Payroll is the largest expense in food and beverage operations. Coincidentally food and beverage is typically the department with the largest amount of overtime and employee turnover – both of which add significant cost to the operation.
So how do conscientious F&B managers go about getting some control over that which eats up so much of their departmental income? Here are 9 steps that will create a significant improvement in any F&B department’s payroll expense and bottom line:
1. Organization. A well-organized operation is more efficient in both front-of-house and back-of-house. If the Executive Chef and Dining Room Manager ensure work spaces are well-designed and well-organized with clear cut procedures for accomplishing all tasks; if storage areas are organized and properly stocked; if the kitchen staff has production sheets assigning daily tasks; if everyone knows what to do, how to do it, and when to do it – it doesn’t take as much time to complete daily set up, food preparation, service, breakdown, and closing duties. A few hours saved daily amounts to a lot less payroll cost on a monthly and annual basis.
A key element in organization is written standards, policies, and procedures (SPPs) spelling out in detail how and why things are done. Not only does this put everybody on the same page when it comes to expectations and standards, but it also becomes the basis for consistent training material.
Hospitality Resources International has created a large number of F&B SPPs that are available at no cost.
2. Training. The logical extension of good organization is the thorough training of all employees, both front- and back-of-house. Better trained employees are more efficient, require less direction, and complete tasks in less time.
While training can be costly in and of itself because each hour of training is an hour of payroll, Hospitality Resources International strongly advocates the use of on the go training – a concept that uses spare moments during each shift to train and reinforce expectations to staff. Two HRI programs, Food Service Management on the Go and Service on the Go, provide the framework for much of what managers and service employees need to know.
3. Staffing Guides. Departmental staffing guides establish core staffing levels – that staffing necessary for year-round functioning. Beyond the core staff are the seasonal employees brought onboard to handle business levels during busy periods. Since seasonal staff are not usually provided with benefits, there is a cost savings when core and seasonal staff needs are identified and utilized.
4. Benchmarking. Unless you measure your payroll cost every pay period, you cannot understand it. If you can’t understand it, you can’t improve it. Detailed benchmarking of payroll hours by employee position and type of hour (regular, overtime, vacation, holiday, sick/emergency) allows managers to see exactly where hours and payroll cost originate.
By benchmarking cover counts (meals served) by meal period and day of week, week by week throughout the year, managers will have a much better understanding of weekly and seasonal business variations. This knowledge will help with the following step.
5. Formal Forecasting. By using historical benchmarks, as well as a knowledge of current trends and upcoming events, managers are able to schedule staff more accurately to handle expected levels of business. This coupled with a willingness of managers to jump in when unexpected rushes take place will minimize payroll costs while maintaining service levels.
6. Daily Review of Dining Flow and Service. By keeping daily notes by meal period of forecasted and actual cover counts, staffing levels, smoothness of dining flow, and an estimation of service quality provided, managers are better able to adjust staffing levels during future meal periods for optimum service while identifying any issues that need to be addressed or improved.
7. Daily Review of Hours Worked. By taking a few moments at the end of the shift or day to record and compare hours worked with scheduled hours, as well as to tally any overages and overtime hours, managers keep track of actual to budgeted cost on a daily basis and are able to intervene as necessary in real time to control costs.
8. Pinpoint and Understand Overtime Hours. By closely monitoring overtime hours, managers can better understand why it was necessary and adjust scheduling to minimize it in the future. Without an understanding of what’s causing overtime, there is no hope of coming up with plans to address it.
9. Workweek and Payday. By paying employees on a bi-weekly basis and establishing a workweek that runs from Friday to Thursday, a hospitality organization will have its usually busiest days (Friday and Saturday) early in the workweek, allowing managers to modify the work schedule of any employee who might be in danger of going over 40 hours because of extra hours worked on the weekend. If the workweek ends on Saturday or Sunday and business levels required employees to work longer shifts on those days, there is no opportunity to make adjustment before the end of the pay period, thereby increasing the chances of overtime payments.
Bi-weekly pay periods also allow the optimum benchmarking framework of comparability because each pay period always contains two weekends (Fridays and Saturdays) instead of semi-monthly or monthly pay periods where there are odd numbers of these depending on the calendar. For more information, read the article Why our Workweek and Pay Cycle? on the Hospitality Resources International website.
There is some effort involved in implementing steps 1 through 3 above. But these are usually one time efforts requiring only ongoing tweaking to maintain.
Steps 4 through 8 require organization to set up the tracking and evaluation mechanisms. Using a spreadsheet program such as Microsoft Excel is the best way to go about doing this, as all the math is handled by the program. Once set up, all the manager has to do is establish and maintain the discipline of entering each day’s numbers and assessments – which shouldn’t take more than 10 to 15 minutes. Periodic analysis and evaluation of what the numbers are showing will allow managers to formulate ideas and take steps to reduce staffing and payroll.
If not already doing it, step 9 is a one-time change that will yield returns for the life of the operation.
The ultimate requirement to implement all 9 steps is the “will to make it happen” and discipline to do it. The payoff is in improved financial performance.
Thanks and have a great day!
This weekly blog comments on and discusses the hospitality industry and its challenges. From time to time, we will feature guest bloggers – those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking hospitality managers throughout the country and around the world.
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