Improve Your Restaurant Labor Schedule
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In today's episode of The Restaurant Realty in 10 our host, Michael Carro has Greg Hazard back to discuss how you can optimize labor schedule at your restaurant.
Greg has over 30 years of experience streamlining restaurant expenses to capitalize on opportunities to improve profit margins. Today Greg shares his tips for ensuring you have all hands on deck when you need it most, and how employee training time can impact a restaurant budget in unexpected ways.
Episode Highlights
4 key areas where you can control labor costs:
Track Sales per Labor Hour
$50/hour average daily is a sweet spot for many restaurants.
Scheduling
Schedule based on expected sales volume. Drive sales to increase hours available to employees and create a win-win situation for you and your employee.
Training
Ensure training shows up as a separate line on your P&L. This will help you see the true costs of training and let you know when your hiring process may need to be modified.
Pre-Opening and Closing Scheduling
By staggering your work force using line bar scheduling you can ensure you have the staff you need to run smoothly during peak service hours while avoiding overstaffing your slower times.
PRO-TIP: Good training on food prepping and closing procedures can make those working more efficient and assist in controlling labor expenses.
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Check out the full interview below:
Michael Carro : 0:01
Welcome to The Restaurant Realty in 10. Then minutes of uncensored straight talk for restaurant entrepreneurs. Weekly The Restaurant Realty in 10 dives into restaurant operations, facilities, real estate, and investments. Welcome to The Restaurant Realty in 10. This is your host, Michael Carro. And today's topic is going to be managing labor in your restaurant. So I've invited longtime restaurant entrepreneur Greg Hazard to the show to walk us through how he manages labor in his restaurants. Greg, welcome to the program.
Greg Hazard : 0:29
Thank you, Michael.
Michael Carro : 0:30
So the first thing I'd like you to do is what are the key items to managing labor and then let's dive into each of those items.
Greg Hazard : 0:36
There's five key items starting with sales per labor hour, then scheduling course training, is number one, and pre opening and closing scheduling,
Michael Carro : 0:44
So sales per labor hour,so why don't we break that down and define what that is.
Greg Hazard : 0:49
okay. sales per labor hour just means how much retail sales can one labor hour effectively do and is a general rule and for easy math for everybody today, I'm going to use $50. So if you You're going to do $100 an hour, you need two employees on the schedule for that retail hour. If you're going to do $150; 3, and it goes, just goes up like that. Now your restaurant may be different. But just for easy math, I'm using $50 an hour today.
Michael Carro : 1:12
Now when you say your restaurant may be different, a full service restaurant would be different than a QSR, or fast food restaurant, which will be different from a fast casual restaurant. So each type of restaurant and then you also have to consider prep hours where there's no sales during the prep. So talk about pre and post opening and how those hours are affected by your sales per man hour.
Greg Hazard : 1:33
Pre opening and closing labor hours are really determined by how efficient you can train your employees to be before sales start ringing up in the till and how soon you have to have them there before you open the restaurant for business. So let's just say we open at 11 o'clock. We may need our prep people there at 8:30am. But we only need two people from 8:30am to 11am. And then our cashier comes in say at 10:45am just right before the sales open. That's a continual fine tuning of your pre opening and closing labor, how efficient can you train your employees to be when there's no retail sales coming in?
Michael Carro : 2:04
Do you add their hours into the mix to get that $50? On average?
Greg Hazard : 2:09
Yes, the $50 a day is for an overall, I probably should break that down a little better. If you're going to break it down that way. $50 per labor hour is really an all day average. And when you really dial this in, you're going to want to get your sales per labor hour during just retail hours, where you're open closer to $65 to $70 an hour to average out to where you'll end up with a $50 sales per labor hour or better. I'm always looking for $50 or better in our fast, casual brand that we're in right now.
Michael Carro : 2:36
Greg, thank you so much for that clarification. That helped me out a lot. So now let's dive into scheduling the labor scheduling.
Greg Hazard : 2:43
All right. Well, most people when I come into a restaurant brand, they're doing labor scheduling by the hour, and they're just kind of meat balling it. And then what I will find is instead of generally just talking about a lunch and dinner operation, you'll have a peak at lunch and a peak at dinner. And I'll find out from are carrying people over from lunch all the way to dinner instead of phasing them out. And there was a term or a strategy that I learned way back in my QSR days called line bar scheduling, where we actually did it by hand. But now most back of the house system, you can do it online. What that means is that really, it's first in first out, your first person in should be your first person out after the peak at lunch, and then the second and third and fourth and take yourself all the way down. Where you're continually managing to your sales per labor hour model. And that's a continual revision every week. Sometimes I see restaurants that use the same schedule every week, regardless of the sales pattern,
Michael Carro : 3:35
cut and paste, cut and pasteregardless of sales and predictive analysis for the next week.
Greg Hazard : 3:40
That is correct. Or they'll get in a bad habit. The predictive model will give them a schedule based on the parameters that they can enter in their back of the house system and they'll override it because they're trying to help somebody with a few more labor hours here and there, instead of adhering to the model. And our marching orders with scheduling has been scheduled to the restaurants needs drive sales. And you'll be able to give people more hours, get the employees engaged and understand it when you drive the business. The more business we do, the more hours I can give you. Get the whole team engaged in driving sales and you know, sales, fix everything sales will fix your labor cost sales will fix your food cost, sales will fix your fixed costs.
Michael Carro : 4:16
And those managers that really manage the restaurant and are able to pivot when they see that we're having a sales bump today, they might keep an employee on for an extra half hour or an hour. Or if they see that sales have not achieved what was expected. A good manager will begin to cut early and manage it that way.
Greg Hazard : 4:35
Yes, cutting earlier in our industry is called phasing. You want to phase them out if it's not happening. And Michael's correct in saying that if all of a sudden you had more sales than you thought, well, that's exactly what I was talking about that sales drive the schedule, so you could keep somebody on an extra hour so that you have to, "oh, shoot we went through more prep than we thought we need to prep more tomatoes, lettuce, whatever",you got to prep to catch up for what you went through that you didn't expect. So that's how employees can get more hours, but it's always driven by sales.
Michael Carro : 4:59
That's perfect. So now you've got a good labor scheduler, you've got a manager paying attention. Now you've got to dive into training.
Greg Hazard : 5:07
That's correct. And training is the cost that nobody likes, they would just want the employee to be hired and by osmosis, learn how to do everything perfect first day. And that's just not going to happen. And training, the amount of time you spend in training, not only will improve your labor costs down the road, it's going to improve your food cost down the road for fewer mistakes that they will make during that phase, and of course, long term in their time with you. And what we want to have in training is a thorough walkthrough from back to front, even if they're going to be a cashier, a cashier can't sell if they don't understand the product. If you just put them up there and hope that they can find out and guess ask them hey, what's that kind of burger? Oh, I don't know. I haven't had it yet. That is a killer to your business. You need to have them learn from the back of the house forward. In our training, the way I approached it, I would use the volleyball approach. And you know, after every service, the players rotate one position so that every player can play every position and that's how I used to do it in the restaurant. The brand new employee was starting to back and they would go as far as they could with their skill set. And maybe they couldn't become a cashier because they just weren't guest friendly or guest focused, but they were phenomenal in the back. They might stop there. But then the next person would hire would come in and start at the back of the house in the very beginning position and work through every position and then only the best got to be up to the cashier. And then in QSR, only the best cashiers ever got to be on the drive thru that was their reward. That was the status symbol that you were the best cashier.
Michael Carro : 6:27
So you're constantly training in the restaurant, but how do you account for the training? Is that also part of your sales per man hour?
Greg Hazard : 6:33
No, the training hours, labor dollars have to be totally separate from your sales per labor hour, you need to account for it so you understand how much money you're spending in training. If you just throw it in with labor. You'll never understand, later, why your sales per labor hour was so far off unless you just happen to remember or, oh yeah, I used a certain number of hours for training you really need to have a separate labor line for your training hours so you can thoroughly account for it.
Michael Carro : 6:56
Well and also at the end of the month or the end of the year. You may determine that if you have so much money in training, that you are a bad judge of character and are not hiring the right people who constantly turn over.
Greg Hazard : 7:10
Thank you for leading me right into my last one.
Michael Carro : 7:12
Oh, is that right though the go!
Greg Hazard : 7:13
The biggest killer in labor costs is turnover. The biggest contributor to turnover is bad, or poor hiring practices or hiring standards. And that was where people forget that, hey, I wouldn't hire this person. I was desperate. And I cross my fingers and hope they would work out and then they didn't. And so all the money you spent training that bad hire to re spend it on next hire and the next hour the next hire. And let me talk about also the your core staff. Every restaurant has a core staff. And if you have turnover of new employees, I mean, I'm talking where your core staff stays the whole time. It's always your new employees that are turning over, you might have a little bit of corruption in your operation. And what I mean by that is that these core employees form a clique, and they won't let anybody else in and so you're constantly confused. Why did I lose that employee? Cuz they just left I just you know these days they don't even give you notice they just stop coming in,
Michael Carro : 8:03
They ghost you
Greg Hazard : 8:04
They ghost you. That's the word. It's usually because your core employees don't want that new employee to take some of their hours so they're protecting their hours and they know that if they keep you short staffed, they're going to keep their hours and so you got to look I call it their nerfing out the new employees.
Michael Carro : 8:18
That is so interesting. I did not realize that that took place. Greg, thank you so much for coming on to today's show, folks, that wraps up another The Restaurant Realty and 10 I'm Michael Carro and if you want some of the show notes, please go to TheRestaurantRealty.com for additional information. Thank you for listening to The Restaurant Realty 10. If you're interested in restaurants, whether operations, facilities, buying, leasing, or investment, The Restaurant Realty in 10 is for you. Please subscribe to this podcast and you can also visit TheRestaurantRealty.com for show notes topics and additional information.