Weathering a Demand Dip: Three Ways To Improve Margins With Flexible Staffing

Shifts in demand cut into thin margins, but flexible staffing combined with the right technology can help restaurant operators stabilize costs without compromising quality.  

Food quality is a huge focus on “The Bear,” a hit TV series that, for anyone in the industry, perfectly captures the chaotic, passionate and utterly relatable reality of restaurant life. While Carmy’s kitchen thrives on a consistent, almost family-like staff with deep personal buy-in, many hospitality businesses must leverage flexible, temporary teams to manage last-minute demand. So, how do you deliver that 'Every day is the freaking Super Bowl' service, where 'Every night you make somebody’s day,' when your team might not have years of shared history or deep commitment?

Another huge theme in "The Bear" is the constant, precarious tightrope walk of maintaining profitability – a reality every restaurateur knows intimately.

Restaurant operators in real life understand the value of great service, but it’s difficult to staff at the right levels when demand fluctuates in an uncertain economy. Many guests have less disposable income today because wages haven’t kept pace with inflation. According to KPMG’s Consumer Pulse Summer 2025 report, Americans plan to cut their restaurant spending by seven percent this summer. More than two-thirds say they’re dining at home more often to save money. So, what’s a restaurateur to do? Here’s a look at three ideas that can help you weather the demand dip while providing service that inspires guest loyalty.

Reduce Costs and Increase Revenue by Preventing Over or Understaffing

As a general rule of thumb, restaurant operators should aim to keep labor costs around a maximum of 35 percent of their total cost – however, in fast food chains with no table service, this target can fall to 25 percent. Yet, many restaurants overspend on labor without realizing it due to siloed staffing systems, manual processes and a lack of workforce data creating blind spots.  

Data that provides deeper insights into how individual locations and workers perform can help restaurant operators minimize labor costs and maximize revenue. Poor workforce visibility comes with a hidden cost — if you’re unsure how much you’re spending and precisely where the money is going due to manual inputs and disparate staffing systems, you won’t be able to hold the line on labor expenses.  

When you put technology in place that allows you to easily track costs like agency fees, overtime expenses, vendor performance, staff attrition rates and training costs, you’ll have the information you need to manage labor costs effectively.   

Consolidate Vendor Contracts to Save Time and Money

Given the thin margins restaurants work on, operators must scrutinize costs closely to avoid unnecessary charges, including staffing agency fees. Are you using several vendors to help find staff when demand rises? Are onboarding processes inconsistent? If so, you have an opportunity to reduce costs and improve efficiency.  

If you’re using multiple agencies to staff for the same positions, consider negotiating more favorable terms with fewer players. Higher volume can translate into lower fees. Or, as a growing number of restaurant operators are doing, take a look at building your own talent pool. A workforce management platform that supports flexible staffing can allow you to identify people who are a great fit for your operation while avoiding excessive agency fees.   

Identify and Make the Most of Staff Strengths

Labor costs and staff shortages remain a central concern for restaurant operators. Last year, labor costs rose six percent in the U.S. restaurant sector, which was almost double the increase experienced by businesses as a whole. So, it makes sense to focus on labor costs and make sure you’re maximizing the strengths of your workers.  

As you evaluate operations to control labor costs, you’ll notice differences in worker styles that affect the guest experience. If you use a workforce management platform that generates performance and revenue data, clearer insights will emerge. For example, some workers are ultra-efficient, which makes them a huge asset at your busiest times.  

Others may be less suited to managing the pressure of the weekend dinner rush but are adept at spending time with guests and suggesting dish and beverage upgrades that increase revenue. With a platform that provides performance and revenue data, it’s easier to spot the differences and assign staff to roles that emphasize their strengths — while demonstrating that you appreciate their unique abilities.  

Flexible Staffing and Technology Can Reduce Labor Costs

Five years after the pandemic rocked the hospitality sector, restaurants are still struggling with demand fluctuations and the need to quickly fill open positions while keeping agency fees to a minimum. Workers who are open to flexible staffing arrangements are a growing part of the U.S. labor force, especially among younger generations.  

Restaurant operators who embrace this approach and implement technology that can deliver insights on performance and revenue will have the tools they need to cut excess labor spending, avoid unnecessary agency fees and accelerate hiring and onboarding when demand picks up — all without compromising service quality.