Archive for June, 2015

9 Steps to Control Payroll Cost in F&B Operations

Monday, June 15th, 2015

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 GuidesDepartmental 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!

Ed Rehkopf

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.

Hospitality Resources International – Management Resources for Hospitality Operators!

 

Leadership Development – The Foundation of Personal and Professional Success

Monday, June 8th, 2015

No matter your role in the organization, no matter your area of professional expertise, if you direct employees, your primary role is that of a leader, not a manager or supervisor.

So what is the difference between a manager and a leader?  While a manager may possess a broad range of skills and abilities to manage the resources, functions, and financial viability of an organization, a leader recognizes the ultimate value of people in all activities and uses a wide array of personal characteristics to get the best from a diverse workforce.  In so many ways this human element of leadership is far more challenging than the many empirical decisions of management.  Roger Enrico, the former Chair of Pepsico, put it another way when he said,

“The soft stuff is always harder than the hard stuff.”

But what was he talking about when he said “the soft stuff”?

In short, it’s the people skills – those aptitudes and abilities used to get the best out of one’s human assets.  It encompasses all those things we talk about when discussing leadership – the relations with multiple constituencies and the highly nuanced interactions with a diverse workforce that result in motivation, morale, enthusiasm, focus, commitment, productivity, teamwork, organizational cohesiveness, and group success.

Regardless of your position in your organization, it is your leadership talents that will ultimately make the difference in the success of your endeavors and career.  As one senior hospitality executive said,

“The longer I’m in this business, the more I realize it’s all about leadership.”

So why leave it to chance.  Recognizing what Warren G. Bennis, the scholar, organizational consultant, and author said,

“The most dangerous leadership myth is that leaders are born – that there is a genetic factor to leadership. That’s nonsense; in fact, the opposite is true.  Leaders are made rather than born.”

Developing strong leadership skills and habits is an ongoing process in which you must change and adapt to your increasing levels of responsibility and the makeup of your constituencies – those who depend on you and for whom you provide leadership and service.

John Agno, corporate executive and author, noted that “Leadership development is self-development.”  So don’t expect others or circumstances to automatically transform you into an effective leader.  You must take personal responsibility for your career by familiarizing yourself with basic leadership principles and practices.  Then draw up a plan to develop and grow those skills as you progress to greater and greater levels of responsibility.

Leadership development is a lifelong pursuit.  You cannot change yourself overnight.  But the more you work at learning and demonstrating leadership, the more your constituencies will respond and the more success you will achieve.

Thanks and have a great day!

Ed Rehkopf

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.

Hospitality Resources International – Management Resources for Hospitality Operators!

Seven Things I Want My Controller To Do

Monday, June 1st, 2015

As a hospitality General Manager, there are seven things I want the Controller to do beyond the normal bookkeeping, accounting, and financial reporting responsibilities.

  1. Develop written Accounting Standards, Policies and Procedures.  Fiscal responsibilities are too important to leave to chance or oral history.  Every aspect of budgeting, accounting, financial reporting, inventory, payroll, member billing, expense coding, accounts payable, etc., should be detailed in written form.
  2. Develop a written Internal Control Plan spelling out the separation of key duties, creating pre-numbered accounting forms, and creating a clear audit trail for all aspects of accounting processes.
  3. Train all department heads and managers, who play any role in the accounting processes of the operation, to ensure a common understanding of their fiscal responsibilities.  Accounting on the Go is a great tool to do this!
  4. Ensure all areas of the operation are benchmarked in detail with departmental benchmarks being reported to the Controller for inclusion in the Executive Metrics Report as part of the monthly financial reporting package.
  5. Institute the Tools to Beat Budget program whereby all managers with bottom line responsibility track their revenues and/or expenses in real time, thereby exercising greater control over their budget and financial performance.
  6. Establish a clear process for departmental budgeting and monthly review of financial performance.  Such focus on the numbers will make performance and accountability a routine discipline at the establishment.
  7. Establish a robust outreach program whereby the Controller visits each department head on a monthly basis to discuss challenges, work through issues such as late accounting submissions, and offer guidance and help.  Such ongoing collaboration builds teamwork and breaks down departmental silos and barriers to efficiency.

This array of initiatives when fully implemented and faithfully supported by the General Manager will bring the operation to a high state of efficiency and performance.  None of these initiatives are difficult in and of themselves, but they do require discipline and the necessary will to make them happen.

Thanks and have a great day!

Ed Rehkopf

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.

Hospitality Resources International – Management Resources for Hospitality Operators!