How to Get Restaurant Wage Costs Down to 20%

There was an audible gasp and some alarmed looks when business accounts expert Trudi Yip told our Smart Operator workshop that 20% wage costs are achievable. In a restaurant or cafe. With Australian wages.

I received a couple of concerned emails the next day about this figure, and asked Trudi to explain her bold statement. It fitted in with the final part of her presentation when she reminded us of the importance of sales building to manage business costs. Fixed costs (rent, insurance, interest etc), fall as a proportion as sales rise, but wages are a variable cost – they go up and down according to how busy you are. Do you want to stick with the ‘typical’ restaurant wage figure of 43-45%, or go for the 20% challenge – the difference goes straight to your pocket.

Right now, you could:

  • Start using real-time cloud based rostering, so you know to the minute what your wages are during the week. No more rear-vision-mirror management – when you find out your costs after it’s too late. Tools like Deputy, Tanda, ZenShifts or Hot Schedules are worth exploring, and cost surprisingly little.
  • Take a hard look at the days or day-parts when your sales are low and wage costs high – do you really need to be open?
  • Get the manager and chef doing their own costed roster – give them management access to the rostering system, and set a budget they can’t exceed – ‘chef, you have $4000 for the week to cover all your staff costs – how will you organise it?’. You’ll be surprised what they can do.
  • Rethink the food you make from scratch compared to what you can buy in – lots of quality options available.
  • Update to labour-saving equipment – eliminate more of the tedious hand work.
  • Cross-train staff between kitchen, bar and front-of-house. You’ll save wages if the bar guy can help out with dishes, or a waiter can restock the bar… instead of calling in an extra person. It requires skills training plus a shift in attitude.
  • Say goodbye to your least productive staff member – the one you’ve held onto for too long. Everyone else carries them – do they need to be replaced?

We’ll leave sales growth for another time – plenty of information at Profitable Hospitality on that.

photo courtesy of brandeemeier