To say that the restaurant labor market has changed in the last five years would be like saying technology has made a minor impact in our daily lives since 1900. Put simply, the entire financial formula on which profitable restaurants were based (30/30/30/10) is now irrelevant. If you aim for 30% Cost of Goods Sold with the expectation you can deliver 30% Direct Labor, it’s unlikely your business will survive the long haul.
The good news is that the single most effective thing you can do today to get control of your labor costs is achievable. And it all starts with forecasting weekly revenue. When you forecast revenue and build your schedule based on your projection, you are getting proactive in your management and building a plan that will help you win. Here are the core steps to this process, taken from our Rethink Intensive curriculum.
- Direct Labor Plan vs. Actual: Close your GAP!
- Forecast your revenue every two weeks
- Create a budget for labor
- Aim for your planned percentage, minus 4 points
- Compare forecast and plan!
But how do you develop a forecast? How do you know what your planned percentage should be? And how can you create a system to make sure that this is what writing the schedule looks like in your business?
We’ll have all these answers for you and more at our next Rethink Workshop on April 7th: Forecasting Revenue: The Key to Managing Labor Costs. And if you’d like to learn more about our training and consulting offerings, get in touch!