How to Reduce Restaurant Labor Costs

Labor costs are one of the biggest overhead expenses for the restaurant industry. Depending on the type of establishment, a figure of between 20-30% of overhead is generally regarded as the industry standard for restaurant labor costs.

It’s a significant figure for businesses operating on tight margins. So controlling and, where possible, reducing staff costs without sacrificing the quality of the customer experience has to be a high priority for management.

Restaurants of all kinds are likely to be labor-intensive businesses, but a creative combination of tried and tested strategies and modern technological solutions can do a great deal to keep costs in check. That’s where the Northstar restaurant POS system comes in. 

Some Key Ways to Reduce Restaurant Labor Costs

Staff Retention

In addition to wages, uniforms, and other upfront costs, training new staff is in itself a significant expense, so one of the most important ways of controlling overall labor costs is by maximizing staff retention rates.

This may involve all sorts of measures including competitive pay rates, a fair tips policy, flexible shifts and the use of part-time, temporary or seasonal workers when necessary. Technology is also a great retention tool. Providing staff access to the tools included in a Northstar restaurant POS system, including digital ordering and meal break alerts, can relieve the pressure on employees. 

Although this may seem counter-intuitive, relieving pressure on valued permanent staff will be a boost for morale, improve their productivity and thereby save the business money in the long-run.

Organization and Teamwork

It’s logical that well-trained staff working as a well-organized team will operate more efficiently, and that fewer of them will, therefore, be required. So, apart from individual training, a regular program of team talks and briefings is a great idea to help ensure that everyone has a clear understanding of their role and how it fits in with those of other team members.

The use of technology to help team members communicate with each other during shifts can also considerably improve efficiency. 

Scheduling and Shift Management

Excellent training and team organization are vital, but being able to schedule the optimum number of staff for each and every shift is possibly the single most important factor in controlling labor costs.

Rostering too many team members for a session is obviously expensive in terms of wages, but it’s also bad for staff morale and therefore retention rates.

You might think your staff will enjoy turning up and getting paid to have little or nothing to do. But most people, in fact, find this experience boring and demoralizing. And the dilution of the tips received naturally does nothing to relieve the frustration caused by overmanning.

Maximizing Table Turns

The more covers and table turns that servers can efficiently manage, the less that those staff will cost as a proportion of total sales.

The Northstar restaurant POS system will greatly enhance productivity by enabling servers to send orders directly to the kitchen or bar, to receive menu updates immediately, to monitor tables’ progress through their meals and to take payments tableside.

If it works for your particular type of restaurant, a POS system can even allow customers to place their orders directly from their table, the bar or while waiting to be seated.  

But it’s nevertheless essential to have adequate staff numbers on shift when busy sessions are anticipated. Accurately tailoring your shift rosters to take account of regular peak periods such as weekend evenings is largely a matter of experience, but having a POS system to record weekly sales data may help further refine staff planning.

POS data can also be used in preparing for such recurring special occasions as Mothers’ Day, Valentine’s Day or Superbowl night.

For management, good POS systems assist with the effective real-time monitoring of staff attendance and performance and in allowing staff to accept or reject shifts online as they wish, as well as providing data which can be used to design menus and floor plans for maximum efficiency.

Reducing Labor Costs with NorthStar Restaurant POS

NorthStar has been producing restaurant technology solutions for 25 years and its current cloud-based iPad product is the market leader in handheld POS systems.

Our tablets provide a single, integrated online tool which management, kitchen and serving staff can all access, and comprehensive reporting features produce detailed real-time data to facilitate planning and maximize staff productivity.

Software options for direct customer ordering are also available where required.

Find Out More

You can find out more about how technology can improve your restaurant’s labor productivity by calling us on 800-551-7674 or requesting a live demo here.

August 2, 2019|News & Events|

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