There is no question about it, staff benefits are expensive. The question is whether your business is gaining or hurting because of it? We know the ability to attract good staff is one of the most challenging aspects for any restaurant business. Quitting, firing and rehiring are almost natural, that any manager or owner can expect. Sometimes money is just not enough to retain staff. Today, more people entering the restaurant industry are searching for companies who can provide extra compensation in terms of benefits.

Are you a new start-up?

A driving force behind implementing staff benefits is to understand your costs. Part of this costs analysis should examine the feasibility to implement benefits. A major factor affecting the feasibility is whether your business is a new start-up concept or is it a well established restaurant/chain. The cost of implementing benefits in a new start-up restaurant may outweigh the possibility of future growth and even survival. On the other hand, larger restaurants or chains can leverage their sales to cover the costs and at same time potentially offer a greater benefit package. Therefore, the very first step a restaurant must do is to identify the Pros and Cons that can affect their business.

Pros

• Potential to attract great employees
• Provides employee motivation
• Improve quality of work and life
• Potential to maintain lower staff turnover

Cons

• Cost a lot of money

There may be many more pros and cons of staff benefits, but these are the main points in which come to mind. Although the advantages may outweigh the disadvantages, it is still important to calculate the actual costs.

Where should I start?

Here is a list of questions you should answer to determine the cost of implementing any form of benefits.

1. How many staff do you have in total?
2. How many are full-time and how many are part-time?
3. Are you going to offer benefits to all your staff?
4. When will your staff receive benefits? After 3 months probation?
5. Will your staff receive all the benefits at one time or will be it broken down into several months?
6. What kind of benefits will you offer?
7. How much does each benefit cost?
8. What is the percentage of benefits to restaurant’s sales?

Okay, you have analyzed the cost and you have answered each of the questions listed above. If you believe it is feasible to offer benefits, now you need to know how it can benefit you and your restaurant.

Employee benefits can generate positive results for your whole restaurant. Staff become motivated, morale increases and staff turnover can potentially decrease. Restaurants need to be creative. The more attractive the benefit package you can offer, the more likely you can attract among the very best of employees.

Remember, we can always build upon what we begin. As your business grows, so too can the benefits. As a new start-up, perhaps implementing benefits may not be fit for you. Therefore, you should wait and place more focus on generating sales. Until you have achieved your sales goals, then you can slowly offer your staff benefits. Take note of what benefits you want to add on in the future and understand how they can benefit you.

We will continue on with part 2 of this post on Friday where we will discuss some of the biggest employee benefits in the restaurant industry.

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We have all experienced working with good and bad employees. A character’s attitude says it all. Attitude can determine an employee’s work ethics. Good employees learn to grow and bad employees will plateau. However, all employees have the ability to rise to a new level in their career, it’s a matter of whether they really want to or not.

Working with bad employees is something I have learned to tolerate. I have witnessed it over and over again, restaurant managers who repeat the same mistake in allowing bad employees to remain. Why do they do this? I had questioned this several times and tried to convince myself of the reasons. The saying goes,

“An employee who can do some work is better than having no one to work.”

Managers fear staff turnover. They understand the challenge of recruiting good employees. The difficulty of attracting good staff often prevents a restaurant to quickly provide effective staff changes. A staff shortage presents crucial problems and sometimes the very worst employees are given the opportunity to remain in the workplace.

What kind of message is your manager/owner projecting? So, your manager had decided to keep Fred who always comes in late, unprepared for work and needs constant motivation. Fred can stay because there isn’t anyone else who can work the grill.

Many times, restaurant managers/owners forget why they are in the business. We are here to provide a service that customers pay in exchange for an overall experience. It is not only the quality of food, the décor but it’s the quality of service that makes it just as or more important. Allowing bad employees to remain in the workplace creates a poor restaurant environment for the customers as well as the staff.

Your staff is your lifeline to delivering the entire experience. The good hard working staff should not be the one to suffer. Keeping bad employees for the sake of being understaffed is a poor excuse and decreases your overall effectiveness as a restaurant manager/owner.

What can be done?

• Do not allow bad employees take control of you; you need to be able to control them.
• Bad employees can change only if you give them an opportunity to change. If second chances are abused, then proper action should be taken immediately.
• To tolerate an employee’s poor work habits will result in negative consequences for your staff and customers. Neither group should have to face the consequences.
• Delaying a change is only going to stall the already expected. Employees come and go, but its part of the business. There is always a solution to a problem.
• Terminate ineffective employees. Any problems a restaurant may face will only be short term. Part of effective decision making is losing something to improve something.

A customer’s perception can be changed within seconds. Do not gamble on bad employees. Make the right choice. Send the right message!

Photograph by The Consumerist

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Too many restaurants focus solely on the bottom line – profits. We lose sight of everything else that is important and how we got there. Owners are so focused on profit that they become entangled in two objectives; increasing revenue and cutting cost. The most likely scenario, a combination of two methods is applied.

Methods to Increase Restaurant Profits:

1. Reduce labor cost
2. Reduce food cost
3. Increase Price

Rule #1: Reduce Labor Cost

Managing your labor cost is part of effectively scheduling your staff. The other half is controlling total wages. Labor cost usually becomes a problem when a restaurant under or over staffs. The common belief is reducing labor cost will save you money.

As this may be true, owners/managers tend to forget that under staffing leads to unsatisfactory service which ultimately can affect a customer’s willingness to return which in affect leads to lower revenues. The rule of thumb based on a full-service restaurant, labor cost should run 28% to 30% of total sales. These percentages do not include employee benefits which normally run 5% to 6% of total sales.

Solution:

• Forecast daily, weekly and monthly sales to schedule staff according to expected sales.
• Shifts should be staggered to allow sufficient preparation time for anticipated busy hours.
• Be familiar of the minimum and maximum number of staff required to operate efficiently on a daily basis.

Rule #2: Reduce Food Cost

Controlling a restaurant’s food cost is crucial to the survival of a restaurant. Understanding the actual costs of each food item can reduce unnecessary wastage and spoilage. Portion control is a major factor in controlling the restaurant’s overall food cost. Higher food costs can be due to over portioning, ineffective pricing, poor inventory control and food purchasing and receiving issues. On the other hand, lower food costs does not necessarily equal to better management. Food cost should remain reasonable and be + / - 1% to 2 % within the industry average. Managers/owners sometimes make the mistake of reducing the food cost too low and sacrifice the overall quality of food. Under portioning is also a major factor in lower food costs but customers will soon perceive this tactic as a decline in value.

While food cost generally runs at 28% to 32% of total sales, it is possible to have food costs as high as 40% or above. Higher food costs are often found in upscale fining dining establishments that focus on premium and expensive ingredients such as seafood and steak. On the other hand, food costs can be as low as 20% which can be found in lower cost foods such as pizza or pasta themed restaurants.

Solution:

• Educate your staff on the affects of food costs to total sales. A large part of effectively controlling your restaurant’s food cost is training your staff.
• Proper inventory control will allow you to stock items according to projected sales. More attention should be given towards higher priced food items on the menu.
• Compare menu items and analyze the price versus the cost while compare this to the overall popularity of the menu item. High priced, low sale items should be reconsidered or completely removed.
• Managers/owners should consistently review their current vendor agreements to ensure best prices are being offered.
• At the same time, receiving goods that do not meet quality standards can significantly affect your food cost due to high wastage. Restaurants should be strict on quality control issues and immediately inform suppliers and bad shipments.

Rule #3: Price

Implementing price changes can be both positive and negative for the restaurant. If done correctly, the restaurant should see an improvement in sales.

Solution:

• Identify and separate items on the menu based on popularity. The common mistake among restaurants is increasing a popular item too high too fast. Customers are price conscious and should not be regarded as unintelligent.
• Price increases should be implemented in small increments over a longer period of time versus short term such as a month. Increasing prices by up to $1 can drive customers away who may have been your most loyal customers.
• Involve your staff and don’t be afraid to ask them how much they would be willing to pay for a particular menu item.
• Be sure whatever item you do decide to change that there is still value created through the quality or portion provided in comparison to the price.

Conclusions

A restaurant needs to spend money in order to make money. Cutting costs is only part of the solution to make more money. You need to understand the components of the profit equation and analyze the steps required to get the results you want. Until the proper steps have been determined then the appropriate methods can be applied.

A restaurant’s ability to achieve its profit target is greater when focus is placed in the right areas.

Photograph by [177]

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