Restaurant Labor Budget Is a Moving Target

 In 5. Fred Langley, budget, Labor

Before I dive into this topic, let me say this: if you don’t have a working budget with a name to every dollar you spend, you need one before the rest of this will work. We would love to help you create one.

Your budget is your business plan by the numbers. It’s also how we will set your goals. This act is necessary because putting your goals in written form is the first and most important step in achieving them.

Recently I was coaching a client who was diligently using the labor allotment system every week. They put in their numbers, set a target and then looked at the scheduled hours in confusion because they didn’t resemble what would be needed for the restaurant to operate.

The reason for this is they looked at what their labor should be in a budget as an entire year. If you do not have salaries this could actually work. It could also work if you do the same sales every month. But most restaurants have some seasonality. In this example the restaurant is very seasonal and does five times the business in the summer as it does in the winter.

In our restaurant management software, SMART Systems Pro, when you run your labor allotment, it factors in that you have fixed salaries as part of your labor numbers along with hourly variable labor. When you put your labor target into SMART Systems Pro, it is the percentage directly from your budget. SMART Systems Pro translates your goals and breaks them down to be easily delegated to your management team. If you put in a percentage target, you have to realize that a fixed cost percentage will change with sales levels. If you have $10,000 in salaries and have forecasted $100,000, your salaries will take up 10 percent of your labor. If you have forecasted $200,000 they will take 5 percent of your labor.

In my earlier example the restaurant was using the same labor percentage all year so in the winter time the labor allotment didn’t give them enough hours because management used them all and in the summer it gave them too many hours because management didn’t take a very high percentage. This made them not pay close attention to the budgeted hours in the winter and in the summer. When I increased their budget in the winter and decreased it for summer, it made them reach for their goal in both cases. As a result they became more efficient in both seasons.

We offer solutions that help you achieve this, such as our Membership that includes SMART Systems Pro, or our Budget Creator Software, which does the work by telling you what your labor target should be for you to achieve your goals.

Whether you reach out to us to help you, or you try to do it yourself, start with a budget (get our free budget report) and go from there.

Fred Langley
Fred Langley is the director of operations and restaurant coach for TheRestaurantExpert.com. As a former chef and restaurant owner, Fred found a new passion in helping other restaurant owners find success with systems and now focuses on it full time.
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