It’s a Monday morning in January and I’m just about to look at the labour report for Sunday night. Ah… maybe I’m going to make my coffee first, wouldn’t want to start the day on a bad note. Familiar feeling? It’s the struggle most of us face in the industry, even the most profitable institutions can face the Monday Winter blues. It’s a seasonal, fluctuating business for the most part and the highs are high, and the lows are, well, really low aren’t they? So, what are some tips and tricks to mitigating it all? How do you drive costs down when sales can dip so fast?
I’m by no means an industry guru, I’ve only gotten my feet wet. With that being said, I’ve ran an independent restaurant for the last few years in an extremely competitive market where the economy has been hit hard due to unsteady oil prices. This has caused a high degree of volatility and I’ve been forced to find creative ways to manage our costs.
1) Cross training is a must: The quick-service and fast-casual segments have excelled at figuring this out and are often industry leaders when it comes to labour costing. What I’ve taken from it for my full-service restaurant is that my employees need to be versatile and absolutely need to be able to take on more than one role when times are tough.
In the back of house our head chef has ensured that his line cooks are able to work multiple stations when we need to cut down on staff during slower evenings. In the front our general manager leads the way having taken it upon herself to learn how to bartend, host and serve to be able to work whatever and wherever she needs to when cutting down on staff. Our bartenders are required to learn how to serve properly as are the hosts. We train our hosts to be able to take small sections in case we get unexpectedly busy. This is also great motivation for them as they get to learn how to become a server slowly, being able to focus on important service practices that are vital to our business. Another positive aspect to this is it has turned into hire retention rates in a tough area of the restaurant to normally keep people in ($$$).
2) #@%$ food cost: I was at a party once having a conversation with a successful multiunit fast food operator and I just had to ask him why he sold his pizzas for such a low price (I knew how much it was costing him and didn’t understand why he did it for so long). He told me sometimes you just got to say #@%$ food cost and try to hit a homerun on volume. Would you rather hit your 30% target on $500 of sales or do 43% of $5000?
Obviously, this strategy must be tried and tested carefully as it’s a dangerous line to cross. I know you’re thinking that an increase in sales also means you must increase your labour to meet demand so how do you make any money? Another drawback is you don’t want to decrease your pricing so much that people no longer see the value in your product. With that in mind there are still some tricks where you might be able to make it work for you.
For me Tuesdays were also synonymous with tumbleweeds in the Winter. My problem was simple yet complicated; there was a minimum staffing level I had to achieve to meet service standards and my sales weren’t high enough for me to meet my labour target. So, I took my friends advice and decided to throw food costs out the window on Tuesdays. Say hello to 2 for 1 burger nights (I decided against alliteration on this one, I had seen enough Taco Tuesdays).
What happened next was awesome. Our sales almost tripled over night and our food costs had only moved a few points monthly (1.7% to be exact). This allowed us to drop our labour costs dramatically as those nights had been heavy to begin with and only caused a slight increase to our overall food costs. What we did to keep food costs down was create specials on those nights that people could upgrade their sides to increasing bill spends. Again, I just want to reiterate that this should be used carefully, and you need to see if you can make it work for you.
3) Manage your schedule: Sounds simple and obvious I’m sure, yet too often I walk into places and see overstaffed establishments and it makes me cringe. First and foremost, the call-in shift can be your best friend. Forecast, schedule and then add an extra body just in case something in your forecasting changes. That can be anything, sudden rise in temperatures, unexpected event down the road or even a high number of last minute reservations. One more thing I try my best to get the management team in the habit of is cut fast during your rush hour. If it’s noticeably slow off the hop, get whoever you can out of there as quickly as possible. Every dollar spent more than you need to is a dollar you’ll never get back.
Another tool that can be extremely useful to your establishment depending on your size is scheduling software for restaurants. One I’m particularly impressed with is 7shifts. This application has a variety of features including the ability to build schedules quickly, a labour budget calculator (it even sends you a live alert if an employee is about to go into overtime), several integrations (just like Fytics does 😉), performance tracking and variety of other amazing tools that will allow you to save every day. Just check out their website here http://www.7shifts.com
I know the struggle can be real and sometimes not at all what you were expecting when you got into this. But keep your head in the game, stay positive and work hard at keeping those costs down and sales up. Busy season is just around the corner!