Restaurant Solutions to Lower and Control Labor Cost

Are you looking for proven restaurant solutions that control your labor costs? Labor cost controls have been a challenge for restaurants forever, since the beginning of time. They're especially difficult today with COVID-19 hitting us and changing the business model for many of you. Restaurant sales are reduced and new positions have been added to get food out to the curbside or maintain sanitization. Controlling restaurant labor is more important today than it's ever been. Watch this video, or scroll to read, to learn the seven must-do solutions to control labor costs.

Controlling labor is always a problem, whether you’re in a pandemic or not. That’s why I'm going to teach you the seven must-do solutions to control labor cost. I want you to train your managers on these. A few of them may seem common sense to you as the owner of your restaurant that work in every day. But you’re somebody who's been doing this for years. I want to stop you right there and tell you common sense ain't so common.

Think about about how you learned your “common sense.” You made dumbass mistakes and went, “Oh, I don't want to do that again.”

Instead of letting your management team stumble through learning the hard way like you did, you have to teach them to standardize and systemize. I have seven I want to teach you right now.

Number one, I want you to check that your staff is not clocking in too soon. This generally isn’t an issue with tipped employees. They work as few hours as possible to make their tips. If they get sent home early, they’re not usually trying to milk the time clock. But consider a cook for example. Cooks get paid by the hour, so they want to work every hour possible. This is where the simple act of coming in the door and clocking in a little early and then hanging out a bit before the shift starts. They might chat, smoke a cigarette, and maybe have a meal. Or maybe the line cook has learned to ask the chef it they need help. Chef never turns down extra hands and allows the line cook to clock in early.

The manager on duty has to monitor this. Go to the system, see that no one is clocking in too early. If they are, the manager needs to punch them out and say, sit down and wait until your your shift starts.

Now, do know, you cannot wipe out that time, but you can write that person up. Make it clear to your staff that it is not acceptable to ride the time clock.

Number two, make sure your staff isn’t riding the clock. This happens a lot when you have to cut someone or at the end of a shift. A line cook might get cut because it’s slow, even after requesting it, then hang out and ride the clock a bit. They need to make the money they planned, so they go have a cigarette, go talk with people, chatting about weekend plans, all while they’re still punched in and using your time.

Your front-of-house managers should have checklists that tell them how to break down a station, how long it should take and then they’re pushing closing shift to move and get out in the time allotted, so there’s no getting paid and not working.

Number three, audit your timekeeping. This means you need to verify your staff is not punching in the wrong job codes. If you have an employee that is a server and a server trainer, they’re getting two different wages for their two different jobs. Bar back and a bartender, dishwasher and a prep cook. Doesn’t matter the jobs. If you have an employee that does multiple jobs in your restaurant at two different pay rates, you have to make sure they’re getting paid the right amount for the right job for the right amount of hours. Without auditing the timekeeping, you’ll never catch the higher labor cost at the end of a pay period. By that time it’s just hours. You teach your employees how to steal by not paying attention.

Number four, audit sales every hour, or when you’re busy, every half-hour. Imagine your restaurant is back open at 100-percent capacity, and you’re busy as hell. Let's say it's 9 p.m. on a Friday and the restaurant is full, but people are eating desserts and drinking after-dinner drinks. You have not been doing any sales in the last hour, but you're busy. But you're not. See, when you pay attention to that, you know you should be cutting people.

When this happens you assign a server to another server’s section and send that server to do their side work. Get people ahead of the game doing the sidewalk so that when they hit their last ticket, and they're ready to go, they're out. You’re conserving your hours.

Number five, schedule staff according to sales. When you try something new in your restaurant and sales start to shift, you can’t schedule the same way. You can’t copy the schedule from week to week. You’ll end up under scheduled or over scheduled on the night you’re shifting sales to or away from. You have to schedule on purpose based on the sales you’re expecting. There is room to adjust based on the prep needs of a day, but if you’re paying attention, you can correlate staffing and scheduling to sales.

This also goes now with COVID-19. Maybe now you have new positions, like a runner for to-go foods. If you expect to be busier at certain times, you can schedule according to those sales.

Number six, avoid overtime at all costs, with one exception. And this is really tough. I get it. In about two weeks we went from not being able to find employees to today where there's millions of people unemployed. When you’re understaffed and you schedule overtime on purpose, understand that's time and a half and that half-time is your money, owner. If you scheduled properly, all that half-time you had over the last 12 months is money that would have been in your back pocket, in your bank account so you could pay your bills or yourself. So, it is important to control overtime.

Now, there's the one exception and that's this. You've got a major event. I work with a restaurant that's near the golf course in Augusta, Georgia. The Masters comes every year. Their sales go through the roof, and they don't have enough people to handle the volume, so their overtime goes through the roof along with their sales. But sales are so high that even though there's overtime, the labor cost doesn't jump. And it’s not worth it to hire and train a whole group of employees for a one-week event. This situation is the exception to the no overtime rule.

Number seven, make selection and training a priority. I'm going to tell you, I think we make bad people. We don't find bad people. We make them because we don't select properly. They don't mesh well with our company culture and/or we don't have training systems.

Without proper training systems you can teach a new employee what their job is, how to do it, how well it should be done, or by when. Instead, we give them the magic apron, and hand them over to another server they can follow around to “learn” the job. This is the fully wrong approach and is not a training system.

When you have well-trained people, you reduce mistakes, you reduce workers’ comp claims, you reduce the number of hours it takes to train people. You reduce your costs. But a well-trained team also reduces the opportunities to lose sales because your product and your service is consistent. Your complaints are limited and easy to deal with rather than providing crappy service and crappy product that leads to a tear-down on Yelp or Facebook.

When it comes to controlling restaurant labor cost, these are things that seem like common sense to you because you've made these dumbass mistakes. But you have new managers all the time learning how to schedule to control labor, and you have to teach so you can impose your will without being there. To you it might seem second nature, but it still has to be taught.

If you want to learn more restaurant solutions like these and how to get your managers to do the work, sign up for my free four-part video learning series where I go into all of this in more depth.