It pays to keep tight control over the cost of hourly employees. Some proven principles:

Avoid overtime. “The true cost killer of labor is overtime,” says Bob Kanzler, managing partner, Gibsons Restaurant Group, Chicago, IL. “Not only does it affect your bottom line, but working too many hours often stresses employees.” Don Fox, ceo, Firehouse Subs, agrees, and adds, “Sometimes it’s inevitable and it’s important not to make a decision simply to adhere to policy, especially one that will negatively impact guests.”

Use historical data to forecast, and review costs daily. “We look at people coming through the door from the previous year – setting our service to take care of customers, not dollars,” explains Bob. He says hotschedules.com provides daily feedback on real labor costs vs. scheduled, showing where dollars are spent by department and meal period, allowing them to make informed decisions when staff needs to change shifts. “There’s a good chance that, if we were still using paper and pencil, we would not follow through and track the total hours per week employees work, and we’d be looking at overtime.”

Watch the clock. David Scott Peters, founder, TheRestaurantExpert.com, says operators can reduce labor expenses by 1) checking that staff is not clocking in early as that can lead to overtime; 2) watching that staff is not riding the clock, i.e., getting permission to leave early and then slowing down; and 3) making sure the appropriate job code has been punched in, as different jobs have different hourly rates.

Cross train. “Not only does it benefit the restaurant to have staff know how to do multiple jobs – prep and line, server and bartender – but it’s also a way to keep employees interested and satisfied,” says Bob.

Keep turnover low. Gibsons forecasts labor three months out and posts schedules three weeks out, giving employees time to plan vacations and time off. “We have a partnership with our employees – we want them engaged and to buy in,” says Bob. Don adds that Firehouse Subs has been able to keep turnover much lower than many of their competitors (around 80% vs. 200%) in part through communication with crews and coaching of franchisees.