Business and Operations
A labour of love
May 16, 2011 By Michelle Brisebois
The road to profitability is paved with well-controlled costs. While
expenses related to ingredients and supplies can be regulated with some
careful planning, wrestling your labour costs to the ground can be a bit
more challenging. Customers may trickle in or descend in a swarm
without rhyme or reason. It can be incredibly difficult to predict your
staffing needs, but balance can be achieved by controlling the things
The road to profitability is paved with well-controlled costs. While expenses related to ingredients and supplies can be regulated with some careful planning, wrestling your labour costs to the ground can be a bit more challenging. Customers may trickle in or descend in a swarm without rhyme or reason. It can be incredibly difficult to predict your staffing needs, but balance can be achieved by controlling the things you can.
Know your numbers
Your payroll for the week divided by your total sales for the week equals your labour as a percentage of total sales. As a rule, many restaurants target a labour spend of less than 20 per cent of sales while bakeries may run as high as 29 per cent. Only you can determine what the best target is for your operation. Track your labour as a percentage of sales for a few weeks to get a sense of what “normal” is for your bakery. With this baseline, you’ll be able to see fairly quickly if you’re veering off target.
Know your players
List your staff members and their hourly pay rate. Chances are there are some people on your team who make more than others because of tenure or other skills. When business is slower, you’ll want to schedule these people carefully, as their associated labour cost can add up quickly over a few shifts. These veterans may be quite valuable because they bring a variety of skills and expertise to the business, but this means you must be extra diligent about how and when you utilize them. If you’re hesitant to cut back their hours because these employees have been with you a long time and have been loyal, you may be surprised to find out they’re at a stage in their lives when a shift or two a week is just right. Investigate if it’s a win/win to let younger, less expensive team members take a larger part of the load.
Know your ebb and flow
Plan your schedule weekly for all employees instead of posting the same schedule every week. Relying on a fixed schedule week after week doesn’t take into account the shifts in projected sales, variations in the weather or other factors that can affect your business. If you’ve created a business plan for the year, you should have your projected sales, which can be broken down by week. Forecast your projected labour spend as a percentage of your projected sales, then you’ll know how many employees to plan for. Adjust the number of staff scheduled each week to comply with weekly budget constraints.
Know the cost versus benefit
Are there value-added frozen dough products that could be used strategically? While your signature items may be made from scratch; perhaps there are smaller categories where a frozen dough or par-baked product could fit the bill? Many portioned frozen dough formats can still be customized, saving you labour costs, yet ensuring consistency.
Know who can roll with the schedule
Make sure you have some flexible team members who won’t mind being sent home if it’s slow or, conversely, mind being called in at the last minute if it gets busy. We can’t always predict traffic patterns, so there will be times when an extra pair of hands could help generate more sales or fewer hands could mean greater efficiency. While being able to give employees stable schedules is important, so is the health of your business. Tough calls have to be made.
Know who’s a generalist
If you have fewer than 20 employees, chances are that you’ll need a good team of generalists. If anyone on the team doesn’t feel comfortable opening, closing or using your POS system, you’ll have to bring another person in to address these gaps. Try to train everyone to be capable of handling a customer transaction adeptly from start to finish. If they’re resistant to the training, you may need to look at addressing the issue formally. Also, try not to succumb to hiring under the pressure of being short-staffed. This can lead to hiring errors. You need to be thorough and patient when hiring staff in order to get a desirable team together. More problems are created by hiring when desperate.
Know when to fire yourself
It can be tempting to start taking more shifts yourself to control labour costs. This is a short-term solution because, as the business owner or leader, your skills are better deployed elsewhere. Businesses need a captain to plan, negotiate and manage. If you’re busy working in the bakery instead of on the bakery, you may need to fire yourself from that hourly position so you can grow the business.
When the costs begin to climb, anxiety levels rise as well. Keep in mind that simply paying your employees less will not solve labour cost issues and it will hamper your ability to attract strong talent. The keys to controlling labour costs are improving workplace productivity and scheduling your employees wisely. After all, who needs labour pains? / BJ
Michelle Brisebois is a marketing professional with experience in the food, pharmaceutical, financial services and wine industries. She specializes in retail brand strategies.
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