Rising labor costs are a challenge many restaurant, brewery, and taproom owners are facing right now. With inflation pushing wages up, combined with an ongoing shortage of skilled workers, managing labor expenses effectively is more important than ever. But while labor costs are rising, so are expectations for quality service. So how do you balance these pressures and keep your business profitable?
Here are some strategies that can help you navigate the rising cost of labor without sacrificing service or quality.
1. Streamline Your Staffing
The first step to addressing rising labor costs is assessing your staffing needs. Are you overstaffed during slow periods? Are there roles that could be combined or cross-trained to maximize efficiency? Analyzing customer traffic patterns and adjusting your schedules accordingly is key to avoiding unnecessary labor costs.
For example, during off-peak hours, it may make sense to reduce staff levels or have employees take on multiple roles. Cross-training employees to handle both front-of-house and back-of-house tasks can keep your operations flexible and efficient.
2. Leverage Technology
In today’s digital age, technology can be a game-changer in reducing labor costs. Point-of-sale (POS) systems, employee scheduling software, and inventory management tools can automate tasks that would otherwise require additional labor. By reducing the time spent on repetitive tasks, your team can focus on delivering great customer experiences.
Self-order kiosks, online ordering, and mobile apps also help streamline operations, allowing customers to place orders without waiting for a server, ultimately reducing the need for a larger staff.
3. Invest in Employee Development
One of the best ways to maximize your labor investment is by investing in your employees. Training your staff not only ensures they’re performing their roles efficiently, but it also boosts morale. When employees feel valued and equipped to succeed, they’re more likely to stay and perform at a high level, which reduces turnover and costly hiring cycles.
Consider implementing performance-based incentives or offering development programs that allow employees to grow within your business. This can result in a more engaged workforce and higher productivity.
4. Review Your Menu for Profitability
Your menu plays a huge role in how much labor is needed in the kitchen and on the floor. A highly complex menu requires more prep time, specialized skills, and longer service times, all of which can increase labor costs. Review your menu regularly to ensure it’s both profitable and manageable. Streamlining it can reduce the time spent on prep and service, which helps lower overall labor expenses.
You don’t have to cut out customer favorites—just find ways to make the process more efficient. For example, introducing pre-prepped ingredients or simplifying certain dishes can reduce labor requirements without sacrificing quality.
5. Outsource When Necessary
Sometimes, the best way to cut labor costs is by outsourcing non-core activities. Cleaning services, payroll processing, and even some customer service functions can be outsourced to save on labor. When you partner with a trusted vendor, you can free up your internal team to focus on the aspects of the business that directly impact customer experience and profitability.
In addition, consider partnering with local suppliers for your ingredients or equipment needs. Building these relationships can help reduce delivery costs and ensure you get the best value for your money.
6. Focus on Customer Experience
As you adjust your staffing levels and operations, remember that the customer experience should always come first. While it’s important to control costs, it’s just as important to maintain the high-quality service your customers expect. Make sure your staff is well-equipped to handle the changes, and communicate transparently with customers about any necessary adjustments to service.
You can also look for ways to engage your customers with unique experiences that don’t require additional staff. Hosting events or offering promotions that encourage customers to spend more during their visit can help offset the costs of reduced staffing.
Conclusion
Navigating rising labor costs requires a careful balance between efficiency and quality. By reviewing your staffing needs, embracing technology, investing in employee development, and optimizing your menu, you can reduce labor costs without compromising the customer experience. It’s all about working smarter, not harder, and finding ways to run a more efficient, profitable operation.
If you need help streamlining your operations or exploring ways to control labor costs, don’t hesitate to reach out. At Lord CPAs, we specialize in helping small businesses like yours thrive, even in the face of rising expenses.
