestaurantExpert.com, we teach several different kinds of systems that make your independent restaurant operate more efficiently, more profitably and without you.

For labor systems, the key measurement is dollars per labor hour. This number will tell you with certainty when you don’t have enough labor and when you have too much labor scheduled for a certain shift.

But even quantitative measurements can lie. You have to be careful because you could be hitting your labor numbers and still be setting up your restaurant for disaster by having a combination of shifts that are either under staffed or over staffed. That’s when it’s important to combine your quantitative data (such as the numbers) with your qualitative data (the things you see in the restaurant along with your gut).

Ideally you want the right amount people in place for the needs of the business and no more.

To get there, first focus on your quantitative measurement and begin tracking your dollars per labor hour. Dollars per labor hour is sales divided by hours. This tells you how many dollars are coming in the restaurant per hour worked. It’s a road map to scheduling your hours in the right places. You’ll see trends and be able to move hours from less-efficient shifts to over-efficient shifts.

Efficiencies are different for everyone’s restaurant, so track your dollars per labor hour and realize that three weeks is what makes a trend.

And if your gut is telling you something different, pay attention. But don’t forego the numbers just because it doesn’t feel right. Change is hard for everyone, and if your team is used to having a dishwasher on Thursday nights, they’re not going to like it if you tell them they’re not getting one anymore. Observe what Thursday nights are really like and what is really needed. Then compare that to your quantitative results of your dollars per labor hour and make an educated decision, not a guess.

The most important thing is to just get started, gather the information you need to combine your gut instincts with solid numbers.

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.therestaurantexpert.com/rdspos.

 

How to Hit a Home Run in Labor Controls

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By David Scott Peters

www.therestaurantexpert.com

How do you make money in the restaurant business? The reality is it’s the small things that add up, such as reducing the cost of cheese by a nickel a pound, or reducing the number of garbage pickups a month by one. But every so often, with the bases loaded, you bring up your cleanup hitter to clear the bases with one big swing, known in baseball as the “grand slam.” If that cleanup hitter is a system, then with that one system you’ll reap huge savings.

This article is about choosing the system that is your cleanup hitter. It’s the one batter who can hit a restaurant profits grand slam for almost any restaurant. You simply need to know how to send him in.

Start with the right equipment

Using the right equipment or tools is how you control your labor expenses! And controlling them starts with a labor budget and labor budgeting system.

First, you need to know your target labor costs. That starts with knowing what your prime cost should be. That’s the sum of your total cost of goods sold and your total labor costs. Prime cost for a full-service restaurant needs to be 55 percent, no matter what type of restaurant you are. Please note that it doesn’t matter where each of the individual expenses are, just so that together they don’t exceed your prime cost target.

You need a good warm up

Before you can hit the big one, you have to be warmed up. To warm up, you need to calculate what your labor expenses were last week. This will give you some key numbers to ensure you hit your projected labor budget for next week. Below is an example of what you need to calculate.

DSP 1

With this information, you’ll be able to tell each of your managers, by department, how many hours they have to schedule and how much money they have to spend (not including taxes, benefits and insurance.)

Swinging the bat

Now that you know what your average hourly wages are by department, average hourly wage for all line employees and the percentage of hours by department, you can now follow my step-by-step system to ensure you hit your target labor costs and ultimately make more money!

1)      You need to know how much you have to spend on labor next week. To do this you need two pieces of information: a) your projected sales for the week; and b) your target labor cost percentage, excluding taxes, benefits and insurance.

2)     How much money do you have to spend, minus management salaries? Since management salaries are a fixed expense, simply subtract their salaries from your total dollars available.

3)      How many hours do you have available to schedule for your line employees throughout your entire restaurant? Take your average hourly wage for the entire restaurant and divide it by the total dollars you have to spend for all of your line employees.

DSP 2

 

 

 

 

 

4)      How many hours does each department get? You were probably asking yourself earlier, “Why do I need to know the percentage of hours each department used last week?” By multiplying those percentages by the total number of hours available for next week, you quickly determine how many hours each department gets.

5)      Last but not least, based on average hourly wages by department you’ll be able to allocate every penny each department gets and stay within budget… guaranteed!

Hitting the home run

You should be saying to yourself, “WOW! That’s really easy!” And that’s because it is. Your final step is to give each manager the number of hours they have to schedule for next week and how much money they can spend. Then have them write their department schedules. The attitude here is to schedule to stay within budget, not just to fill shifts.

By following my step-by-step labor budgeting system… you’re in position to hit your very own restaurant profits grand slam!

 

 

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.TheRestaurantExpert.com.

 

How to Develop a Management Plan in Your Restaurant – Part 2

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By David Scott Peters

www.therestaurantexpert.com

In my last blog post I explained what a management plan is and the benefits of developing one in your restaurant.  For this blog post I want to give you the tools you need to create your restaurant’s management plan.

What’s next?

First you have to evaluate your restaurant.

Your management plan is divided into sections that correspond with many of the most important areas of your operation. Each section includes a personal evaluation of your restaurant’s current approach to running a profitable and easy-to-operate business. Use the following questions to create your own evaluations for each of the key areas of your restaurant.

Financial Plan

Using a scale of 1 to 5, 1 being strongly AGREE and 5 being strongly DISAGREE, rate your restaurant on the following:

  1. Based on my restaurant’s current efficiencies, good or bad, I know my breakeven point ­­­____
  2. My restaurant is on an accrual accounting system ­­­____
  3. I supply my accountant, or whoever prepares my books, my ending inventories within five days of the end of every month ­­­____
  4. My profit and loss statement is currently set up in such a way that cost of goods sold and labor are broken out into easy to read sections before all other expenses ­­­____
  5. My restaurant uses weekly and monthly cash flow projections to help run the restaurant efficiently and pay its bills ­­­____
  6. My restaurant has a detailed monthly budget that everyone in the management team understands and is expected to achieve ­­­____
  7. My restaurant knows its dollars per square foot and or dollars per seat ­­­____

Cost of Goods Sold

Using the same scale above, rate your restaurant on the following:

  1. My restaurant uses a budget variance report so management can clearly see how they are managing our controllable expenses ­­­____
  2. My restaurant does a monthly food and liquor inventory ­­­____
  3. For even better controls, my restaurant does a weekly and/or a daily food and liquor inventory ­­­____
  4. My restaurant calculates its cost of goods sold by category at least monthly ­­­____
  5. My restaurant manages its inventory turns to minimize the amount of product sitting on our shelves at any given time and keep our cash in the bank ­­­____
  6. My restaurant keeps an eye on our change in inventory to see if we are ordering properly ­­­____
  7. All of our recipes have a completed recipe costing card filled out and updated on at least a quarterly basis ­­­____
  8. Utilizing our POS system, we know our restaurant’s ideal food and pour cost, and we measure our performance against these numbers ­­­____
  9. In my restaurant we use tools such as a key item report and waste sheet to control our food costs ­­­____
  10. My restaurant uses a purchase allotment system to make sure we are ordering correctly ­­­____

Food Systems

Using the scale above, rate your restaurant on the following:

  1. My restaurant uses par levels for products it purchases ­­­____
  2. My restaurant utilizes a purchase order form to ensure ordering, receiving and costs are done accurately ­­­____
  3. My restaurant only allows management or line employees who have been sufficiently trained on receiving procedures to check in orders ­­­____
  4. My restaurant uses a daily prep list to ensure we prep the appropriate food levels to run successfully each day based on the business we expect ­­­____

Labor Systems

Using the scale above, rate your restaurant on the following:

  1. My restaurant uses a master schedule for all departments so that any manager can write an accurate schedule even if it’s not their own department ­­­____
  2. Every manager knows how many FTEs are needed by department and hire accordingly ­­­____
  3. Schedules are written based on forecasted sales for the week by day and shift ­­­____
  4. Before schedules are done for the next week, management is given projected sales, how much money they can spend and how many employees they need to fill their shifts ­­­____
  5. My restaurant tracks labor cost daily ­­­____
  6. My restaurant trains all managers to write a schedule the same way all of the time ­­­____

Running the Restaurant

Using the scale above, rate your restaurant on the following:

  1. My restaurant uses AM and PM manager checklists on a daily basis ­­­____
  2. My restaurant has a pre-shift meeting 15 minutes before every shift for both front of house and back of house staff ­­­____
  3. My restaurant uses a manager’s log on a daily basis to communicate ­­­____
  4. My restaurant has clearly defined house policies ­­­____
  5. My restaurant trains all managers to follow a step-by-step systems for checking-out ALL line positions ­­­____
  6. All of my managers have been trained in the proper use of the I-9 Employment Eligibility Verification Form ­­­____
  7. My restaurant has a HACCP Plan in place ­­­____
  8. My restaurant has a tip reporting system in place to comply with the yearly filing of our 8027 Tip Report to the IRS ­­­____
  9. My restaurant complies with the OSHA posting requirements ­­­____

Finally

To develop your management plan, after you evaluate each section, start putting your plan on paper in the form of both short-term and long-term goals.

When you are finished with this exercise, you will have put together your complete management plan for success.

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.TheRestaurantExpert.com.

 

9 Things to Offer to Attract Good Restaurant Employees

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By David Scott Peters

www.therestaurantexpert.com

One of the key lessons I’ve learned over my years in the restaurant business is that not everyone works for you just for money. Money is a factor, but people are looking for much more.

So how do you provide the “much more?”

Many years ago now, restaurant coach Fred Langley best articulated what you have to strive for if you want to attract and keep the very best people on your team. He said you have to become the “Employer of Choice.” So what does that mean?

Without going into the whole explanation behind clinical psychologist Frederick Herzberg’s, “Herzberg’s Motivation-Hygiene Theory,” let’s cover the key factors beyond money that he says motivate people to work and work hard:

  1. Supervision – Make sure you have a management team that coaches employees to success, understands what makes each employee unique and is able to push their buttons to get the best of your people.
  2. Fair compensation – While you don’t have to be at the top of your market’s pay scale, you certainly cannot be at the bottom.
  3. Good working conditions – Make sure you have a clean restaurant, that you have all the right equipment and tools for your employees to do their jobs, and make safety a priority.
  4. Interpersonal relationships – Avoid at all costs having a management team that thinks all of their people are stupid and treats them like crap. Remember, this is a people business and it all starts with your internal customers.
  5. Recognition – Look for people doing things right in your restaurant and give them kudos when you see it. It’s easy to find people doing something wrong. When you focus on the good things, you create a positive work environment where people want to continue to please you vs. just waiting for the scolding.
  6. Responsibility – Sometimes you have great employees who have been with you for many years who NEVER want to be a part of the management team. Yet, they are willing to do more. Look to teach and assign them tasks that make the company better and get more done. Allow them to be a more valued asset on the team and they will be motivated to do more.
  7. Achievement – With responsibility there are often measurable results. When your team sees how what they do has a direct positive impact on the business, they get a real sense of achievement, which makes them want more.
  8. Advancement – Remember money is not the only thing people are looking for when they join your management team. Many want to know that there is a clear path to promotion and advancement in your company. Whether it’s moving up the management ladder, moving into the next better paying line position or gaining the skills that make them more valuable in their career, there needs to be a clear path to advancement that’s based on doing a good job, not who you are sucking up to.
  9. Work itself – I remember my first jobs in the restaurant business were washing dishes, and I hated it. It felt thankless to me, and I was probably not mature enough to want to work that hard as a young teen. Moving up in my career, I’ve always kept that in the back of my mind when managing employees. You need to make sure the job, no matter what level in your organization, is rewarding.

High employee turnover is expensive and disruptive to any business. With training and systems in place, you start with employees who know what their job is and what is expected of them. But to keep them long term, you have to be an “employer of choice.” If you properly address the majority of these factors, you’ll be one!

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.TheRestaurantExpert.com.

13 Steps to a Fool-Proof Schedule

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By David Scott Peters

www.therestaurantexpert.com

Here are 13 steps I developed to write a fool-proof schedule to make it fun and effective. With this system you and your managers can write great schedules that satisfy the needs of the business and of the staff.

1. Staff Order
When you list your staff members on the schedule, list them in the following order:
A. Lead server
B. Server trainer
C. Seniority

Put your key people — such as your leads and trainers — first as a sign of respect and responsibility. Then list your servers by seniority. However, this order has nothing to do with who gets the best shifts.

2. The Busiest Times Require Your Best People
Schedule your strongest people for the busiest times.

3. Offer Opportunities to Make Money to Everyone
Make sure your new, less senior staff get at least one money-making shift on the schedule each week to keep them happy and to give them an opportunity to learn.

4. Everyone Should Know the Day Shift
Have all staff work at least one day shift. Doing this opens up those money-making shifts for the newer members of the team and allows for a stronger lunch shift for stronger sales and a better customer experience.

5. The Backward Scheduling Priority
A common mistake a manager makes when scheduling is to start writing a schedule on Monday and finishing with Sunday. From here on, number your days, 1 being the busiest to 7 being the slowest. Then start scheduling backward, from 1 to 7 to get your strongest people in your busiest shifts.

6. Give Them Personal Time
Schedule two days off in a row whenever possible.

7. Close/Opens, the Quickest Way to Mediocrity
Stay away from scheduling close/opens, when a staff member closes the night before and opens the next morning. It’s important for morale and accountability.

8. What to Do When You Are Over Staffed
If you have more staff available than shifts to fill, give shifts to your full-timers first.

9. Staff Up, Not Down
Always have two more full time equivalents (FTEs) than you need. An FTE is whatever number of people it takes to equal one full-time person.

10. Remember a Request Is a Request
Scheduling requests are just that: requests. The needs of the business must come first. Make it clear to your staff you reserve the right to say no. But try to always grant those requests and fill the hole with your extra FTE.

11. Management Is Required
Any schedule changes must be initialed by a manager to avoid overtime and to make sure shifts are covered properly.

12. Post Quickly and Consistently
Accept scheduling requests until Tuesday night, write the schedule on Wednesday or Thursday, and post it by Thursday at 4 p.m. Make few exceptions. And in the case of holidays, plan ahead.

13. Use a Scheduling Key
When filling out a schedule, use a staffing key that includes every employee and their schedule requirements. Place an “X” on the days people cannot work, place an “R” in the days people have requested not to work and place a “V” in the days people have requested off for vacation. Then start scheduling shifts.

Following these 13 steps will save you time and ease your stress. It will also keep employee morale high and productivity up.

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at www.TheRestaurantExpert.com.