By assessing your data, you can find the right balance for employee productivity
By Clifford Bramble
As you read this article, you may be working twice as hard as you were last year. You may even be working harder than you were pre-COVID.
Since the shortage of employees, many employees and owners are doing the job of two or three people. So we all know we are productive. But while that may be great for the bottom line, it weighs heavy on the individuals doing the job.
Picture this: A great employee is serving but has previously been a cook and a general manager of a restaurant. Since the restaurant is short-staffed in the kitchen area, the server says, “Hey, I can cook if you need me.” Since she is only serving in the evening hours, she can now be a cook for the lunch hours. Before you know it, that same employee is now washing dishes on their day off and pulling back-to-back shifts for six days straight.
For everyone involved, this is a dream staff member and a very productive one. But the employee can only do this for so many days before they need a day off. This brings us to productivity. Hopefully, this information will assist you in honing in on areas that need help.
Attention to Data
Have you ever walked into a business and observed the employees leaning on a wall? How about walking into a restaurant and seeing all of the servers sitting down waiting for their guests? Probably not, but an employee hanging around not doing anything is considered non-productive. In a restaurant or any business, there is always something to do. (Especially right now!)
Productivity in a restaurant is an area some pay attention to and others may not. Specifically, hotels may pay more attention to this number than restaurants. However, I prefer to pay attention to it because the resulting data helps me understand how productive the business is during a specific period. So, what is the productivity number? In a restaurant, it’s the sales per labor hour. In other industries, it could be the number of products made per hour/day/month.
The data needed is the number of hours worked during a sales period to arrive at this number. The sales are divided by that number. (Number of hours worked.) The result will be the actual sales per hour. For example, if an employee is paid an average hourly rate of $10 and the incoming sales are $50 per hour, the restaurant should be profitable.
If the sales per employee hour are at $70 or above, in my opinion, the restaurant is making a 20% profit. The reason is straightforward. They are taking in seven times more in sales than the business is paying out in labor. Again, this number is an excellent way to see the productivity within a company.
The goal is always to watch this on a day-to-day basis. As long as the sales are consistent, the productivity number should be about the same.
Labor Hours Per Cover
This topic is unique to many. It’s unique because so many people do not look at it. Personally, it’s an excellent indicator of how well a restaurant is doing on a productivity basis. If anything, take a look at your hours, labor and sales and see what your number is. You may be surprised that it is so good, or on the other hand, it may be too high.
One thing for sure is that the productivity number will vary on a shift-by-shift and manager-by-manager basis. The reason is simple. Every manager cuts staff at different times, and sales may arrive at the end of a shift, thus keeping the team on longer than expected. Of course, some managers don’t cut staff at all, but after reading this, you may think it is an excellent time to hold them accountable to do so.
Labor hours per cover is another number telling the business how many hours it’s taking to serve one guest. Think about it. Knowing the number of hours it takes to help a guest and the hourly rate results in the total labor cost to serve one guest. For example, if the employee is paid an average of $10 per hour and it takes them .88 of an hour to help one guest, the labor cost is $8.87 to take care of one customer. (See example below.)
The goal is to have the lowest number under one (1) as possible. When the number goes above one (1), profit per guest will be reduced. This number gets applauded for being low. While this is simply an exercise, it’s an excellent barometer of the team’s productivity.
Average Rate Per Employee
Within a full-service restaurant, typically, each position has a job code. Each position also gets paid a different hourly wage. In this example, there are five positions: cook, server, bartender, host position and manager.
The cooks, servers, bartenders and host positions are paid at an hourly rate. The management is typically a salaried position, so the management should not be included in the average hourly rate. Stay with me here.
To maintain a budgeted labor percentage, it’s essential to know the average hourly pay rate. For example, the cook makes $15 per hour, the bartender and server make $2.50 per hour, and the host makes $11 per hour. Adding them together and dividing them by three will give an average rate of $9.50 per hour. So, the data to analyze here is the average rate of $9.50 per hour. By knowing this number, management can understand why they may pay one person a higher rate per hour and others lower.
Lastly, by scheduling to the budgeted or scheduled sales and hours, management should know the percentage of labor before they post the schedule. Think about it. If the manager overschedules before posting a schedule, the labor percentage is already too high. But by knowing the number of scheduled hours, total scheduled labor dollars and scheduled hours, management will know their numbers before the schedules are posted. If you haven’t used hot schedules, it may be something to look into. But, again, the app does a lot of this for you and keeps you on track with your expected numbers.
***Part of this article is an excerpt from Cliff’s new book, The Business Side of Restaurants, which can be purchased on Amazon or Barnes & Noble. Cliff owns Hungry Hospitality, which is a restaurant consulting company based out of Atlanta. www.hungryhospitality.com
With 40 years of restaurant and hotel experience in all restaurant segments, Cliff Bramble has built restaurants from the ground up, retro-fitted restaurants, opened Marriott Hotels and, since 2004, has co-owned and operated nationally recognized restaurants throughout Atlanta. Cliff co-founded Rathbun’s, Kevin Rathbun Steak, Krog Bar and KR SteakBar and was the owner of Noble Fin until June 2020. He has first-hand knowledge in banking, finance, development, real estate and overall business expertise, assisting in all levels of business. Look for Cliff’s new book, The Business Side Of Restaurants, which provides 18 steps to analyze data that makes a restaurant more profitable, on amazon.com now. Currently, he owns Hungry Hospitality, a hospitality consulting firm focusing on all aspects of the restaurant business.