How to Manage Labor & Food Costs
Both food cost and high labor can plague restaurants and reduce the businesses' bottom line dramatically. A restaurant's cost of food can quickly erase any potential profits, and high labor can eat away at the sales made during any given day. Keeping an eye on the number of customers in your restaurant, the types of food you order and your employee's use of that food can help reduce both food cost and labor.
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Control Labor
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During slow periods, you must keep an eye on your labor cost in relation to your sales. If you're a traditional restaurant that serves breakfast, lunch or dinner, your last major rush occurs during dinner. Once the rush ends, immediately look at your sales versus labor. If you have five employees earning $12 per hour, then you need to pull in at least $60 each hour just to match your labor costs. Ideally, your labor should be no more than 30 percent of your total sales. Begin sending people home when that percentage begins to rise up to or near 30 percent. Avoid employee overtime at all costs, unless your customers will suffer from a lack of service.
Scheduling Employees
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Scheduling your workforce according to your predicted level of sales helps you avoid taking on unneeded labor costs during sluggish days. A good, but not absolute, indicator of sales for any given day can be found by looking at sales on that same day last year. Don't rely on that figure alone. It's also important to consider unusual one-time slow or busy days that result from holidays or special events that don't happen on the same day each year. If you aren't anticipating a lot of traffic, scheduling the bare minimum of workers will help with labor. If you're expecting a lot of traffic, schedule a host of employees, but be prepared to send people home if your actual sales begin lagging behind your expected sales.
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Serving Size
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Coaching each employee about food costs and serving sizes can help employees understand how their actions directly affect the company's bottom line. Employees must understand they cannot exceed the strict serving sizes that are in place. If you continue to have difficulty with food costs and your employees are adhering to the serving sizes, review each serving size and your food's ingredients. Consider decreasing portions and adding fewer ingredients to your food, but beware the impact your decision may have on the customer. Cutting ingredient amounts can adversely affect the taste of your food, and offering smaller portions may make the customer feel as if he's getting cheated. If you decide to cut back, start small.
Seasonal Produce
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Produce that's in season typically costs significantly less than produce that's out of season. Naturally, refusing to order certain types of produce when the food is out of season might be impossible for certain menu items, but it's best to avoid purchasing fruit and vegetables that skyrocket in price when not in season. For example, suppose you decide to serve a fruit salad that contains strawberries, peaches, pears and other fruit. Consider offering the item during summer only to cut back on the cost of the fruit during winter.
Avoid Overstocking
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When you overstock, you run the risk of food spoiling and becoming moldy. The amount of food you order should directly relate to your expected sales for the upcoming week or two weeks. Meats, pasta and canned goods won't go bad quickly, if kept in the right conditions, but fruit, vegetables and dairy products will.
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References
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