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    Managing Foodservice Labor

    Foodservice labor is the second highest cost in an operation, which makes labor management the cornerstone to profits.

    By Dean Dirks

    Foodservice labor is the second highest cost in an operation, which makes labor management the cornerstone to profits.

    Convenience store retailers should keep a separate Profit and Loss statement to manage their foodservice business and labor has to be managed hour by hour, not at the end of the week when it is too late to make adjustments.

    Since labor control has to become part of your culture, there should be a "no excuse" mentality when it comes to managing it. For example, never allow overtime and have lower paid employees working holidays that required employees to be paid time and a half.

    Some other concepts c-store retailers should follow include:

    -- Focus on labor dollars, not hours, you don't take hours to the bank.
    -- Labor should be scheduled in 15 minute increments.
    -- Training hours should be minimized; employees should be trained by the managers.

    Customer count labor management is the only way to control costs and maximize speed of service.

    I've found three tools to be extremely valuable for managing labor costs. They are a labor schedule module, a labor report that lists actual vs. budgeted costs, and a labor distribution report. Here's a brief explanation of how each of these help.

    Labor Schedule Module
    1. Labor is budgeted on a three-week rolling sales average, so that day with higher volume gets more labor.
    2. Each day has to balance before moving on to the next when scheduling.
    3. After the schedule is completed, the total dollars are compared to budget number. If the manager has used too much labor he or she can readjust it before the week starts.
    4. The module is populated with customers in 15 minute increments, forcing managers to allocate labor correctly to maximize both labor and speed of service.
    5. Sales per labor hour should be monitored hourly, to make adjustments at that point in time.

    Actual vs. Budgeted Labor Report
    1. This report is generated the day payroll is calculated and shows the actual labor dollars used vs. what the store's budget was.
    2. Managers are called the day this report comes out for an action plan to reduce labor the following week.
    3. Labor variance is kept year-to-date, so that if a manager has a bad week, he or she can catch up the next week.

    Labor Distribution Report
    1. This is calculated the day payroll comes out.
    2. Calculates overtime used and wage rates.
    3. Should a manager commit the mortal sin of overtime, it allows you to see if he or she used the cheapest employee.
    4. Calculates average wage rates and shift differentials.
    5. Calculates sales per labor hour and how it was distributed.
    6. Managers can make labor budgets but if labor is not allocated correctly, customers will stand in line.

    Successful restaurateurs manage labor, not write schedules. To manage labor the culture has to focus just as intensely as portion control or any other basic concept.

    Other columns by Dean Dirks:

    The 1 Percent Edge

    If you have questions for Dean Dirks, please send them to [email protected].

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