Restaurant labor cost management starts with optimized schedules.
For many restaurants, labor accounts for up to one third or more of their cost of sales. Having the perfect number of employee’s on-the-clock during any shift is critical to that restaurant's profitability.
Many restaurant chains only measure how well their managers are at executing schedules based on sales forecasts. But what if a restaurant’s actual sales didn’t match its expectations? In this instance your restaurant may have either too many or too few employees scheduled for certain shifts. That can spell trouble for guest experience and profitability. Nobody ever said labor management was easy!
What are“Earned Hours” and why are they important?
Earned Hours indicates how long your employees should have worked during a based on the actual sales during their shift.
This is a great metric to evaluate your managers' staffing adjustments in response to sales conditions throughout the day. Analyzing a manager’s Earned Hours can help drive better schedule planning, execution, and reaction in the future.
A manager's Earned Hours performance is determined by their Actual Hours-to-Earned Hours Variance. The (+/-) variance is derived from calculating Actual Hours (how many hours the employees worked) – minus – Earned Hours (how many hours they should have worked given the actual sales performance). The resulting (+/-) variance indicates how well or poorly a manager reacted to real-time restaurant sales performance against the implemented employee schedule plan.
If their Actual-to-Earned Hours Variance is close to zero, they are doing a good job calling in extra people or sending people home during busy or slow days, respectively. If the variance is too high or too low, there's likely a problem that needs to be fixed. It may mean they aren't properly reacting to sales conditions that require schedule adjustments. These managers should be coached by an experienced supervisor about how to be more responsive to current conditions.
A labor management solution will help you with optimizing schedules and reducing labor costs.