In May 2015, Ron Ruggless ( @ronruggless ) covered The Shifting Labor Landscape on Nation’s Restaurant News.
Here’s a quick synopsis if you haven’t seen the article:
· Restaurants are worried about the changes to wage and tip regulations in swing states like New York and California.
· According to one restaurant owner’s predictions, the wage increase is going to creep all the way up through the organization, resulting in a 15-30 percent increase in labor costs.
· Restaurants (or other institutions) that employ hourly workers will have to take action to manage the administrative burden associated with the changes in tip and wage regulations (if they aren’t already).
The article also did a good job of outlining some strategies to navigate the rocky wage waters. Restaurants could, for instance, eliminate tipping and take no tip credit. They could allow tips but take no tip credit. Or they might charge an administrative fee and eliminate tipping altogether.
All excellent options that got us thinking … what else can restaurants do to get ahead of this administrative nightmare and keep labor budgets from boiling over to uncontrollable levels?
On the surface, restaurants are really just looking at a simple equation. Restaurants don’t want to and can’t change revenue or profit. Yet, you’re being told that one of the most expensive cost centers in your operation – labor – has to go up no matter what.
The challenge is pretty clear. Operators need a way to set a budget for the amount of labor they can schedule on any given day and still keep revenue and profit the same.
A lot of times this happens at the top of the organization on a macro level. But in order to actually get control over those labor costs, scheduling managers need a way to easily track their labor budgets at the store level. This is where we move away from a simple math problem. Now restaurant managers need to track sales (from the POS) and labor (from paper and spreadsheets?) every single day, every single week, every single month to figure out if they’re over, under, or sideways.
This is the challenge one commentator in the article identified when he said: “the small guys aren’t going to be able to deal with [the costs].”
What should come after that statement is a big “UNLESS.”
Small guys used to paper and spreadsheets aren’t going to be able to deal with the wage increase unless they give managers tools that make it possible to keep track of labor costs and budgets – something that can be easily accomplished using online scheduling software.
An online scheduling tool can do things like:
· Integrate labor data with historical sales data to predict optimal staff levels.
· Set and track labor budgets to get a better control on actual labor costs.
· Create more accurate schedules in less time because data is all in one spot.
The wage increase conversation isn’t going away, and it’s going to force restaurants to get really close to their numbers and use them to make intelligent scheduling decisions on a daily basis – a calculation that can’t be done quickly through spreadsheets.