Answered February 13 2020
As a business owner, you need to be aware of the effects that labor brings to your bottom line. Most restaurants are striving to increase their revenue in a competitive marketplace where the cost of labor is consistently rising. It’s been proven that the best tactic to controlling your profit margin is monitoring labor costs.
With labor being such a crucial cost to running a successful restaurant, how can we go about reducing labor costs and the effects the labor costs have on your bottom line? By putting your Point of Sale System to work, you can monitor labor costs and help better manage your business’ bottom line.
Food and beverage labor costs in the restaurant industry should run between 28%-35%, depending on the nature of your business. You should check that you fall in this percentage consistently. This simple calculation below can help to determine your labor cost percentage.
This formula and the 4 useful tips below will help show you how your POS can work for you to keep your labor costs in the magic range and help your restaurant run more efficiently in the long run.
If your restaurant has been up and running for a while, you will know when to expect your restaurant to be busy and when to expect it to be slower. Sometimes you will have an erratic rush or unusually slow day, but for the most part humans are pretty predictable.
We all know you can’t predict the future, but a good Point of Sale will offer data and analytics from past and present that will help predict high and low traffic times at your restaurant for any given week, day, or even hour. This data provides a benchmark for staffing and enables you to make more educated decisions when putting together your schedule. Rather than attempt to plan for the unexpected by overstaffing, resulting in increased labor costs and ineffective management, this data allows you to only schedule as many people as necessary, in turn reducing labor costs and increasing profits.
Did you know that instead of wasting your time (or the time of your staff), your POS can automate alerts and necessary restaurant management tasks? Managers can use their POS system to automatically generate schedules, purchase orders, and manage inventory, freeing up time to perform other tasks.
When setting up inventory alerts, for example, you avoid the risk of running out of vodka at the bar or chicken wings in the kitchen. Your POS can be set to monitor and automatically reorder inventory when stock depletes below a set level.
Your Point of Sale System can also notify you when employees are reaching their 40hr work week so you don’t end up paying time and a half. When alerted, you will know to schedule more part-time employees or temporary workers, whose cost of labor is less expensive.
In this day and age your staff should be able to do more than one thing. Think about cross-training your staff so they are able to handle other jobs that need filling as necessary. When the prep cooks are able to operate the grill and the hosts can act as back-up servers, you eliminate the need for a specialized, diverse staff. The beauty of this is that it maintains the same level of production quality your restaurant is known for without spending money on unnecessary labor.
If you’re a quick service restaurant, you can encourage your customers to place their orders online using a mobile app linked to your POS. This will decrease the need for labor to take orders for delivery or take-out and will help increase order accuracy.
As cost of labor continues to rise, utilizing a tech-forward restaurant POS and management platform becomes even more essential to monitoring costs and automating essential tasks, in turn empowering your staff and restaurant to run more efficiently and profitably. Let a company like PointOS go to work for you and help manage your business’ bottom line today.
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