Operating a lucrative restaurant requires you to examine ways you can increase efficiency and sales while reducing costs. Not exactly the top three reasons someone decides to open up a restaurant. But with the right tools and technology supporting your workforce and inventory management strategies, you can conquer every shift!
Labor costs. Staffing shortages. Supply chain issues. This is the new normal that restaurants must conquer to achieve sustained profitability.
Managing inventory and people in real time is complex. Predicting future demands is even more challenging. But with the right strategies and technology in place, you can simplify the chaos of workforce and product management to Conquer the Day.
Operating a lucrative restaurant requires you to examine ways the restaurant can:
In crafting a plan to achieve your profitability goals, there are two areas of opportunity to examine:
This guide outlines actions you can take to run your restaurant more efficiently. From managing inventory and
engineering your menu to engaging employees and optimizing scheduling, learn 10 ways to improve your
Labor is not only one of the largest expenses a restaurant faces but often the most unstable because of over and understaffing. Ranging from 25%-35% of sales, labor costs include not only hourly wages and salaries, but also related costs such as benefits, vacation, sick pay, payroll taxes, and overtime pay.
Luckily, it’s also an area of great opportunity as streamlining your administrative tasks and optimizing and empowering your workforce can significantly impact your profitability.
Hourly hiring remains a top priority for operators, but finding high-quality applicants and managing sponsored job postings is a time-consuming and daunting task. And with popular job boards beginning to evolve their sponsored post programs—resulting in higher ad spend costs—recruitment challenges and expenses only continue to grow. But with the proper Applicant Tracking System (ATS) and AI-powered programmatic bidding, you can reduce your cost per application, increase quality application volume, and lower your cost per hire.
Traditional forecasting is time-consuming and subjective, resulting in frequent and costly errors. Using data-driven AI to create accurate and predictable labor forecasting and scheduling models, however, gives restaurant operators a powerful tool to manage ever-changing swings in demand while fighting inflation and razor-thin margins.
AI labor forecasting uses machine learning algorithms to analyze millions of internal and external data points, including years of historical sales data, promotions, holidays, and more. This extensive analysis is automatically calculated, removing common industry issues like manager turnover and human biases from the equation, resulting in a more accurate demand forecast that continues to learn and improve its calculation day by day.
While it may seem counterintuitive for the hospitality industry, restaurant employees value flexible work schedules as much as their corporate counterparts. Not only do they appreciate receiving their schedules more than a few days in advance, they want to have the option to adjust the schedule once published.
The ability to easily swap, drop, and pick-up shifts is table stakes when it comes to retaining frontline workers. If this can be accomplished from a mobile app, it’s even better! It’s ok to require manager approval on shift changes, but employees need an easy way to put in these requests.
It’s also imperative to improve ease of communication between employees and their managers. Restaurant and hospitality employees are 5x more likely to quit in their first 90-days over miscommunication. Look for workforce management solutions not only offering schedule flexibility, but communication tools like direct messaging, group messaging, and broadcast announcements.
Get the right systems in place to properly record staff time off and calculate the associated costs. By understanding your team’s availability and required time off you’ll always stay compliant with legislation and be able to set the right staffing levels. And by always keeping absence records up to date, you’ll be able to manage underperforming team members.
With the time and effort it takes to recruit and train a new team member, it’s easy to see the financial impact of high staff turnover and why doing everything possible to retain your best staff is so important.
At best, unengaged employees will simply turn up and do the job on a day-today basis. At worst, they’ll be a negative influence on other members of staff and negatively impact the customer experience.
Engaged employees are more productive, less likely to be absent or to leave. They go the extra mile, become brand ambassadors, brainstorm and share ideas, give feedback openly and feel a sense of achievement.
Companies that address employee engagement see customer satisfaction rise 10 percent and sales grow by 20 percent on average, The Gallup Blog reported. And, because they’re receiving a better service, customers are more likely to spend more and become repeat customers.
Asking for feedback is one of the best ways to engage your teams. Workforce management solutions that offer anonymous pulse surveys and end-of-shift surveys will give you an easy opportunity to ask for regular feedback while keeping a pulse on satisfaction and happiness levels.
69% of hourly employees admit living paycheck to paycheck; 70% say financial stress has a direct impact on their physical health, and 79% worry about personal finances while at work. This presents a major obstacle for the restaurant industry. To better develop leaders to support future profitability and reduce turnover, businesses must address the challenges faced by their employees head-on.
With on-demand pay programs employees can access a portion of their earned wages before payday, often at no financial risk to the employer.
There are several ways you can create efficiencies and reduce costs of products purchased for your establishment.
Food waste in a restaurant happens for a variety of reasons including out-of-date stock that needs to be destroyed, items dropped or spilled, and food leftover by a customer.
The food you serve and the menus you create need to drive demand and deliver profitability. Menu engineering is the process of creating a collection of recipes to form a menu for your business, while accounting for potential costs, waste, sales, and profitability. Automating this process and moving it from spreadsheets to a menu engineering tool supports increased profitability.
Food and drink is typically the highest cost after labor in a hospitality business’s P&L – so counting stock is an essential part of every operation. You need to know what you’ve bought, returned, and sold. Good stock accounting should also link to invoice and credit management so you can understand the value of your stock and know precise numbers for cost of sales, profit, and revenue.
It’s important to choose the right vendors and negotiate good purchasing deals with them. It’s just as important to manage the ongoing relationship, making sure all parties are communicating and working together toward common goals. Establishing business partnerships means working together in trust and good faith. Once your vendors are invested in your success, you can work to ensure you are receiving the best pricing for the contracted products and services.
With all the demands of running your restaurant, you’ve got a lot on your plate – but taking these steps will help you improve your profitability. Once you’re set up to optimize your product and empower your workforce, there is even more opportunity for you to generate savings by increasing efficiencies and reducing costs.
With all of your data in one place, you can have full visibility that will translate to better informed decisions. A complete view of your purchasing and inventory data, and financial performance allows you to understand your highest performing items, your best days, and much more. Bringing in data from other applications can deliver deeper insights. Armed with that data, operators can have new power to learn about customer behavior, identify areas for improvement, and make changes.
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