This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
LABOR COSTS & CONTROLS
• FIXED vs VARIABLE LABOR COSTS• HIGH TURNOVER, CAUSES & DETERENTS• SAVING ON LABOR• FORECASTING LABOR COSTS• COMPENSATION TECHNIQUES• LABOR STANDARDS:
– QUALITY, QUANTITY, COST
• JOB ANALYSIS vs. JOB DESCRIPTION• CORRECTIVE POLICIES
LABOR COST CONTROLKnow Your Target Audience
Food services and drinking places pay mean average wages that are roughly half the national mean wage--$9.84 vs $20.32 (May 2008).
The industry’s low average wage is due to two factors: 1) below-average wage rates for individual occupations and 2) the industry’s occupational mix
The main reason is the predominance of low paying and low skilled occupations--97% of industry employment was in occupations with mean wages below the national mean wages.
Food preparation & serving workers are 23 percent of industry with a mean hourly wage of $8.07.
The waiters and waitresses, are 21 percent of employment with a mean hourly wage of $9.26, including tips.
The highest paying positions in the industry are Food Service Mgrs., General Mgr., Operations Mgr.
Highly paid non-management occupations comprise a very small portion of the industry—dietitians and nutritionists @ $22.59, about .04 percent of industry
sales representatives, services--hourly mean wage of $27.42, about .03%.U. S. Department of LaborBureau of Labor Statistics, 2008
Median Salary by Years Experience Job: Restaurant Manager
Restaurant Managers with 5-9 years experience canexpect earn between $35-$45,000, roughly $16.80 to $21.60 an hour, calculated on a 40 hour week*
*A 40-hr. week is probably unrealistic www.payscale.com
Median Salary by Years Experience Job: Executive Chef
Executive Chefs with 10-20 years experience can expect to earn between $45-$65,000 a year. Calculated on a 50 hour week, which is standard, they will be earning between $17 and $25 per hour.
www.payscale.com
Median Salary by Years Experience Job: Sous Chef
Sous Chefs with 5-9 years experience will earn about $13.50 to $17 per hour for a 50 hour week.
www.payscale.com
Median Salary by Years Experience Job: Pastry Chef
Pastry Chefs with 5-9 years experience will earn about $13.50 to $17 per hour for a 50 hour week.
www.payscale.com
Median Salary by Years Experience Job: Line Cook
Line cooks will earn an average $15 an hour once they have put in 20 years on the job for a 45 hour week.
www.payscale.com
LABOR COSTS
Labor Cost is generally the inverse of COGS
Hi Labor Lo COGLo COG Hi Labor
Tot. Labor Cost% = Tot. Labor (include
benefits) $Total Sales
Labor Classifications
Fixed Labor CostsSalaried employees whose cost doesn’t fluctuate with salesConsidered a “non-controllable” cost
Variable Labor Costs
Hourly employees whose hours/wages can vary with sales
PERSONNEL TURNOVER
One of the major factors driving labor costs in the foodservice industry is high turnover
Improper Training/CommunicationIf personnel don’t know and understand the objectives of the
organization, it is difficult to attain them
“Advancement in the foodservice industry is slowing all the time because companies don’t train and don’t provide a pathway to advancement.”
Facility DesignCommissary preparation for multi-unit operationWell designed kitchen that allows more work more easily
Menu DesignFewer items require fewer employeesLimited menu requires less trainingSimply executed dishes require less skill/experienced workers
Style of ServiceFine dining requires trained, skilled staffCasual dining requires less skilled staffSelf-serve or Cafeteria service requires fewer staffTake out requires no service staff
OUTSOURCING
Outsourcing is the fastest growing labor cost savings trend in the hospitality industry.
HR (recruiters and payroll companies) AdvertisingFinance Pre-prepared foodsWaste Disposal Bakery ServicesLinens Food service operationsPest Control
COMPENSATION
Current Compensation--paid within a short timeframe (i.e. pay check)
Deferred Compensation—expenses that are shown as current
expenses, but are not paid until the employee is eligible (i.e. pensions, stock options)
Direct Compensation—money given to the employee in a paycheck Indirect Compensation--payroll taxes, social security (6.2%),
What needs to be done?When should it be done?How should it be done?
Labor Costs
What can be successfully outsourced Cost-Benefit Analysis compares the cost of doing the task in-house vs. buying
it from an outside source
Specifications should be sent to all potential suppliers sothey are bidding on the same job
Multiple bids should be obtained to get the best cost
Job Specifications are needed for each job
Detail all work to be accomplished by the employeeThe more detail, the better guidance for those hiring
“You can get it done fast, cheap and right but you only get two out of three at the same time.”
Quality Standards
Should relate directly to the target audience—the concept and positioning of the establishment will dictate the level of expertise needed for each employee
Quantity Standards
Amount of work each employee is expected to manage during a particular timeframe
Cost Standard
Influenced greatly by local laws, government, labor unions and supply and demand
JOB DESCRIPTION
Outline the job specifics (i.e. % of time expected to spend cleaning and
stocking shelves vs. cooking/prepping) Where and when will each task be executed (i.e. will spend a minimum of 1
hour daily in a freezer at 0 degrees) Provide measurable performance criteria (i.e. expected to learn how to set up
the cold station within the first week of employment) Provide information on the company philosophy and mission (i.e. each team
member is regarded as an integral part of the decision- making team in his department and will be encouraged to be pro- active in making positive changes)
TRAINING
Training is an investment. It is key to reducing employee turnover.
Company PhilosophyGetting employees to “buy in”On-the-Job Training
On going training—New technologyChanges in policyChanges in Menu
Cross training for another position—this is an important way to cut down
overtime and to give employees a pathway to advancement
MOTIVATION
Get employees to “buy in” to the company philosophy and lower turnover will follow.
Financial Rewards:BonusesComp TimeAdded Benefits
Non-Financial Rewards:
Open Door policy with managementPositive, Comfortable work environmentFlexible SchedulingRespect from Management
Productivity Quantitative Measures of Productivity:
Count of items completed Covers per shiftSales per Hour Rooms cleaned per shift/per hr.Guests checked in
Qualitative Measures of Productivity:Mystery Shoppers ReviewsCustomer Satisfaction Surveys Industry Recognition Government Reports
Correcting Mistakes: 1. Identify the problem2. Create process to correct it3. Train staff in the new process