Monday, January 25, 2010

Low Productivity can be the kiss of death.

New entrants to the food service industry, be it fine or casual dining or fast and furious will find labour management control a daunting task.
Here we take a closer look at productivity and its impact on profitability.
Too many hours on a roster burns margin, not enough hours  places stress on delivering a guest service philosophy that will maintain repeat business.


Restaurant scheduling software can tell you that Mary cannot work on Tuesday between 7.00 pm and 10.00 pm because of netball.
These systems are great time savers and report compilers, but invariably take considerable time and effort to understand whether your restaurant is operating at  peak productivity and profitability.
Easy with a calculator, just divide the total Sales in $ for any given week by the total hours worked  in the given week.
So….Projected  restaurant sales of $ 10,000 and total hours worked 250 including Management hours …{ 10,000 / 250} = $40  Productivity per labour hour worked.
So low productivity is the kiss of death for restaurant profitability. This might sound like simple stuff.  “Like my Labour Scheduling software cost $ 4000  and I know every thing about labour control. “
……not the real thing.
How often have we heard, “How can we increase productivity”
Too many restaurant operators that  have state of the art systems but still struggle in this area of effective labour management. control.
The last POS /  labour scheduling  system we deployed in a La Porchetta in West Gosford near Sydney was  A$32,000 . WOW…  With all the bells and whistles we still had to rely on the basics of  labour management control to achieve results.
Back to basics then…
Productivity is king here and you need to have a very clear perspective of  what the real productivity of your restaurant or food operation is in $ sales per labour hour worked / scheduled.

Download the xlsx file for Rate,Labour % and Productivity Matrix here

This  is  a simple spreadsheet that will :-
1   Tell you how many hours to place on a weeks roster if you project $10,000 in weekly Sales and want $40.00 in productivity. Alternatively if you want 25 % labour then you need a $40 productivity to deliver 250 hours.
2 And if you have an average rate of pay of $10.00 per hour worked ( Including Management ) then the Labour % is 25.00 % and you don’t  need a calculator to understand that there is a 75% Gross Profit margin after labour costs . {10/40x100} = 25 %-100% =75%
Partial screenshot of  average rate, labour % & productivity Matrix 

Labour Matrix


This matrix includes Management/Owner Operator hours. This is advisable as we are looking at a Manager Controllable here and want a clear picture of the total impact of this cost on the business.
Every operation has its own roster or scheduling structure that will determine the optimum number of hours to allocate. This structure will allow for
    1. The ability to deliver a quality product in a short time.
    2. The ability to deliver a guest service philosophy that is FAST. Friendly, Attentive, Speedy and Thoughtful.
    3. The ability to maintain high standard in cleanliness and operational efficiency.

Low productivity is the absolute kiss of death in any food operation.  Quantifying, projecting  and tracking weekly productivity will quickly highlight where roster scheduling can be improved to maximise productivity.
Next, we will take a closer look at the average labour rate and how this can be structured to deliver a better bottom line.

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