Are You Truly Optimizing Your Labor Cost?

Learn how advanced forecasting capabilities helped one Fourth Customer achieved labor savings with smarter deployment of hours

Success in the restaurant industry depends on many things, and the ability to control labor costs is at the top of the list. An inefficient and ineffective labor strategy can lead to unnecessary cost, disgruntled employees, and decreased guest sentiment.

When it comes down to it, labor management is an exercise in optimization — it’s about finding the right balance between the quantity of staff and quality of service. And since labor touches everything in your business, operators need to examine everything when devising their labor strategy. That means looking at:

  • Table configurations
  • Ergonomics
  • Section sizes
  • The experience level of the employee building schedules
  • Forecasting practices

That last bullet is key. How is your business forecasting? And how accurate are those forecasts? With accurate labor forecasting based on activity and data, you can build efficiency, grow revenue and positively impact the restaurant’s bottom line.

Advanced forecasting technology gives you the capability to forecast at the quarter-hour level. Instead of bringing in extra staff “just in case,” managers are able to accurately predict the absolute minimum staff needed based on your restaurant’s historical data and your unique business rules.

The Benefits of Optimized Labor

Experienced managers have a pretty good idea of the sales their restaurant will do in a given week — it’s true. But a standardized labor model with accurate forecasting can help those managers get even better. It removes the guesswork from the equation.

When your schedules are based on realistic performance, it can drive sales and makes for happier team members. It ensures that you’re only using the hours you need and ultimately delivers labor savings. And it boosts guest sentiment because the team is deployed effectively.

But when your forecasts are inaccurate, it can lead to overcompensation and poor decisions. Maybe a manager under-schedules on a weekend in an effort to claw back any unnecessary labor spend during the week to hit their numbers. These decisions can affect both team member and guest sentiment, leading to turnover and decreased revenue.

An advanced forecasting solution can help you answer the million-dollar question: are you using your labor hours in the right place?

Watch Your Peaks and Valleys

These advanced forecasting methods give your business visibility into whether you’re deploying labor effectively, or if there’s room for improvement. For instance, maybe you have too many hours allotted in the downtimes of your day. Maybe there are ways to more productively use time during the day to achieve labor savings.

During our 2019 Spark Conference, Dave Lehn, Vice President of Information Technology for Noodles & Company, shared with the audience how he and his team realized a number of areas of opportunity during the rollout of Fourth’s Labor Optimization forecasting module.

With Fourth’ advanced labor forecasting, Lehn and Noodles were able to reallocate dollars to where they needed them most, reduced labor during their opening, closing and midday hours, and gain visibility into their forecasted vs. actual labor hours on a daily basis.

“One of the things we’ve discovered is that we do prep once a day in the morning, but it turns out that there was a fair amount of idle time in the middle of the day that we could take advantage of,” Lehn said. “So we moved some of the prep and in doing that, we built out a labor model to save about 1 and a half hours of labor a day across more than 40 locations.”

Their forecasting capabilities gave Noodles the opportunity to achieve labor savings without setting out specifically to cut labor and instead readjust their spread of hours to achieve significant results.

Learn more about how to optimize your labor spend and control costs with our free eBook!

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