Productive Workforces Build Profitable Restaurants

Phil Johnson

30 November 2017    |   

Phil from Tanda caught up with Ken Burgin, restaurant industry veteran and consultant, to find out how restaurant managers are using data insights to make better staffing decisions.  Ken is the founder of Profitable Hospitality, a resource for the latest information on food & beverage marketing, management and cost-control, which sold to Silver Chef in 2016.   Introduce yourself, your background, and current role “I’m a former restaurant and cafe owner in Sydney, and now work with foodservice operators to make their businesses more popular and profitable.” “I like finding out the ‘why’ of business success, and the ‘why not’ of business problems. I like watching new developments in digital management and marketing, sharing photos on Instagram, and finding great bakeries!”   Why are wage costs so important for restaurant managers to understand and manage? “Employment costs are often the single biggest expense for a cafe or restaurant. They can also be the ones that are hardest to adjust quickly.” “For example, if you suddenly have a couple of quiet days, you will use less food and sell fewer beverages, but it’s much harder to ‘turn off the tap’ with staff who are already rostered. Proper notice has to be given for the changes, and good staff don’t like having their work life chopped and changed.”   How big a component is wage cost to the cost of doing business in the restaurant industry? “Food & beverage costs plus wage costs may be more than 65% of operating costs in a restaurant or cafe  – a huge proportion. This combination is often called the ‘Prime Cost %’. Think of it in terms of currency – there are only 100c in a dollar, and and if 65c or more go on these two items, you still have to cover rent, utilities, insurance, repairs and marketing – plus a good profit. There is no room for error!”   What KPIs should restaurant managers be monitoring and how should they select suitable KPIs for their requirements? “It’s important to look at your total cost of wages compared to sales each week, and also see how individual departments are performing.” “Traditionally the front of house and kitchen manage their own rosters, and with good data they should be held accountable for their own costs. Front of house wages should be measured against total sales, and kitchen wages against the cost of food sales—not including beverage.” “This way operators should check their current week’s performance with the week before, and this month with last month or the same month last year.  Some operators give each department a wage budget that they must not exceed. Make sure these costs include the on-costs e.g. superannuation, workcover and uniforms, so the picture is real —the value of these can be a surprise to new managers.” “It’s also important to make the figures available as soon as possible – real-time numbers allow for immediate adjustments. Most old-style rostering follows the rear-vision approach – it’s not until we do the wages on Monday that we realise we blew the budget last week because of those quiet days!”   How important is data in rostering staff and what data sources should restaurant managers rely on to prepare efficient rosters? “Most chefs and restaurant managers complain that they’re treated like mushrooms – kept in the dark and fed you-know-what! So the more you can give them real, immediate information about costs and sales, the more they can work to achieve targets.” “Online rostering software and payroll services allow this information to be captured right down to the last hour. Combine honest data with challenging goals and rewards for good performance – there’s no reason why managers can’t bring wage costs well below what you thought was possible.” “You also need to have good shift-by-shift information about sales – if you’re understaffed on a busy night, that can cause a big hit to sales and reputation. Watch that low wage costs don’t reduce the customer spend per head.”   How does a restaurant manager know what the optimum staff level should be at any given time? “Every shift will have a sweet spot where there are just enough staff and the wage costs for that shift meet budget. There should be very few shifts where costs are high because ‘it’s always quiet’.  It can be harder to cut kitchen staff on quiet shifts, so they will have a list of standby preparation and cleaning tasks to keep them fully occupied.”   What are the most common restaurant staffing mistakes you come across in the industry? Overstaffing – just in case it’s going to be busy. Understaffing that reduces sales and service quality. Not having staff with sufficient skills to do the work required – it can take 3 inexperienced staff, to do the work of 2 who are skilled and efficient, but they are usually all paid the same rate! Not having an efficient training and onboarding system for new staff, to get them at peak performance quickly. Ken Burgin www.ProfitableHospitality.com.au If you are interested in learning more about leveraging technology to unlock workforce productivity gains, contact info@tanda.co to arrange a free webinar.

Phil from Tanda caught up with Ken Burgin, restaurant industry veteran and consultant, to find out how restaurant managers are using data insights to make better staffing decisions. 

Ken is the founder of Profitable Hospitality, a resource for the latest information on food & beverage marketing, management and cost-control, which sold to Silver Chef in 2016.

 

Introduce yourself, your background, and current role

“I’m a former restaurant and cafe owner in Sydney, and now work with foodservice operators to make their businesses more popular and profitable.”
“I like finding out the ‘why’ of business success, and the ‘why not’ of business problems. I like watching new developments in digital management and marketing, sharing photos on Instagram, and finding great bakeries!”

 

Why are wage costs so important for restaurant managers to understand and manage?

“Employment costs are often the single biggest expense for a cafe or restaurant. They can also be the ones that are hardest to adjust quickly.”

“For example, if you suddenly have a couple of quiet days, you will use less food and sell fewer beverages, but it’s much harder to ‘turn off the tap’ with staff who are already rostered. Proper notice has to be given for the changes, and good staff don’t like having their work life chopped and changed.”

 

How big a component is wage cost to the cost of doing business in the restaurant industry?

“Food & beverage costs plus wage costs may be more than 65% of operating costs in a restaurant or cafe  – a huge proportion. This combination is often called the ‘Prime Cost %’. Think of it in terms of currency – there are only 100c in a dollar, and and if 65c or more go on these two items, you still have to cover rent, utilities, insurance, repairs and marketing – plus a good profit. There is no room for error!”

 

What KPIs should restaurant managers be monitoring and how should they select suitable KPIs for their requirements?

“It’s important to look at your total cost of wages compared to sales each week, and also see how individual departments are performing.”

“Traditionally the front of house and kitchen manage their own rosters, and with good data they should be held accountable for their own costs. Front of house wages should be measured against total sales, and kitchen wages against the cost of food sales—not including beverage.”

“This way operators should check their current week’s performance with the week before, and this month with last month or the same month last year.  Some operators give each department a wage budget that they must not exceed. Make sure these costs include the on-costs e.g. superannuation, workcover and uniforms, so the picture is real —the value of these can be a surprise to new managers.”

“It’s also important to make the figures available as soon as possible – real-time numbers allow for immediate adjustments. Most old-style rostering follows the rear-vision approach – it’s not until we do the wages on Monday that we realise we blew the budget last week because of those quiet days!”

 

How important is data in rostering staff and what data sources should restaurant managers rely on to prepare efficient rosters?

“Most chefs and restaurant managers complain that they’re treated like mushrooms – kept in the dark and fed you-know-what! So the more you can give them real, immediate information about costs and sales, the more they can work to achieve targets.”

Online rostering software and payroll services allow this information to be captured right down to the last hour. Combine honest data with challenging goals and rewards for good performance – there’s no reason why managers can’t bring wage costs well below what you thought was possible.”
“You also need to have good shift-by-shift information about sales – if you’re understaffed on a busy night, that can cause a big hit to sales and reputation. Watch that low wage costs don’t reduce the customer spend per head.”

 

How does a restaurant manager know what the optimum staff level should be at any given time?

“Every shift will have a sweet spot where there are just enough staff and the wage costs for that shift meet budget. There should be very few shifts where costs are high because ‘it’s always quiet’.  It can be harder to cut kitchen staff on quiet shifts, so they will have a list of standby preparation and cleaning tasks to keep them fully occupied.”

 

What are the most common restaurant staffing mistakes you come across in the industry?

  • Overstaffing – just in case it’s going to be busy.
  • Understaffing that reduces sales and service quality.
  • Not having staff with sufficient skills to do the work required – it can take 3 inexperienced staff, to do the work of 2 who are skilled and efficient, but they are usually all paid the same rate!
  • Not having an efficient training and onboarding system for new staff, to get them at peak performance quickly.

Ken Burgin

www.ProfitableHospitality.com.au

If you are interested in learning more about leveraging technology to unlock workforce productivity gains, contact info@tanda.co to arrange a free webinar.

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Industry Insights    |   

Why Pharmacies Love Tanda

Tanda spoke to Jarred, Co-Owner of Marraboor Pharmacy about his experience using Tanda. Marraboor Pharmacy is a locally owned and operated pharmacy located in Swan Hill. They have been providing great quality service and health advice to the community for over 50 years. Known for their friendly and knowledgeable staff, Marraboor Pharmacy provides a range of health services. Immunisations and blood pressure recordings as well as a number of over the counter and prescription medications are available. “As a business owner and pharmacist, being part of the local community is really important. What I love about my job is being able to help people through the service we provide.” Jarred discovered Tanda when he went searching for better solution to manage and roster his staff across his busy store. Having previously used online systems and spreadsheets to roster, and paper time sheets to record staff attendance, Jarred was looking for a solution that could solve his rostering issues and make payroll processing easier. “Running a pharmacy, means that labour is my second biggest expense after stock. I therefore needed a simple and fast way to create rosters for my team, and forecast my labour costs. It needed to be easily visible, and able to connect to my Xero account so my wife could do payroll. “Tanda’s made a huge difference in how I roster. It was so easy to use with the drag and drop feature, and I could quickly see that I had my whole team covered with the colour-coded roster. “The integration has been so easy with Xero, and has made a real difference for my wife. She used to come in on a Monday to do payroll, and would spend hours chasing up staff who’d forgotten to fill in time sheets. Now she can come in, check the time clock selfies and time sheets, and do payroll in no time.” In addition to faster rostering, Jarred is also enjoying the Award interpretation and leave management features built into Tanda. “Being able to forecast my labour costs, plan my time and workforce through Tanda has really made a difference. I can see all my labour costs easily in Tanda, so I now know when someone is going into overtime on a Saturday, and how much that will cost me. “There’s already plenty of paperwork involved in running a pharmacy, so I’m a big advocate of paperless systems. Being able to track and approve staff leave requests electronically through Tanda, has made it much easier not only for rostering and payroll, but for tracking our leave accruals and leave costs in general.” Tanda is giving Jarred more time to spend focusing on his business and his patients. “As a Pharmacist, health professional and business owner, the less time I spent on admin, and more time spent focusing on running the business and providing excellent customer service to my customers, the better. Tanda is helping me to get out of the back office and away from the paperwork, to spend more of my time on pharmacist related work, which is what’s important. “Any pharmacists or business owner for that matter, should be using a cloud-based system like Tanda. It’s a great product and the customer service is excellent. I’d highly recommend giving it a go.”   Marraboor Pharmacy is a locally owned pharmacy in Swan Hill, that has been providing exception customer service and health advice to the Swan Hill community for more than 50 years.

Industry Insights    |   

The (True) Cost of Winning

On 12 July 2017, the Queensland Maroons whopped the NSW Blues 22-6 at this year’s State Of Origin series decider. It was attended by 52,540 screaming supporters at Suncorp Stadium and watched by millions more on the TV.  It was a game for the ages, featuring rookie Valentine Homes’s hat trick and Cameron Smith’s Man of the Match Performance. The night may well be talked about for weeks, months, even years to come. However, the morning after also merits conversation. We collected employee attendance data on the morning after, analysing employees’ punctuality for approximately 4000 shifts. We looked at the clock in activities starting at 4 AM until midday of the Thursday after the State of Origin decider. It yielded some not so surprising results. 22.43% of Queenslanders were late the morning after the match. In contrast, only 20.48% of employees from the rest of the country clocked in past the start of their shifts. This was a 20% jump from the norm. The past three Thursdays before the decider, QLD only had 18.68% Queenslanders clocked in a little late. While maybe not entirely scientific, it is easy to see how significant cultural events can have an impact on productivity. In a US context,  Chicago-based Challenger Gray & Christmas predicted that Super Bowl LI cost American businesses USD 1.7 billion in productivity losses. It goes without saying that Queenslanders paid the price, both on and off the pitch, to win this year’s State of Origin. We tend to think it was worth it.

Awards & Rostering    |   

Why POS Machines make Terrible Time Clocks

Most POS solutions available in the market today have some form of time clock feature included. It might seem to be a cost-efficient and convenient method at first, but it has more problems than benefits in the long run. The disadvantages of integrating time and attendance with your POS machine are: Lack of Accessibility: Front-of-house staff (cashiers, waiters, retail personnel) constantly uses the POS. So, it makes sense for them to use the machine as their time clock. But what about your back-of-house team? Kitchen staff and inventory personnel will have to go regularly to the front in order to clock in and out of work. Clunky Software: Even good POS providers focus only on making a good POS. The many features they perfect are primarily to make serving your customers as easy as possible. Unfortunately, time and attendance is never going to be a priority for POS companies. This means doing things like editing clock-in times, building a roster, or exporting to your payroll system can be either really hard or impossible. Security: By definition, the POS machine has sales information and cash. As much as possible, you should limit those who need to use it. If your POS machine is your time clock, all of your employees have access to it. This means that you’re more prone to theft and other forms of security breaches. Lack of Accuracy – Most POS systems that have a time clock in it use only a four-digit PIN to identify a specific staff member that clocks in and out. With no other forms of verification, there is no guarantee that your employees are really in and out of work. Some POS may offer fingerprint scanning verification, but they are notoriously unreliable and are difficult to maintain.   Read: “Buddy Punching” is Costing Businesses Millions. What Can Employee Time Clock Software Do About It? But why are a lot of businesses integrating time and attendance with their POS? The reason behind using the POS as the time clock is that attendance data is stored with sales data. With all these information in one location, managers are able to see the restaurant’s performance at a glance. Best of Both Worlds The right workforce management solution will still integrate with your POS, but not in the way it was before. With Tanda’s POS integrations, your business can make smarter rostering decisions. Our Predictive Workforce platform uses sales data from your POS to automatically calculate the right number of employees your business will need at specific times of the day. This ensures that your business remains profitable and it helps you also cut down the time needed for building the weekly roster. With Tanda part of your business, you can phase out your POS for time and attendance and replace it with our tablet-based employee time clock software. It tracks employee time and attendance and verifies it as well by taking a photo of them as they clock in and out. It also informs them of upcoming shifts and allows them to file time off requests. Move your time and attendance off of your POS, and onto Tanda. Sign up for a free trial or contact us today to help you get started.

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About the author

Phil Johnson

Partner Manager: Having used Tanda in a management capacity prior to working at Tanda, Phil understands first hand the value that Tanda can bring to a business. Phil now manages Tanda's Partner Program, to assist businesses to implement innovative solutions and processes in their business.

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Industry Insights

Why Pharmacies Love Tanda

Tanda spoke to Jarred, Co-Owner of Marraboor Pharmacy about his experience using Tanda. Marraboor Pharmacy is a locally owned and operated pharmacy located in Swan Hill. They have been providing great quality service and health advice to the community for over 50 years. Known for their friendly and knowledgeable staff, Marraboor Pharmacy provides a range […]

Industry Insights

The (True) Cost of Winning

On 12 July 2017, the Queensland Maroons whopped the NSW Blues 22-6 at this year’s State Of Origin series decider. It was attended by 52,540 screaming supporters at Suncorp Stadium and watched by millions more on the TV.  It was a game for the ages, featuring rookie Valentine Homes’s hat trick and Cameron Smith’s Man […]

Awards & Rostering

Why POS Machines make Terrible Time Clocks

Most POS solutions available in the market today have some form of time clock feature included. It might seem to be a cost-efficient and convenient method at first, but it has more problems than benefits in the long run. The disadvantages of integrating time and attendance with your POS machine are: Lack of Accessibility: Front-of-house […]

More Resources

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