Editor’s note: This is part 2 in a two-part series on restaurant tech.
September 21, 2021 by Morgan Harris, Restaurant365 Chief Customer Advocate & Co-Founder
A healthy restaurant profit margin is dependent on controlling key expenses such as food and labor costs. Today’s restaurant technology tools can help optimize both these costs in different ways.
Part 1 of this series focused on applying technology to control food costs, and this issue outlines four ways restaurants can use technology to increase profit margins by optimizing labor costs.
1. The impact of data-driven scheduling
A restaurant constantly generates data, which can be leveraged to make better scheduling decisions that match labor spend with labor needs.
For example, sales forecasting is a powerful restaurant management tool that can pull historical sales information from a point-of-sale system to project sales for a comparable period.
With sales forecast data in hand, managers can design schedules that match labor to sales, optimizing labor hour spend. This can create a more efficient use of labor hours than writing a schedule based on last week’s schedule.
Even with the best-designed schedules, managers may still need to make decisions in the moment as service needs change. Real-time access to labor expenses, compared against sales per labor hour goals, can help managers make in-the-moment decisions about strategically using breaks, cuts, or call-ins.
Other scheduling software features can help managers keep track of and minimize potential employee overtime or set enforcements for clock-in/clock-out times.
2. Hiring, scheduling and payroll tools
Technology tools can now streamline many of the most time-consuming tasks for restaurant managers, from hiring to scheduling and payroll.
Restaurant hiring has historically been a very manual, paper application-driven process. Today, tools like an applicant tracking system can save managers time and make the process easier for applicants.
Features such as prescreening questions or assessments through an ATS can help restaurants gauge how interested an applicant is in a position through their willingness to complete extra steps, before inviting the applicant to an in-person interview.
For example, Sweet Lou’s, a northern Idaho local restaurant group, found that an assessment tool changed its hiring process. When co-owner Chad Foust scheduled interviews with applicants who had completed the assessment, he reported that nine out of the 10 candidates appeared at the interview (in comparison to previous experiences without a prescreen assessment, where half of the interviewees did not show for the interview).
In the scheduling realm, employee scheduling software can help managers streamline the most repetitive, time-consuming elements of the task. Templates, centralized dashboards for shift change requests, and integration of sales forecasts can empower managers to create better schedules, faster.
In addition, leveraging technology tools for HR or payroll can help make processes more efficient for staff. Automating onboarding paperwork for new hires, as well as features like accurate and on-time payroll processing, can provide dual benefits: contributing to positive employee experiences, and saving time for management.
3. Keeping tabs on labor costs
With the right technology tools, restaurant owners and operators can leverage granular data points to make informed decisions about labor costs.
For instance, restaurants can track the productivity of labor as a percentage of sales through data metrics such as customers served per labor hour, or sales per labor hour (SPLH). A close look at costs by day part, through daily or even hourly sales forecasts, can fuel decisions about where and when employees are needed the most.
And specifically for multi-location restaurant groups, breaking down labor cost by location can help operators spot trends where additional training or controls may be needed.
4. The value of employee retention
Recruiting and retaining high-quality employees is a recurring issue for many restaurants. However, between understaffing issues or resources wasted on frequent training, a high turnover rate is costly. To control labor costs, it’s essential that restaurants work to improve employee retention in multiple ways.
First, leveraging technology in the hiring process can help restaurants recruit strong candidates. An ATS can help restaurants communicate efficiently with candidates and prescreen applicants. The more streamlined the hiring process, the more time hiring managers can spend developing meaningful relationships with candidates who are a good fit for company culture.
In addition, technology can be used to examine root causes of low retention. For example, if staff members are experiencing irregular schedules, or aren’t getting enough hours, these issues can increase turnover. A restaurant may need to implement labor cost controls, but regular reviews of employee scheduling data can also to help address staff concerns.
Restaurant owners and operators have more access than ever before to data and software that can improve labor operations. When applied strategically, today’s technology tools can help restaurants optimize labor costs and improve their bottom line.