Profit increases in a tough labor market

Profit increases in a tough  labor market https://wahospitality.org/wp-content/uploads/2019/08/profit.jpg

By Arnold Shain, Advisory Network

 

What I hear from clients on a daily basis: My profits have eroded. What happened? My labor cost is way up. My cost of goods is up. Most of my time is spent running ads, interviewing (if they show up), hiring and trying to train the new people and then they don’t show up for work 20 percent of the time. This feels like an endless struggle. Help!

I feel the pain, so I developed the following programs that are working very well in several restaurants.

1. Treatment of our people.

We believe that all our people should be treated with respect and dignity and regard them as assets of the business. We are now spending more time with our people, cultivating our relationship with them, making them feel they are contributing, so they feel good about themselves, their job, where they work and their employer. If you haven’t been doing this, I’d suggest you start now.

Result: I am seeing the staff becoming more engaged in their work and seeing and hearing contentment.

2. Food Costs

No. 1

Before raising any prices to get a better food cost, I suggest you talk with your vendors about value propositions to help you achieve your cost goals. I think the marketplace is trending toward more and more value and now is not the right time to raise any prices, believe me.

The suppliers are in for the long haul and are your partners in your business. I have found visiting with them and discussing your dilemmas with costs has proved to be quite fruitful for the clients. It is just a matter of working with them on a closer basis.

No. 2

The second part of food cost is to evaluate each item for its cost and see if there is any trimming in order with regard to the ingredients and the specifications.

No. 3

Fully engage your chef to be the driver on this process. Have him show you in writing and in metrics weekly what he has accomplished in terms of costing and bringing the overall food cost down. Track the purchases weekly and compare them to the sales.

Result: I’ve seen this year’s food costs go down some

2-4 percent thanks to working more closely with our vendors.

3. Scaling the prep—another chef responsibility

First step

Take all your daily prep items and list them on a sheet with a time spent for each task. This chart will show you where you are spending your time in the prep kitchen. I’ve seen prep reduced in the kitchens up to 20 percent when doing this study. One group was spending two to three hours per day making house-made crackers to serve with an appetizer dip. When we priced out the labor to do this task, we saw that we were spending $60 per day, six days a week or $18,720 plus the labor taxes of another $3,000 or more than $21,000 per year. I am going to guess that you have several of these prep items on your list.

Second step

I also found that some of the prep people were inadequately trained by the chef’s own admission, so we discussed furthering the development of these people through additional training. We want prep people to feel good about what they are doing so we gave them a pathway to furthering their productivity, directly resulting in their salary level increasing. When explained well and when shown how to do the work more efficiently, they got faster and they made more money. Win-win deal.

Third step

I have a good friend who manufacturers high-end sauces, marinades and dressings. Restaurants, of course, make all their own sauces, marinades and dressings because this is what prideful kitchen staffs do. Well, when doing a blind taste test of these various items, we found out the manufactured ones exceeded the flavor of ones we made ourselves. And we now reduced the workload of the kitchen staff.

Result: I’ve seen labor cost be reduced by 10 to 15 percent and we are working on this more to get better results, but still paying good to great wages and maintaining a prideful, happy kitchen.

4. Scaling the menu

This can be a tough one to change but we have found that some change is helpful to kitchen labor management.

Evaluate station productivity

How many stations do you run throughout the day? Could lunch exist with one less station? How about dinner? Are there more efficient ways to make a dish that is very similar to the one you are doing at this extra station? We are finding some dish-up type items can work equally as well if not better than made from scratch sauté type dishes. Spend some time with your key kitchen people challenging them to create dishes that are more efficient to make.

Follow the trend line of kitchens of the future

The staff wants to cook interesting and creative food. This goes without saying. They need to become more adaptable to current conditions and get out in front of the trend line of kitchen staffing, being economical,

maximizing their resources, etc. The current labor conditions in the marketplace are not allowing us to have a staff as robust as it was some five years ago, so we need to make changes in the way we approach the situation and come up with solutions.

Results: We are gaining on productivity and beginning to change the menus to be more labor friendly. I am seeing staff members do their jobs more easily and more quickly with more consistency in the finished product.

Read more
Categories: Articles, News Room