This blog was originally produced for Hospitality Technology.
As the second-highest cost at your restaurant, labor and the best way to manage it will always be a focus for successful operators. As labor becomes more expensive across the industry, however, restaurant businesses are seeking ways to optimize costs as best they can.
In the industry research report, Building an Insight-Enabled Infrastructure, Hospitality Technology reports that overwhelmingly restaurants see the greatest worth in keeping labor in balance — 89% say that labor percentage data is mostly or totally valuable.
Unfortunately, maintaining that balance is not as easy as many would hope. According to TDn2K’s People Report, about 70% of restaurant companies are experiencing intensifying labor scheduling difficulties for hourly restaurant employees and managers.
It is in this heightened labor environment that advanced forecasting tools can truly show their worth. Accurate forecasting is the key to profitability, allowing your restaurant operation to:
- Optimize and avoid costs
- Increase sales
- Improve guest satisfaction
Restaurants who want to win in today’s competitive environment should focus on providing an optimal guest experience that drives repeat traffic, higher check averages, and positive social media sentiment. The less planning a company does upfront to create accurate sales and labor forecasts, the more that is going to impact their business performance down the line.
With advanced labor forecasting based on activity, historical data, and business rules based on corporate-level labor modeling and analysis, brands can build efficiency and grow revenue despite how the labor market is trending.
At some point, you have to get scientific about your operations and your labor to stay ahead of shifting market conditions and the competition.
Top 5 Ways to Leverage Smart Tools to Cut Labor Costs
If your brand is considering adopting advanced forecasting technologies, here are some things to keep in mind.
1. Schedule Labor Beyond Simple Coverage
When you are just starting to get controls around your labor scheduling in place, a blanket or block scheduling approach will cover you and deliver some awesome initial time and money savings. At some point, you have to get scientific about your operations and your labor to stay ahead of shifting market conditions and the competition.
2. The Larger the Operation, the Greater the Need for Advanced Forecasting
As your business grows and adds locations, you start to see every single interval of time as a way to optimize your labor. Literally, every moment counts. Therefore, the more accurately you can schedule labor at the store level, the more accurate your entire business can be. That is a powerful insight for leadership and a confidence-booster for investors.
3. Leverage Algorithms in the Technology to Automate Shifts and Hours
At each interval of your daypart or shift, an activity drives a labor need. Advanced labor forecasting technology like HotSchedules’ Activity Based Forecasting module pulls in all of your restaurant’s historical data and applies an agreed upon set of business rules to automatically generate shifts that optimize your costs and your people. The result is a labor blueprint that your managers can follow and trust.
4. Technology is a Tool to Coach Your Managers
When your managers understand how their daily decisions about labor impact your bottom and top line and you have the right rewards system in place, you’re going to see consistent results.
5. Drive Accountability with Reporting Systems
Advanced labor forecasting takes the subjectivity out of your restaurant employee scheduling. That is not to say there is no flexibility in the system or ways to empower employees to manage their schedules – all of those exist to complement the labor blueprint. With activity-based forecasting, the data does most of the talking, giving everyone across the organization an objective view of what is happening. There is power in that level of accuracy and accountability.