Three words for you: global pretzel empire. Today we’re chatting Anne Beiler, the founder of Auntie Anne’s Pretzels and the author of the book Overcome and Lead. We sit down to discuss the best practices she honed while scaling this company and the lessons she learned along the way. Time and time again, we keep hearing the same foundational idea revisited: personal growth is professional growth.
To check out her book look for Overcome and Lead wherever books are sold.
Full Comp is brought to you by Yelp for Restaurants: In July 2020, a few hundred employees formed Yelp for Restaurants. Our goal is to build tools that help restaurateurs do more with limited time.
We have a lot more content coming your way! Be sure to check out our other content:
Jeremiah Tower is the father ofcontemporaryAmerican cuisine.From Chez Panisse to Stars, he impacted cuisine and culture.He stepped off the lineand into the dining room, creatingthe role of the celebrity chef,
I believe that, as an industry, we need to blaze a new trail and Ithought it was a good idea to talk to the guy that blazed the trail for Alice Waters, Danny Meyer and, well, me.
Want to streamline your front-of-house operations and increase sales? Head over tohttp://restaurants.yelp.com/fullcomppodcastto claim your free page and learn more about these powerful tools for your business.
Bryce Fluellen has one of the most important jobs in our industry. As the Executive Director of Everytable, it’s his job to transform line level employees into managers and evolve those managers into restaurateurs. In today’s conversation we discuss Everytable’s Social Equity Franchise model and the steps they’ve taken to build the future of Everytable and our industry.
Full Comp is brought to you by Yelp for Restaurants: In July 2020, a few hundred employees formed Yelp for Restaurants. Our goal is to build tools that help restaurateurs do more with limited time.
We have a lot more content coming your way! Be sure to check out our other shows:
If you think it’s hard to build a brand, try turning one around. The Coffee Bean and Tea Leaf scaled to 1,200 locations globally but, after decades of success, the wheels of progress began to slow. That’s when today’s guest, Sanjiv Razdan, was brought in as CEO. It was his job to take a great business and evolve it into a great company. Today, we discuss what it takes to begin again when you’re already in the middle of it and the tools he’s crafted to ensure that his new beginning has a happy ending.
Full Comp is brought to you by Yelp for Restaurants: In July 2020, a few hundred employees formed Yelp for Restaurants. Our goal is to build tools that help restaurateurs do more with limited time.
We have a lot more content coming your way! Be sure to check out our other shows:
Betsy Hamm didn’t set out to become the CEO of a 100+ unit donut franchise but, when the moment arose for her to step up, she took the opportunity to go global. In our conversation today, we’re discussing how a donut shop can grow from a thousand-person town to a thousand-location brand and why marketing is a blade that we must constantly sharpen.
Want to Grow Your Business Fast? Check Our Guide by Josh Kopel on Restaurant Marketing Strategies.
Full Comp is brought to you by Yelp for Restaurants: In July 2020, a few hundred employees formed Yelp for Restaurants. Our goal is to build tools that help restaurateurs do more with limited time.
We have a lot more content coming your way! Be sure to check out our other content:
Marketing is hard. It’s hard because it’s nondescript and it’s a moving target. Restaurant marketing looked different in 2020 than it does in 2023. But there are experts in the field and we’re chatting with one today. Meet Paul McEnany. Paul is the founder of Plein Air, a Restaurant marketing agency that specializes in helping great restaurant brands grow. Today he unpacks the same gameplan he gives the big guys, so that we can use it too.
Full Comp is brought to you by Yelp for Restaurants: In July 2020, a few hundred employees formed Yelp for Restaurants. Our goal is to build tools that help restaurateurs do more with limited time.
We have a lot more content coming your way! Be sure to check out our other shows:
Are you charging what your food is worth or are you charging what customers are willing to pay? What do we need to do to fix our broken system? We cover this and so much more with third-time entrepreneur, first-time restaurateur Joelle Parenteau whose fresh take on the industry will blow your mind.
Want to streamline your front-of-house operations and increase sales? Head over tohttp://restaurants.yelp.com/fullcomppodcastto claim your free page and learn more about these powerful tools for your business.
SHOW NOTES
Beginnings of Wolf Down
Lessons learned in the first year of business
Many in the supply chain have dated processes
Estimating food volume is very difficult to do
Put back up plans in place to have enough stock
Allocating staff hours is tough
Restaurant business is volatile
Coping with rushes in the restaurant
Increase efficiency
Time to get an order through
Time to make the doner sandwich
Time to get people through the door
Streamlined menu
Allocating sources accordingly
Labor
Having a delivery business
Wolf Down was always a delivery business
Was 50-50 delivery – dine-in
Now predominantly delivery
Covid happened 10 months into operation
Bakery who makes there bread shut down for many weeks
Foundational issues in the industry
Pricing in the restaurant business
Price wars have caused low prices
Will customers revolt?
Provide a unique, high-quality product to justify higher prices
Wolf Down increased pricing during Covid
No one noticed or cared
If the product is good, people will pay for it
Prove the value is there no matter what your price point is
Stand out and differentiate
Raising delivery pricing in line with commission costs
Third-party delivery apps take 25-30% commission
Customers wanted delivery
Offering delivery at a premium
Consumers are moving to the convenience model
We must adjust and adapt to our customers wants
Some issues with gratuities
Relying on customers to pay your people
Most people don’t vary the tip amount
Tipping is not motivating service
Doesn’t make sense for quick-serve establishments like Wolf Down
Creates discomfort for customers
How Wolf Down attempted to solve the tipping problem
Abolished gratuities
Raise pricing to pay staff
Staff don’t ask for tips
Tip jar for customers who insist on tipping
People were angry they couldn’t tip
Engrained in the culture
Benefits of a cashless system
Saves labor costs of staff counting tills
Safer – cashless restaurants less likely to be robbed
If someone comes in and they only have cash, staff find a way to make it work
The realities of restaurants post-covid
Pre-ordering
Delivery
QR Menus
Joelle’s aim is to build foundations this year for expansion in later years
The young guns in our industry are full of new ideas. They’re creating an entirely new business model for restaurants centered around media and the diversification of revenue. But what happens when you drop those new ideas into a 75 year old restaurant?
Want to Grow Your Business Fast? Check Our Guide by Josh Kopel on Restaurant Marketing Strategies.
Today we chat with Matt Kirschner. A fledgling restaurateur ready to change the industry and impact his community. We’ll get a front row seat to see what happens when old school meets new school.
FULL COMP is brought to you by Yelp for Restaurants: In July 2020, a few hundred employees formed Yelp for Restaurants. Our goal is to build tools that help restaurateurs do more with limited time.
The restaurant industry is a competitive one, and managing labor costs can be the key to success. To make sure you’re running a profitable operation, it’s vital that these expenses are optimized. Here we’ll explore techniques for budgeting efficiently lower labor costs as well as certain benchmarks and strategies to help streamline your overall cost management in relation to employees’ wages.
Key Takeaways
Labor cost management is essential for a successful restaurant operation.
Strategies such as scheduling and forecasting, cross-training employees, leveraging technology, and boosting employee retention can help optimize labor costs.
Adhering to legal regulations is key to ensuring compliance with fair labor practices in the restaurant industry.
The Importance of Restaurant Labor Cost Management
Managing labor costs for a restaurant is an essential part of running it successfully, and in order to maximize profitability it’s important to accurately monitor the restaurant’s actual labor costs and cost percentage. This can be difficult as unexpected events or slow days may arise that require additional staff members, which contributes significantly towards labor costs.
Strategies such as schedule forecasting, cross-training employees and leveraging technology solutions can help effectively control these expenses while also minimizing violations with fair workweek laws.
Calculating restaurant labor costs, which include wages, taxes and benefits as components of the calculating labor cost percentage with regards to sales, is a key factor in achieving success for restaurants. This requires effective management of variable operating expenses while controlling prime costs that consist mainly of COGS (costs-of-goods sold) and labor.
By calculating this labor cost percentage it can allow maximum control over such related variables that influence profitability thus impacting overall performance significantly. Fixed costs also play an important role when looking at labour, but these are much easier to maintain given their static nature within budgeting contexts.
Challenges in controlling labor costs
Controlling labor costs can be a tricky challenge due to several factors such as changes in demand, employee turnover and the adherence of legal regulations.
It has been calculated that when it comes to personnel replacement expenses linked with training and reduced production, restaurants could face up an average cost of approximately $5,864 per individual. High staffing rotation may result in costly excessive wages or even requiring additional staff members temporarily if there is not enough manpower available.
Pay special attention to local labor laws as violations could result in everything from penalties to class action law suits. Among which: minimum wage rules apply along with overtime stipulations, which include norms relating to staff benefits like health insurance and vacation period provisions.
Calculating Restaurant Labor Cost Percentage: A Step-by-Step Guide
In order to effectively manage labor costs, it’s important to calculate the percentage of total sales allocated towards those expenses. To do this accurately and make informed decisions about optimizing staff levels and reducing spending, you must follow a step-by-step process that starts with gathering relevant data such as wages, taxes, and benefits. Afterward applying the formula will reveal your restaurant’s labor cost as percentage of sales.
When trying to ascertain the percentage of restaurant labor costs, it is essential that wages, taxes and benefits are accounted for. Taxes have a big influence on what business owners spend on employees as this sum incorporates both employee salaries but also taxes paid by the establishment in their name. When assessing these expenses one should incorporate all relevant staff perks like health insurance plans or retirement schemes etc., yet tips which usually go directly into workers’ pockets are not taken into consideration during calculating calculate restaurant labor costs and cost percentages.
Formula and examples
To calculate the restaurant labor cost percentage, we need to find out total labor costs and sales for a period. These expenses include wages, salaries, benefits, payroll taxes and overtime pay related to employees.
Divide the overall labour costs by the total amount of sales in order to get this figure –
($10 000/$40 000) x 100 = 25%.
Monitoring and adjusting your calculated calculate labor cost percentage is an effective way of managing staff expenditures so as to make business more profitable.
Industry Benchmarks: What’s a Good Labor Cost Percentage?
It is important to be aware of industry benchmarks for labor costs percentages and their influence on your restaurant’s performance. Restaurants are encouraged to keep the percentage of total sales attributed to labor costs at about 30% but in many markets that’s no longer realistic.
It should be noted that different types of restaurants – such as fine dining restaurants or quick-service establishments – can have variations in these figures due to factors like location, staff size and efficiency. By monitoring the relevant metrics associated with labour costs within the restaurant sector, you will put yourself in a better position when looking for areas where improvements could be made.
Comparing restaurant types
When compared to fast food or quick service restaurants, average labor costs that for fine dining establishments usually account for a higher percentage of their total operating costs. This is mainly due to the increased level of service and quality that customers expect in these types of establishments along with wages being paid at higher rates than other restaurant businesses.
Nevertheless, within any given type of restaurant, there can still be significant variation due to location size, staff size, and operational efficiency.
Strategies for Optimizing Restaurant Labor Costs
It is vital to devise strategies that will allow you to reduce your labor costs, as well as improve the quality of service and customer satisfaction at a restaurant.
Scheduling and forecasting
By leveraging the power of scheduling and forecasting, labor costs can be managed to maximize efficiency. Through analysis of past data and market research, a forecast can be established that will inform decisions on when best to employ staff or order inventory. Strategies such as utilizing customer traffic records over time periods or sales figures for predicting future activity help businesses identify how much they should spend in regards to labour expenses while also minimizing wastage. This way restaurants are able to decrease their labor cost percentage, which positively impacts profit margins.
Cross-training and skill development
Labor costs can be significantly reduced and efficiency improved by providing employees with cross-training in multiple areas. This offers the additional advantage of supporting colleagues if one is absent due to illness or any other reason.
There may be potential roadblocks that need to be addressed before implementing such a system. These could include financial investment for training materials and staff time as well as resistance from managers/employees who might not readily accept changes like this.
Taking the necessary steps – allocating resources properly, transparency when communicating ideas, tailoring courses to each team member’s needs while offering adequate support throughout the process – along with patience will make it possible for organizations reap benefits associated with cross-training practices within their teams.
Leveraging technology
Technology use in restaurant operations can be a great aid to labor cost management, making processes more effective and efficient. Self-ordering kiosks for example are very helpful when it comes to cutting down on expenses related to front of house staff at quick service restaurants as they handle orders and payments while allowing employees to concentrate on providing quality customer service instead.
Employee Retention: Reducing Turnover and Its Impact on Labor Costs
When managing labor costs, employee retention plays a major role since high turnover rates can be expensive due to the need for hiring and training new staff. Strategies that work towards improving this element divide labor costs within the restaurant industry include: increasing compensation and benefits packages, fostering an atmosphere of positivity, as well as giving employees opportunities to develop their careers. By keeping an emphasis on job satisfaction and worker wellness, it is possible to reduce turnover levels which will in turn lower your labour expenses significantly.
The cost of turnover
The financial impact of employee turnover on a restaurant can be costly, with estimates reaching up to almost $6,000 per lost front-line worker. This includes losses in productivity as well higher labor costs such as added expenses for hiring and training new personnel along with hidden costs such as customer satisfaction deterioration. Taking into account these long-term outcomes is essential when considering staffing tactics and strategies that minimize labor costs or retain staff members better. High turn around rates tend to cause reduced profit margins. To increase recruitment/training fees resulting in unfavorable service quality and culture within the establishment.
Strategies for boosting retention
The restaurant industry can reduce their labor costs by focusing on strategies to improve employee retention. Benefits like competitive salaries, positive culture, autonomy and career growth opportunities help create job security and financial stability for employees. Restaurants should also embrace transparency in all communication and decision-making processes when creating a sense of ownership over work duties among staff members. Lastly, offering rewards & recognition as well as flexible scheduling are important components when attempting to promote satisfaction within the workplace. Ultimately these initiatives will aid in minimizing turnover rates thus reducing its costly effects on businesses operating within this sector.
Legal Compliance and Fair Labor Practices
The restaurant industry must comply with legal and fair labor regulations to avoid any penalties or unfavorable reputation. Businesses grossing at least $500,000 per year are held to the standards set by the Fair Labor Standards Act (FLSA) for minimum wage payments, overtime pay requirements, as well as child labor restrictions. It is also important that all state laws relevant to restaurants be adhered too so employees can feel secure in their workplace environment while restaurant owners can maintain a good standing within their community.
Understanding labor laws
In order to ensure compliance with labor laws, it is essential that all restaurant industry personnel become familiar with the regulations relevant to their field. The Fair Labor Standards Act (FLSA) sets out guidelines for labor reports such as minimum wage and overtime pay for workers as well as child labor provisions. Some states have additional requirements on topics like meal and rest breaks which must be observed accordingly.
To educate managers in this area correctly, one should provide training covering food safety, workplace safety protocols along with inventory management techniques, etc. Creating equitable staff schedules while recognizing appropriate law-boundaries too are equally important points when tackling these matters of legality within restaurants/the hospitality sector overall. Adhering to established legislation not only safeguards employees, but can also save companies from potential litigation down the line.
Ensuring compliance
Prioritizing legal compliance and fair labor practices should be of the utmost importance for a successful restaurant. To ensure this, there are several key steps that can be taken to guarantee their implementation. These involve providing comprehensive training opportunities to managers alongside recognition when warranted, accurate records being kept as well as paying employees properly. For extra security measures regarding labour laws adherence, it is wise to take advantage of software designed specifically for such circumstances so you avoid facing potential fines or penalties while also upholding your establishment’s standing with both staff and customers alike.
Summary
It’s imperative to be savvy in managing labor costs for a restaurant if you wish to maximize profitability and make the business successful. Knowing why this is important, calculating labor cost percentages with respect to industry benchmarks, and implementing optimization strategies to reduce labor costs like focusing on employee retention while also abiding by laws regarding such matters will ensure optimal budgeting and aid in turning any eatery into an income-generating powerhouse. Taking control of these expenses now should lead your restaurant towards the success you deserve.
Frequently Asked Questions
What is a good labor cost percentage?
When figuring out a suitable labor cost percentage, it’s essential to keep in mind that typically the amount should be approximately 20-40% of gross sales. The precise figure is determined by industry and calculated by taking the labor and cost of goods sold divided by total earnings multiplied by 100.
What is labor cost per meal?
To determine the Labor Cost Per Meal, one must divide the total labor cost by how many meals were served or alternatively calculate it as a result of multiplying together both the food costs and the hourly labor rate and amount of time required to prepare each individual meal.
How do you calculate labor cost?
You can figure out labor cost by taking the sum of an employee’s gross wages and associated costs, then dividing it by their yearly hours worked multiplied to 100%. Alternatively, divide all expenditure concerning labor by total sales for a higher labor cost percentage.
What strategies can be employed to optimize restaurant labor costs?
To maximize productivity and efficiency when it comes to restaurant labor costs, cross training staff members is a great strategy. Utilizing technology in the scheduling process as well as forecasting can help maintain compliance with fair workweek regulations while minimizing overall expenses.
How can technology be utilized to optimize labor cost management and enhance overall efficiency?
Technology can provide many benefits to the operational side of businesses, such as scheduling optimization prime cost, and improved inventory management. Through technology-based solutions like these, companies are able to better manage labor costs while increasing overall efficiency.
On today’s show we chat with Mark Canlis, made famous by transforming his Michelin-starred restaurant into a bagel stand and burger joint saving jobs and his restaurant.
When the pandemic hit, the conventional wisdom in the industry was to shut down and hoard cash. Mark did the exact opposite, pivoting his fine dining restaurant into 3 casual concepts, almost overnight. Today we discuss the idea behind such a bold move, how it worked out and what the future looks like for the Canlis family and their restaurant.
Want to streamline your front-of-house operations and increase sales? Head over tohttp://restaurants.yelp.com/fullcomppodcastto claim your free page and learn more about these powerful tools for your business.
SHOW NOTES
How much to invest where
Before then worked for Danny Meyer
Been in restaurants for 20 years
Incorporated other family members into the business
Fine dining is the most considered way of caring about people with food
Conventional response from fine dining restaurants when Covid hit
How it felt to pivot
A trainwreck that has somehow stayed on the track
Hardest and most rewarding thing they’ve ever done
Hugely grateful for the team and city who have supported
Mission at Canlis
Began by listing strengths and weaknesses
150 employees who are all in
Located on a freeway – drive-through potential
What can we be thankful for?
What assets do we have?
Pivoting into three tiers of dining
Restaurant encouraged customers to see that life goes on
Losing money immediately after Covid lockdown
Canceled 3 months of reservations in March
Refunding 1000 reservations
Having an amazing team on your side
Didn’t lose any staff
Incredible energy of the staff to keep things running
Letting the creativity and work ethic of the team run free
National attention due to ingenuity of their pivot
Esquire magazine wrote about them
Amazing to be noticed
One story in a sea of one thousand stories
Now is the time to try
Racial inequality in America
Inspiring to see people try something so hard
Trying imperfectly is better than not doing anything at all
Showing up 90% of the battle
In the restaurant business, you never know what you are doing
Show up and put in everything in this today
Review the results tomorrow to improve
How Mark got through the pivoting process
He was in the military during 9/11
It was comforting to have a mission
Feel less helpless
During Covid, having the mission of keeping staff felt less helpless
Prioritizing the present
One day at a time
Future is less important than the present
You don’t need to have the answers
Be present with the community, city, family, staff
Hospitality has roots in making space for the other
Stratis Morfogen has done business differently from the beginning and, over the last 30 years, it’s made a dramatic impact in how successful he’s become as a restaurateur. Today, we unpack lessons to be learned from both his successes and his failures on his path of industry disruption.
Want to Grow Your Business Fast? Check Our Guide by Josh Kopel on Restaurant Marketing Strategies.
Full Comp brought to you by Yelp for Restaurants: In July 2020, a few hundred employees formed Yelp for Restaurants. Our goal is to build tools that help restaurateurs do more with limited time.
We have a lot more content coming your way! Be sure to check out our other shows:
Leverage Digital Media to Drive Traffic to Your Restaurant
This free (and highly detailed) guide will outline how to tell your story in the most compelling way possible and how to share that story with the masses.
(Yep, even if you’re not a “tech” person!)
FREE DOWNLOAD
Lead Your Team Instead of Managing Them
This free (and highly detailed) guide will give you everything you need to know to build and lead a world class team from scratch, ensuring you work less and earn more. (Yep, even if you know nothing about leadership.)
FREE DOWNLOAD
Ready to Optimize, Manage and Grow Your Restaurant’s Profit Margin But Not Sure Where to Start?
This free (and highly detailed) cheat sheet will give you everything you need to know to set up your restaurant to maximize profitability. (Yep, even if you’re not a “business” person!)
