Four Ways Modern Labor Management Helps You Respond to Rising Minimum Wages
4 Min Read By Greg Staley
While careful labor management has always been an important part of controlling prime costs in the restaurant industry, operators should be looking toward better ways to manage labor costs with competition for labor increasing and a potential minimum wage increase on the horizon.
Many operators are still relying on their general managers’ gut feelings when it comes to schedule creation and enforcement. Among restaurant operators who aren’t, some may be working with out-of-date or simplistic software, and others are still writing schedules manually, rather than taking advantage of the predictive tools in more modern software.
Margins are already thin enough that any improvement in labor makes a difference, but if the minimum wage increases, the impact of optimizing your labor will be greater than ever. I know implementing new technology can feel like a big risk in an uncertain environment, but restaurants who move to an up-to-date labor management platform will be the ones best positioned to handle any state or national minimum wage increases with the least effect on the bottom line.
1. Smart Scheduling Assistance
No matter how good a general manager you have, there’s always some degree of gut feeling that goes into writing a schedule. And that doesn’t even count trying to remember who asked in passing for Saturday off or combing through texts to make sure an open shift was getting covered Friday night.
Over and underscheduling are both major problems in their own right. While overscheduling eats away at profitability, underscheduling leaves guests with poor service and long wait times. Cloud-based labor management software uses predictive algorithms to analyze historical sales data to create optimized schedules based on the labor needs during different times of day and days of week. This helps you walk the line of great service with as little wasted time as possible.
Additionally, your managers will save time by letting employees manage their own schedules—availability, swaps, picking up open shifts and more—via cloud-based software, with one-click approval from the manager.
Labor software is the next area of innovation for companies struggling to keep their labor under control. I know it’s tempting to keep using more familiar methods but doing so will ultimately lead to even thinner margins and frustrated guests.
2. Holistic View of Labor Metrics
Modern labor management systems can crunch the numbers from across your entire operation in the time it takes a regional manager to consolidate two spreadsheets. When it comes to collecting and analyzing data, efficient labor management software is built to augment your team.
This frees up your general and regional managers to use their time and institutional knowledge to help train employees, improve store processes, or other tasks not as easily done with software.
Not only are you able to collect data metrics from every location in real time, your labor dashboards can provide instant reporting on whatever is most meaningful to your business, such as labor cost percentage, break entries, labor summary, sales per labor hour, and more. Being able to see and understand the information that drives your business is a critical part of controlling prime costs.
3. Data-Based Decision Making
Once you have all the data available in an easy-to-understand dashboard, you are able to make decisions driven by data rather than intuition alone. Track hours, wages, tips, performance, and adapt accordingly.
You can see which employees may need a little extra training to become more efficient, which shifts should go to more experienced services, or whether break rules have been violated. Any anomalies with specific employees or stores will also be visible so you can make adjustments as needed.
This all helps you foster a more collaborative and efficient restaurant that is not only better for guests but plays to the strengths of your employees. You can apply lessons learned in standout locations to other stores and help boost performance across the brand.
4. More Impactful Savings
Restaurants using modern labor management tools are already seeing savings on their labor costs, but as wages rise, the impact of these savings will only become more apparent. What may now be $2000 a month saved, could easily double or triple with a higher minimum wage.
The principle of how the labor management tools work remains the same, but with labor becoming a larger percentage of your prime costs, any optimizations you can make will be felt exponentially more. By the same token, any missteps in a manual or outdated process when writing the schedule could crater profitability that week.
There will come a tipping point as wages rise where restaurants working to manage labor without modern, cloud-based tools will lose the margins in their labor. Preparing to find a solution now still allows you to reap the benefits of profitability improvements, while setting you up for even bigger savings when minimum wage increases are implemented.
It can be daunting to think about investing in updated labor management software following a year that has been as disruptive as this one. However, with more disruption on the horizon in the form of rising minimum wage laws, it’s critical to find a solution that will help you stay profitable no matter what comes at you.
Modern labor management tools will have a growing role to play in successful restaurant operations. Operators are going to face stiff competition for labor as employment and dining normalize. Modernizing your approach and toolset now will keep you nimble and profitable as the restaurant industry faces new challenges.