Webinar/Podcast
How to Create the Ideal Labor Budget
Labor cost is most often the biggest expense for restaurants. It is also one of the most difficult expenses to control as operators struggle between giving staff enough hours to keep them happy versus keeping labor cost low enough to make a profit.
Learn how to significantly improve your scheduling and labor budgeting practices using tools you may already have - such as a POS system for tracking time and attendance - but may not be taking advantage of.
Receive practical, proven methods to reduce overtime, eliminate early clock-ins, schedule staff based on guest counts, create an ideal labor budget unique to your restaurant and other ways to maximize the utilization of your staffs and lower your labor cost.
What You Will Learn:
- Discover the Ideal Labor Cost for your restaurant
- Simple but effective method for forecasting sales and guest counts
- Making schedules that result in maximum productivity
- How to create an ideal labor budget - and how to meet it!
- A proven shift management technique for hitting your budget numbers
- Use the time clock features in your POS system to their full potential
- How to use the free download resources on RestaurantOwner.com to reduce labor cost
About the Presenter:
Joe Erickson
Joe Erickson is the Chief Operations Officer and a partner in RestaurantOwner.com. He has owned and/or managed several restaurant/catering operations. He started his career by developing Luther's Catering, a division of the Luther's BBQ chain, in Houston. He was also a partner and co-founder of Sunset Dinner Cruises and was the founding partner of Bobby Mac's, a casual, full service restaurant in Kerrville. He later helped to develop a southwestern bistro, Nicole's Cafe San Felipe, and was managing partner for the original Truluck's Steak and Stone Crab, which now has 11 locations throughout the U.S. Joe is focused primarily on developing easy-to-implement, yet highly effective systems and processes to help our members improve their restaurants' efficiency, product utilization and most importantly, deliver a more consistent guest experience.
This video is for members only, below is a short preview clip. To login and watch the full video Click Here.
Download Handouts:
Download the Ideal Labor Webinar Handout
Preview
This form is available in the following formats. You must have a compatible program installed on your computer to use them.
Click to Download Adobe PDF format
Download the Ideal Labor Webinar Slides
Preview
This form is available in the following formats. You must have a compatible program installed on your computer to use them.
Click to Download Adobe PDF format
Download the Labor Schedule Template (blank)
Preview
This form is available in the following formats. You must have a compatible program installed on your computer to use them.
Click to Download Microsoft Excel format
Download the Restaurant Schedule - Simple
Preview
This form is available in the following formats. You must have a compatible program installed on your computer to use them.
Click to Download Microsoft Excel format
Download the Labor Webinar Attendee Answers
Preview
This form is available in the following formats. You must have a compatible program installed on your computer to use them.
Click to Download Adobe PDF format
Attendee Answers:
| 1. How do you set your labor cost target? |
|---|
Show Responses
Hide Responses
| Based on industry averages - 5 responses |
| Based on anticipated operational needs |
| Based on earlier learning for Jim Laube, we shoot for a Prime Cost of 65% |
| Based on history plus adjust for quarterly targets |
| Based on industry averages, but that's been a pipe dream with our new minimum wage. Flagstaff is going to $15.50/hr in 2021. |
| Based on industry standards and employee expectations |
| Based on last years sales |
| Based on last years weekly sales in tandem with our projected prime cost for the period |
| Based on past history |
| Based on previous data, and forecasted sales percentage |
| Based on profitability. We like to look at a 60% prime cost with the food cost being considered |
| Based on schedule |
| Based on the market in our area |
| No target - But I would really would like to have one |
| No target - Just try to keep everyone busy, no one standing around |
| No target - Right now we schedule based on needs |
| No target - We do a mock schedule, cost it out and compare to margin |
| No target - We shoot from the hip, with a leaning to sales forecasting. We are moving to a SPLH (sales per labor hour) budgeting approach. |
| No target - We're not open yet, so we use industry averages |
| Target of 10% of sales for BOH labor |
| Target of 25% of projected sales |
| Target of 25% of projected sales |
| Target of 8% of sales for FOH labor |
| We are opening a new restaurant hotel/restaurant and we are working off budgeted costs and projections |
| We just started setting a target, trying to find a balance between cutting cost and productivity |
| We overstaff to ensure prompt customer service on super busy nights with specials events. The increased labor cost is offset by increased sales so the net is better margins overall. |
| We use HotSchedules to forecast and hit those goals |
| We use Prime Cost, we target 35-40% |
| 2. What percentage do you target for total labor cost? What service style is your restaurant? (QSR, fast-casual, tableservice, fine dining) |
|---|
Show Responses
Hide Responses
| 20% |
| 22% Beach casual - full service |
| 22% We are a multi-venue operation |
| 25% |
| 25% BBQ |
| 25% Full service, high-end casual |
| 25% Steakhouse concept. Labor is low because my food cost is upwards of 35%, |
| 27.5% |
| 28-32% Counter service |
| 29-32% Both fast casual and full service |
| 30% |
| 30% Bar and restaurant |
| 30% Full service |
| 30% Full service |
| 30% Table service |
| 30-35% Fullservice pizzeria |
| 32% Taco stand |
| 32.5% Full service |
| 33% Labor is 20% hourly, 10% management in a high-end casual concept. Labor has driven this up to 33% with key management demanding more money. |
| 35% All in table service |
| 35% Full service |
| 35% Table service |
| 35% Tableservice |
| 35-40% Table service (We already have high minimum wage) |
| 3. Does your manager or chef ever complain they can't hit the target you've set? | ||||
|---|---|---|---|---|
| Yes - 15 responses | ||||
| No - 4 responses | ||||
Show Responses
Hide Responses
| Yes - They say we're getting barebones staff |
| Yes - It is a target that we have not hit |
| Yes - We did when I ran 18% |
| It Depends on the manager |
| Management needs to be involved in building labor budget buy-in |
| 4. Which POS labor reports do your managers use most often? | ||||
|---|---|---|---|---|
| Sales per labor hour - 6 responses | ||||
| Labor percent of sales - 4 responses | ||||
| Sales summary - 2 responses | ||||
| Transactions per labor hour - 1 response | ||||
| Labor summary - 1 response | ||||
| 5. How often do you evaluate changing labor needs and how do you do it? | ||||
|---|---|---|---|---|
| Weekly - 9 responses | ||||
| When processing payroll - 1 response | ||||
| Daily - 1 response | ||||
Show Responses
Hide Responses
| Check customer counts six weeks back and season of the year |
| Every week using year over year budgeting |
| I feel like I do this all day every day and it's exhausting |
| Need to do it more/need guidance |
| Not often enough |
| Ongoing based on net sales |
| Pretty constantly, observation, monthly staff meetings, my staff helps me |
| Set schedule for the month but review weekly, staff meetings check |
| Trends from previous weeks and year |
| We use our SPLH and historical data to help us |
| Weekly review then create a monthly plan to make changes and quarterly action plans |
| Weekly, based on sales and time folks weren't busy |
| Weekly, basing % of projected sales |
| Weekly, but I'm also active in watching the staff and cutting as I go |
| Weekly, looking at special events and local community events |
| When we do scheduling |
| 6. What program do you use to make schedules? | ||||
|---|---|---|---|---|
| Spreadsheets (Excel, Google Sheets, etc.) - 14 responses | ||||
| HotSchedules - 9 responses | ||||
| 7 Shifts - 4 Responses | ||||
| When I Work - 2 responses | ||||
| Schedulefly - 2 responses | ||||
| R365 - 2 responses | ||||
| Homebase - 2 responses | ||||
Show Responses
Hide Responses
| ADP |
| Homebase |
| Open Sim Sim |
| PeachWorks |
| Smart Systems Pro |
| We have a set schedule where the employees own their shifts |
| 7. Does your schedule include daily cost and number of labor hours? | ||||
|---|---|---|---|---|
| Yes - 18 responses | ||||
| No - 7 responses | ||||
Show Responses
Hide Responses
| Hours yes, dollars no |
| Just show who we hope will show up to work! |
| Number of labor hours not cost |
| Only weekly |
| Restaurant365 does, and links a strong sales forecaster, HotSchedules as well. |
| Yes, it has overtime potential and alerts |
| 8. Do you use forecasting to anticipate sales or labor needs? How do you forecast? | ||||
|---|---|---|---|---|
| Yes - 20 responses | ||||
| No - 6 responses | ||||
Show Responses
Hide Responses
| No, we just pull it out of our ear |
| Yes, based on last years sales, upcoming events, weather |
| Yes, based on previous years sales year over year |
| Yes, last year plus 10% |
| Yes, using weather conditions, paydays, etc. |
| Yes, we do year over year analysis |
| Yes, we use sales by last year, plus/minus current year sales trends |
| We forecast from historical sales and data from other locations |
| 9. How often do your managers compare actual labor hours to scheduled labor hours? | ||||
|---|---|---|---|---|
| Never - 11 responses | ||||
| Daily - 6 responses | ||||
| Weekly - 5 responses | ||||
| Shift by shift - 3 responses | ||||
Show Responses
Hide Responses
| Weekly, and I look at it more than that, our scheduling program constantly tracks labor hours |
| Daily, it's data entry that needs to be done at the end of the day |
| We track labor when doing payroll only, not good |
| Daily by the closing manager |
| We can track labor by the hour |
| 10. What did you learn anything on this webinar that will help you create an Ideal Labor Budget? What's one idea that will help you reduce your labor cost? |
|---|
Show Responses
Hide Responses
| Focused observation and evaluation |
| Food prep time studies |
| I like the table of minimum # of employees per guest per hour |
| I may be changing my POS to get better reporting |
| I need a POS system |
| I need to stick to my forecasts |
| Looking at guest count vs. tables |
| Looking at the productivity of employees and comparing costs with prepackaged goods |
| Makes me realize we really need to be way more focused on productivity based scheduling |
| Need to have accountability reporting on the schedule, it would be great to have software that enforces the schedule. |
| The one thing that I would like to do is directly compare clock-in clock-out times more consistently. |
| Tracking guest count for forecasting |
| Tracking guest counts |
| Use the forecasting on HotSchedules |
| Yes, tracking prep hours and other non-revenue hours |
| Yes, we need to spend more time focused observation to make sure we are operating efficiently |
| 11. What scheduling software packages would you recommend to others? | ||||
|---|---|---|---|---|
| HotSchedules - 3 responses | ||||
| Homebase - 3 responses | ||||
| 7 Shifts - 2 responses | ||||
| 12. Insightful comments from webinar attendees | ||||
|---|---|---|---|---|
| More labor hours will also affect benefits and taxes thereby reducing margins | ||||
| Ensure job descriptions match what staff is actually doing by position, then when watching your expectations are the same | ||||
| You are never "closing the restaurant" but rather preparing it to open efficiently the next shift | ||||
