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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How much do full time staff really cost?

Being in the business of managing staff costs, we often hear people say that casual staff just cost so much more than their full time equivalents. I mean, that extra 25% is a killer, right? Especially for staff who work a fairly consistent schedule each week, it’s almost like free money. For a while there I went along with that, not really giving it much thought. But today the thought struck me – casuals miss out on plenty of benefits afforded to full and part timers, so are they really better off? I decided to investigate further. What follows may surprise you. First – how many days in a year does a full time employee work? Weeks in a Year: 52 Working Days in a Year: 260 So far so good. We’re going to ignore the 1 or 2 days that we’re off by, for the sake of a nice round number. Next, let’s look at this full time employee’s entitlements, in days. Annual Leave: 20 (4 weeks) Personal Leave: 10 (2 weeks) Public Holidays: 10 We’ll assume a 7.6 hour work day and 17.5% leave loading. So how many hours of leave are we paying? Annual Leave – Base: 152 Annual Leave – Loading: 26.6 Personal Leave: 76 Public Holidays: 76 Total Hours of Leave Paid: 330.6 Earlier we calculated how many days of work one can work in a year, now let’s subtract leave taken to get a more accurate figure. Days of Leave Taken: 40 Actual Days Worked in a Year: 220 Actual Hours Worked in a Year: 1672 Divide 330.6 (hours of leave paid) by 1672 (hours worked) and we get 19.77%. Remember, we are comparing this to the 25% loading paid for casual staff. So from this perspective, yes, your full time and part time staff are still cheaper – but only by 5.23%. And even that number is probably on the low side. We ignored long service leave and maternity leave because they are a bit more unreliable. Both they are also costs (or accruals) that can definitely add up! When you take into account the fact that you only have to pay casuals when you need them, it’s easy to see why more and more Australian employers are turning to casual staff. According to the ABS, this has been growing steadily since the 90’s, and today over 1 in 5 jobs in Australia are casual.

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Text Me Maybe: Share Your Rosters by SMS!

Tanda’s (PayAus) roster management tools just got even more powerful, with the ability to send your staff their rosters by SMS, instantly. No more printing rosters out and making sure they don’t get lost, or trampled on, or wet. No more casuals calling up during the busiest time of the day to ask when their next shift is. And no more typing text messages up yourself – Tanda can do it all for you. Once you’ve designed a roster in Tanda, just follow the prompts to SMS it to your staff. You’ll be able to select which staff members get their rosters delivered, and even see a preview of the message they’ll get. Rosters by SMS cost 25 cents per message, but as a gift to Tanda customers, we’re making the first month absolutely free. Have fun! P.S. rosters are sent to the phone number you’ve provided for your staff, so you’ll need to make sure that’s correct. If you are having issues entering phone numbers, or need help importing a lot of phone numbers, please contact us!

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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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