5 Ways Fast Casual Chains can Slash Bloated Labor Costs

Eric StoberOperations & Management, Restaurants

This is a guest post from 7shifts who recently partnered with Bypass to offer a fully integrated POS & labor solution.

If you run a fast casual restaurant, you know one of your top priorities is reducing labor costs.

To keep pace with the rest of the industry–let alone overtake the competition, your labor costs should be between 20 to 25 percent of total sales. Less than that and you’re likely sacrificing customer service and creating a bad guest experience by understaffing, but more than that and chances are you’re overstaffed.

In 2017, labor costs amounted to $250 million for fast casual restaurants in the U.S., according to National Retail Concept Partners. Costs were bloated by higher wages and benefits expenditures.

With higher costs and stagnating sales, it’s no wonder reducing labor spends is a priority for fast casual restaurant chains looking to scale.

But fear not—there are many simple and effective ways to reduce your labor costs with smart efficiencies, and without sacrificing other areas of your operation. Here are five tips savvy fast casual restaurant chains are using to reduce labor costs.

1. Get ahead of turnover

Employee turnover is a major issue in the restaurant industry, with difficult or stressful working conditions and disorganized or overwhelmed management being the biggest culprits. The average restaurant employee turnover was over 73 percent in 2017 in the U.S., according to the Bureau of Labor Statistics.

Employee turnover is very costly, so it’s in your best interest to hire the right employees and make sure they are happy and motivated.

Resist the urge to fill open positions with the first person that walks through your door. Instead, try to wait for the applicant that has the right experience, has demonstrated loyalty and fits your restaurant’s culture.

By waiting for the right person, you can avoid the extra cost of having to retrain a new employee if the first one does not work out, and can gain more value from the carefully selected new hire.

Another way to prevent turnover is to motivate your staff with incentives and staff competitions. These could include encouraging friendly upsell competitions between shifts by giving away an Amazon gift card or a pair of movie tickets to whoever can sell the most of a specific special. This gamification of work kills two birds with one stone – increasing sales and staff morale.

2. Train competent staff

In addition to being proactive to reduce turnover in your fast casual chain, once your staff has been selected, the next important step to keep your labor costs low is to train your staff properly.

One excellent method is to cross-train your staff. This means training your staff on multiple jobs, even if the training isn’t directly related to their primary role. For example, you can train your kitchen staff on how to use your POS so anyone can help punching orders in if things get hectic or your wait staff gets slammed by an unexpected rush.

Another advantage of cross-training is that it gives each staff member a holistic view and understanding of how the entire restaurant is run. This prepares all staff to be better collaborators, to anticipate each other’s challenges and to lend a hand when the need arises. Research shows that it also helps with long-term retention!

When training new employees, make sure your training is as comprehensive as possible, overviewing the menu, restaurant layout, and role responsibilities and expectations. You can even create an employee handbook for staff to use to refer to documented best practices.

Finally, don’t forget to go over important tasks regularly at first to make sure everything is being done correctly. With proper training, you will find that inefficiencies can be easily identified and you will get the best bang for your buck out of staff.

3. Create smart, efficient schedules

Smart scheduling can do wonders for your fast casual restaurant’s efficiency, as well as staff morale. Don’t simply copy and paste your schedules week-to-week. Instead, carefully plan your schedule and customize it according to the specific events for which you may need more or fewer employees. Take advantage of “on-call” shifts, meaning staff that can be called off if the number of guests isn’t what is expected during peak times.

In addition to creating a dynamic schedule, try to use your restaurant’s sales history to determine staffing needs for a comparable time of year in the future to ensure you are not caught by surprise.

If all this sounds overwhelming or time-consuming, consider using restaurant scheduling software to help you create schedules on the go with either your mobile phone or computer. To maximize the benefits, integrate your employee scheduling platform with your POS. Deep integration between systems provides a direct communication channel with staff and the ability to stay up-to-date on their ever-changing availability needs and requests.

Integrating an automated employee scheduling platform can also help you review your sales history and give smart predictions of how to best schedule staff in the future.

4. Consider new revenue streams

Technology can provide novel and innovative ways to create efficiencies and boost stagnant revenue streams.

One area of restaurant technology to seriously consider are mobile meal pick-up and delivery platforms like UberEATS, GrubHub, Doordash, Skip the Dishes or Foodora. Staffing several delivery drivers can cut into your bottom line, but with meal pick-up and delivery apps, you can reduce labor costs by outsourcing delivery to other companies or incentivizing customers to pick up.

5. Integrated systems alignment

If there’s one thing a restaurant can do to boost the impact of the above tips, it’s to ensure all their different systems are integrated and aligned. When you introduce new technology into your restaurant, you need to do it in a thoughtful, strategic way to eliminate inefficiencies and to trust the different systems work together seamlessly.

Bypass’s enterprise point-of-sale systems, robust back office management tools, and rich insights for fast casuals integrate and enhance existing systems. From mobile ordering to loyalty and menu management, Bypass helps fast casual chains ensure all technology is working in sync to unleash peak productivity.

For example, mobile ordering is a tempting technology to integrate into your business, but it’s not as simple as flicking a switch. The last thing you want is your staff being so overwhelmed by mobile orders that the customers sitting in your dining room are left stranded. Maximize labor cost reductions across locations when integrating new technology with a focused, integrated enterprise POS solution.

Cutting labor costs can be an exercise in paying attention to the details, but once systems are set in place and inefficiencies are hammered out, you’ll find that the staggering cost of labor can actually be quite manageable. Then you can start treating labor optimization more like a science with precision and predictability, and less like a mysterious art with occasional hit-or-miss success.