HomeGetting StartedEffective Ways Of Reducing Labour Costs In Your Restaurant

Effective Ways Of Reducing Labour Costs In Your Restaurant

The Indian restaurant industry is infamous for having one of the highest employee turnover ratios. According to a report by NRAI, this industry employed more than 7 million people. With such a massive labour force, it is easy to replace or lay off employees to reduce the labour costs. But smart employers and bosses know that laying off trained staff is not the way to cut costs but shooting oneself in the foot.

Laying off the labour force is the easiest trick in the restaurant business. If you are not satisfied with their work, lay them off. If they take too much time to learn, replace them with someone smarter. But their ability to learn or the quality of work is not entirely dependent on them. There are many workplace factors that need to be taken into account before evaluating the performance of your employee. And apart from layoffs

Here Are Best Effective Ways of Reducing Labour Costs In Your Restaurant

1. Reducing Employee Turnover Ratio

For any restaurant, trained employees, who know how to handle front-of-the-house and back-of-the-house activities, are the most important assets. Laying off such staff only increases the burden on other employees and the management. Seeking, recruiting and training new staff every other time, is a great waste of money, time and resources. Such staff is well acquainted with the restaurant process, suppliers and even the customers. They help smoothen the processes and provide consistency in the quality of work provided.

On the other side of it, failing to provide a healthy and incubating work environment demotivates employees and hence they quit. This also is a big failure for the management. By providing time-to-time incentives, an interactive and friendly workplace keeps them attracted and interested in their work.

Restaurant Staff giving tissue paper to a customer. | Layoff does not help reduce labour costs.

2. Hiring And Training Staff

One of the major expenses in restaurant staff management should be hiring and training staff. This might seem like a major expense, but with time, the trained staff becomes the biggest asset to the brand. As we have already pointed out, the restaurant industry employs a large labour force. And so, restaurant managers are very hasty and lax with hiring employees. For them hiring becomes a process of trial and error rather than following an industry prescribed screening process.

Trained staff can handle and manage the restaurant in absence of the owner or manager. They are well aware of all the processes and so can be efficient in coming up with better ways to improve them. The waiters and captains handle the customer-facing jobs. If they are trained well, then they can effectively take spontaneous decisions to improve customer experiences. Trained employees help reduce costs of hiring extra help and re-hiring staff. They are loyal to the restaurant because their work adds value to the restaurant’s functioning.

A group of chef cooking in a restaurant kitchen . | Trained employees help reduce labour costs in restaurant

3. Avoiding Over-burdening

All and every business, despite the industry, need to have proper allotments and distribution of all tasks among the employees. In a restaurant, even after working hours, there are many tasks that need to be managed. If employees have to pull all the weight by themselves, the employees can be overworked and then demotivated to work.

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To avoid this, the restaurant management should create an accepting environment for open communication. A proper understanding of individual skill sets and their capabilities can help managers in finalising their roles at the work. But at the same time, they should be provided with a brief training on all restaurant processes to help in case of any emergency or short staffing. If the employees feel that they are not being heard, they are more likely to quit and this would only increase labour costs.

4. Proving Incentives To Retain Staff

Every employee is always looking for incentives that help improve their work quality. It can be either emotional and/or monetary rewards. Time-to-time bonuses, monthly internal rewards, discount offers, appraisals and appreciations, employee and family health insurances, and paid/ sick leaves help create job security for employees. Often these incentives and benefits are taken as expenses, but these are ways to retain employees and win their loyalty to the business.

5. Employee Analyses and Reports

For all restaurant owners taking time-to-time business analyses are very important to map the trajectory of the business growth. This analyses also include staff reports analysis. Maintaining such reports in traditional book-keeping ways can be hectic and confusing. But thanks to advanced restaurant billing software technology, this can be automated. With the help of PoS software’s reports management, the owner can know all about the emplyees’ performance and contribution to the restaurant. With a proper assessment, the management can take critical decisions about employees’ roles, responsibilities, progress and appraisals. This eventually helps distribute work and hence reduces labour costs.

Another benefit of such reports is that it helps clear the clogs in the work pipelines. The owner can do detailed research about how to improve product and service quality, which areas are operating well and which would need a revamp.

Restaurant staff discussing with each other. | Employee reports helps manage labour costs in restaurant

Due to the pandemic, more than 2 million people out of the 7 million labour force were laid off. Losing their employees made the restaurant owners understand and appreciate the efforts put in by the staff every day. A great team is built by cooperative and efficient leaders and so, retaining staff to sustain business and reduce labour costs is a task needed to be handled by the owner himself/herself.

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Ishika Tripathi
Ishika Tripathi
Ishika Tripathi is a Marketing and PR content writer at Petpooja. During her free time, Ishika is more likely to be found tucked in a quiet corner reading a book while her forgotten cup of coffee is growing cold next to her. Reach her at Ishika.tripathi@petpooja.com


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