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Four Strategies to Reduce Your Restaurant’s Labor Costs

In the fiercely competitive restaurant industry, finding ways to trim labor costs without compromising quality is imperative for sustained success. This article delves into four strategic approaches to reduce labor expenses without compromising quality or service. From analyzing current costs to harnessing the power of automation, these tactics offer a roadmap to greater efficiency and profitability for your restaurant business.

1. Analyze Your Labor Costs
The first step is to analyze your current labor costs to identify areas where you can reduce expenses. This can include analyzing labor hours, employee schedules, and labor productivity. To really understand your labor costs, you should compare them with your sales. This will help you to determine which shifts are overstaffed, resulting in wasted labor. This data can help you build better schedules, ensuring you are never overstaffed or understaffed, because both can negatively impact your profitability.

2. Cross-Train Your Employees
Cross-training your employees can help reduce labor costs by ensuring that each employee can perform multiple tasks across different departments. This reduces the need for additional staff during busy periods while increasing productivity during slower times. It also creates more flexibility when someone calls in sick last minute.

3. Leverage Automation to Streamline Your People Management
There is no better way to save money, than by saving time. And restaurant automation achieves just that. Mundane, repetitive tasks, such as scheduling staff, validating hours worked, and processing payroll can all be completed in minutes with a people operating system, like our partner, Push Operations. By automating and streamlining every aspect of your people management, you can greatly reduce your restaurant labor costs. 

A people operating system can reduce restaurant labor costs by:

  • Processing payroll with the push of a button
  • Creating automated optimized schedules
  • Populating alerts when someone clocks in or out outside of their scheduled hours
  • Leveraging facial recognition to prevent buddy punching
  • Offering employee self-serve vacation requests and shift swaps
  • Creating and tracking all tax documents
  • Building reports to track labor costs and revenue across all your locations

4. Reduce Employee Turnover
High employee turnover is costly for restaurants, as it leads to increased training costs and reduced productivity. Employee turnover costs, on average, $5,864 per person for a front-line position — and from August 2021 to August 2022, the average restaurant employee tenure was just 110 days. Implementing measures to improve employee satisfaction, such as offering flexible schedules, providing training opportunities, and offering a competitive compensation package can help reduce turnover rates.

In an industry with razor-thin profit margins, every penny counts — but you don’t have to sacrifice quality to increase your profits. Reducing restaurant labor costs can be achieved by cross-training your team, leveraging people management software, and reducing employee turnover. By implementing these tactics, your restaurant can operate more efficiently, allowing you to increase your profitability without compromising on quality or customer satisfaction. 

Push Operations can help you save thousands on your restaurant labor costs. Book a demo to get started!


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