Productive Workforces Build Profitable Restaurants
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.
If you are interested in learning more about leveraging technology to unlock workforce productivity gains, contact firstname.lastname@example.org to arrange a free webinar.
Awards & Rostering |
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.
Awards & Rostering Industry Insights |
Australian Businesses Suffer from Absenteeism
Definition: Absenteeism is the practice of regularly staying away from work without good reason. Everyone is guilty of absenteeism at least some point in their lives. But how do you know when absenteeism is becoming a real problem within your business? How much it is actually costing your business invaluable work time, productivity and money? A survey conducted in November 2014 by Direct Health Solutions, a firm that specialises in reducing workplace absenteeism, found that sick days are costing Australian businesses a record $33 billion in payroll costs and lost productivity. Sick days are not only costing Australian businesses money, they are also being incorrectly recorded. “Absenteeism levels are understated and incorrectly recorded in over 50% of organizations.” “To ensure employers understand the impact and cost of absenteeism to their business, companies need accurate recording and measurement systems in place” said Managing Director of Direct Health Solutions, Paul Dundon. Tanda, an award-winning time and attendance software, is a cloud-based system that helps small and large businesses manage their staff costs. Through the use of our automated time and attendance tracking software, in just a matter of minutes Tanda can calculate the total number of employees who take sick days along with the total cost of lost revenue and productivity due to absenteeism. Tanda offers a complete payroll administration system that allows businesses to manage and monitor time and attendance from any device at any time. The processing of an entire payroll that used to take hours to complete can be processed in a matter of minutes. You can trial Tanda yourself for FREE to see just how easy it really is to use. We guarantee you’ll never look back.
Product Updates |
New rostering features allows you to get visual with pay rates
This week at Tanda, we’ve launched some exciting new features to give businesses a complete visual breakdown on different pay rates that are applying on the roster. This is a game changer in allowing managers to easily build a fully costed, compliant and optimised work roster. Making it easier to understand the cost of a roster Tanda’s always given you the cost of a roster, broken down by each employee and each day. However, even that doesn’t always make it clear why costs blow out sometimes. This is why we built the roster costing chart. Visible on the costs view of their rosters, it shows a breakdown of each hour of the employee’s roster, showing if the time will be ordinary time or overtime and the cost that it’ll be paid at. With lots of staff on a roster, you’ll see a small preview for each person. We call it the candybar because of how datalicious it looks. You can even sort the list of staff based on this candybar – so you can order rosters based on who has the most complex costing which usually comes from having the most different kinds of overtime. Making it easier to give staff the hours they want We’re tackling these problems from both ends to give you more tools to make great rosters. You can now set the preferred hours that someone would like to work on their employee profile. If you roster someone with a lot more, or a lot less, hours than their preference, you’ll see a reminder on your roster. There’s 10% leeway on either side, which means you don’t need to roster everyone with exactly the number of hours they want – just in the general vicinity. This is a great way of giving staff hours they are happy with, while still maintaining the natural flexibility in hours required for casual employment. Did you know? If you roster a casual for the same hours every week, most Modern Awards include a clause where you need to offer them a permanent contract. Fair Work refers to this as “regular and systematic” rostering. Our goal at Tanda is to make it super simple to build a roster that is both compliant and optimised under your relevant Fair Work Award. If you’re interested in finding out some more information about implementing this in your business check out our rostering or award interpretation pages.