You’ve got your rostering and time tracking set up. Now, how do you use what they’re telling you to save money each week? In this session, we’ll explore the warning signs that labour costs are drifting: shifts regularly finishing later than rostered, staffing levels staying high as sales slow down, and small overruns adding up across your team. You’ll leave with a practical weekly process to spot where hours and dollars are slipping, understand why, and make changes that stick.
Unlike cost of goods, where you’re partly at the mercy of suppliers and rising prices, labour can be adjusted minute to minute. You can finish this session and start saving on wages straight away by managing it more closely.
Monthly P&L figures arrive too late, and gut feel or hours alone miss too much. If you sell food as well as drinks, measure kitchen wages against food sales, not total sales, and track sales per labour hour to see how productive each team really is.
Starting 15 minutes early and finishing 20 minutes late adds up fast. Across 10 staff, 5 shifts a week, an extra 15 minutes per shift is worth a bit over $225,000 a year in the example Tom shows.
If you aren’t hitting budgeted sales on a day, labour should come down with it. Build the roster so you already know who gets cut first, and ask whether this is the same roster you’d build from scratch.
Do as much of the close as possible while guests are still in and revenue is still coming through. As one GM told Tom: if you’re wondering whether to send someone home, the answer is always yes.
A $50 to $100 a week incentive tied to labour and cost of goods can cost a bit over $5,000 a year and protect $30,000 to $80,000. Start simple, and use bar tabs or bottles of wine if cash flow is tight.
Most venues are already tracking labour, whether in Loaded or another platform, and seeing a wage percentage every week. This session is about what to do once you have that data. Tom splits it into four parts: measuring labour properly for your venue type, spotting the easy wins, fixing the roster (often on the floor, not on paper), and making it stick.
Labour is the thing you can change this week. With cost of goods you’re partly at the mercy of suppliers and inflation. With labour you have minute-to-minute control, without too much process or outsourcing.
If you’re a food and beverage business and not just a bar, measure kitchen labour against food sales. In Tom’s example, $7,000 of kitchen wages is 14% of overall sales but 35% of the $20,000 of food sales. The bigger number looks uglier, but it shows where labour dollars are going and how productive each department is. Kitchens can become a black hole for operators who aren’t chefs, so seeing that productivity matters.
Sales per labour hour shows how productive the hours your team works actually are, for both front and back of house. Take your total sales (overall, front of house, or just food) and divide by total hours worked. It’s a simple weekly calculation for now, and Loaded is developing a report for it in the roster space.
This is almost always the easiest fat to trim. If you’ve set a realistic revenue budget and worked out what your labour percentage and roster cost should be, the roster should be what you’d expect if you hit that target. Starting 15 minutes early, finishing 20 minutes late, or not cutting someone when you should quickly runs the roster over.
A good habit is for managers in control of hours to note down why a shift ran over, in a nightly or at least weekly report. There can be plenty of valid reasons. Writing it down gives you context if you weren’t in the venue, and makes managers ask whether there was a reason at all or whether it just slipped by in service.
An extra 15 minutes per shift across 10 staff and five shifts a week comes to a bit over $225,000 a year in Tom’s example. If a staff member asked you to sign off a $225,000 expense, you’d know the answer. Helping on-shift managers see how incremental overruns compound over a year is a big part of the fix.
A viewer asked what to do when managers resist cutting staff early, so wages stay at or over what was rostered even when revenue misses budget. Tom’s answer is to drive the incentive back to your managers, so they run shifts and manage finances as if they were their own. This is covered under manager incentives below.
This is arguably the one with the most detrimental effect on your labour at the end of the week. A roster built to budgeted sales is only as good as the sales you actually make. If you aren’t hitting budgeted sales on a day, labour should come down. Short services and minimum shift lengths make that harder, but you can build redundancy into the roster by deciding in advance who gets cut and when. A great report for managers to bring each week is budgeted sales versus actual sales, alongside rostered versus actual labour.
Closes are the biggest source of going over rostered times, for back of house and front of house. A close should be done well and leave the venue spotless and ready for the next shift, but done efficiently. Build a pre-close checklist so staff know exactly when each task starts. The trigger could be the last table leaving a section, the last mains plate going out or the last ticket hitting the kitchen. Do as much as possible while guests are still in and revenue is still coming through, so that when the doors close you’re only tidying, doing checks and ordering.
Tom picked this up from a GM. Managers should keep asking whether everyone on shift is absolutely needed, and whether sending someone home would change the guest experience or whether everything would be fine. Some people set a phone alarm every half hour to prompt that check.
Rostering to habit is the quickest way to blow out wages. Set days are fine, but ask whether this is the exact roster you would build from scratch. Most venues roster on the hour or half hour, and a 10:15 start instead of 10:00 across six roles, five days a week, adds up. That doesn’t mean short-staffing. Analyse why each person is there. A head chef and sous chef starting at 10:00 may spend half that time organising prep and sections, and that 15 minutes can set up a far more productive day.
Grinding labour down to bare bones costs sales, guest experience and staff wellbeing. If a guest can’t get a drink refilled or order extra bread, you’re leaving money on the table. The goal is productive labour hours and a healthy spend per labour hour without sacrificing what happens on the floor.
A viewer asked how often to review budgets and seasonal roster templates. Tom separates budget from targets. Your budget is set for a long period, quarterly or annually, and is what your accountant tracks you against. Your targets are your realistic revenue expectation and should change when conditions do, such as a cyclone in north Queensland or a big snowfall bringing in the ski market. Templates are fine as a starting point because they save time and set out sections and staff, but the template should never be the posted roster. Review the roster every week against your targeted sales.
Who does this is up to you. Tom used to do it in the morning with a coffee, reviewing the night before. Even more useful is having managers bring the numbers to a weekly meeting:
Tom thinks this is incredibly valuable and doesn’t see enough people doing it: a financial incentive for head chefs and venue managers, linked to labour and cost of goods. It doesn’t need to be large. At $50 to $100 a week, a manager incentive changes how people treat labour and COGS. In Tom’s example, if managers successfully hit the target all year you spend a bit over $5,000 to protect $30,000 to $80,000.
Start simple. Tom used $50 or $100 a week, depending on venue size, for COGS and the same for labour, paid monthly, and only if both targets were hit. More complex venues can add review scores or other checks. If cash flow is tight, bar tabs and bottles of wine work well.
Avoid relying on monthly P&L figures, which arrive four to six weeks late, and don’t rely on gut feel alone. If you only sell drinks, total wages against total sales works. If you sell food too, measure kitchen wages against food sales and track sales per labour hour so you can see how productive each team is.
It’s your total sales (overall, front of house, or just food) divided by total hours worked. It tells you how productive a labour group is each week. For now it’s a simple weekly calculation, and Loaded is developing a report for it.
Rostered versus actual is almost always the easiest fat to trim. Starting 15 minutes early, finishing 20 minutes late and not cutting staff when sales are down add up quickly. An extra 15 minutes per shift across 10 staff and five shifts a week is worth a bit over $225,000 a year in Tom’s example.
Give them a reason to care. Tie a small financial incentive to labour and cost of goods, such as $50 to $100 a week, so they run shifts as if the money were their own. Also have them note down why a shift ran over, which makes them ask whether there was a reason.
Set budgets for a long period, such as quarterly or annually. Keep targets realistic and update them when conditions change, like severe weather or a snowfall that drives trade. Templates are fine as a starting point, but review the posted roster every week against your targeted sales.
Yes. Running on bare bones costs sales, hurts the guest experience and staff wellbeing. The aim is productive labour hours and a healthy spend per labour hour without sacrificing service on the floor.
Tom: This session is about what to do with your rostering and labour data. Most venues are already using labour tracking by now, whether that’s with us at Loaded or another platform, and you’re likely getting your wage percentage and data coming through every week and possibly jumping in to look at those reports. So this is really about, now that we have that data, what are we going to do with it?
We’re splitting this into four sections. First, making sure we’re measuring labour properly for our venue type, which will be different for every venue, so that we get good information back from the data. Second, how to spot some of the easy wins with labour. Some may sound obvious as we walk through them, but they’re things we need to circle back to at a high frequency, daily and weekly, to spot where labour drift is happening. Third, how to fix the roster. Often the fix isn’t in the roster. If you were in our COGS chat last week, a lot of the fixes from controlling these two primary costs happen on the floor, with your managers and your staff. And fourth, how to make it stick. If you were on that webinar last week, we went through five steps, and we’re bringing a similar process to labour.
Tom: The biggest thing with labour is that it’s the thing you can change this week. You can jump off at the end of this session and immediately start to make savings by managing it appropriately. As everyone knows, it’s one of the two biggest costs, and with cost of goods we’re to some degree at the mercy of suppliers and inflating costs. With labour you have that minute-to-minute ability to make decisions and improve your bottom line without going through too much process or outsourced things. We’ll keep this relatively straightforward and cover some really obvious flags and ways to manage and track them weekly.
Tom: Pretty much everyone here probably tracks labour to some degree, but how we track it is really important. Monthly P&L costs are hopefully a thing of the past, where at a minimum four weeks, more than likely six weeks after the start of the month, you’re seeing what your labour percentage is. There’s an obvious reason why that isn’t a great method.
Gut feel is another one. I was a terrible person for this, particularly when I was younger. I knew what busy felt like and thought I had a good handle on it. If you’ve run the same venue for years and years, you may have a really good gut feel, and there’s nothing wrong with listening to it. But you still need to go through the checks to make sure your gut feel takes into account everything else that goes into labour.
Watching hours only is one I don’t see as much anymore. It may work for less complex venues, like smaller cafes or restaurants under 50 seats. It gives us some insight and it’s a way to start educating your managers about managing labour, but we really want to drill down into the nitty-gritty.
The one I see a lot, and I’d encourage you to think about why you do it, is total wages against total sales. If you’re a food and beverage business and not just a bar, my biggest piece of advice is to start measuring your food labour against your actual food revenue. We want to drill down on productivity in each area of the business. Yes, the percentage figures look a lot uglier. Our example here is $7,000 in wages across the kitchen for the week. That sits at 14% of overall sales, but 35% against the $20,000 they did in food. It’s not inherently bad that it’s a bigger number. What we want is to break it down more granularly to see where our labour costs are going and how productive the different departments in our business are.
Tom: Measuring labour as a percentage completely makes sense, and it should be talked about daily and weekly with your management team and wider staff. Another really important metric is sales per labour hour. It drills down into how productive the hours my staff are working actually are. It’s relevant for front of house too, and if you’re not a chef operator and you have a decent-sized kitchen team, then having been a chef for a long time, I can tell you kitchens can become a bit of a black hole for operators. Being able to see productivity in your kitchen is really important.
At the moment it’s a simple calculation you do every week. We’re doing quite a bit of development work in the roster space, and in the near future this will be a report you can pull from your Loaded account. Take your total sales, whether that’s overall, front of house or just your food sales, and divide by the total number of hours worked. That gives you your sales per labour hour. It’s effectively telling you how productive that labour group is each week.
Tom: Anyone who has done training or onboarding with me has heard me talk about this to no end. It’s rostered versus actual, and it’s almost always the easiest fat to trim from your roster. If we’ve taken the time to set a realistic revenue budget, and done the same with working out what our labour percentage and roster cost should be, then the roster should be a realistic expectation of what we need if we hit that revenue target. Fifteen minutes early, 20 minutes late, not quite cutting someone when you probably should, starts to run your roster over really quickly.
A really good habit for managers on shift, if you do a nightly report or at the very least a weekly report, is for the managers in control of those labour hours to note down the reasons why it ran over. It does one of two things. If you’re not in the venue, it paints some context around what happened. There can be plenty of valid reasons. It also makes those managers start to think about why they kept someone there. Was there a reason at all, or were they caught up in service and it just slipped by?
Host: Hey Tom, just to interrupt, we’ve had a question come through from Christopher. He says he quite often gets push back from his managers on cutting staff early, so when revenue is not quite where you’d budgeted it, they’re still coming in at or even over what they’ve rostered to spend. What should he do?
Tom: Very good question, and I don’t think you’re alone there. We’ll cover it a little later in this webinar, but it’s really about driving that incentive back to your managers. We want them to run shifts and manage our finances as if they were their own. We’ll jump into it at the end, and if you still have questions, jump back in the chat and pick our brains.
Tom: Keeping with the same theme of rostered versus actual, a really big one is small overruns across your team. A little 15 minutes here and there really adds up. This isn’t an extreme example: an extra 15 minutes per shift across 10 staff across five shifts. If you’ve got a decent-sized team, that could be half of your team staying 15 minutes later, or starting 15 minutes earlier, and over the year it’s a bit over $225,000, which is pretty eye watering. I imagine if any of your staff came up to you this afternoon and asked you to sign off on a $225,000 expense, I can guess what the answer would be. So it’s about getting the managers on shift to understand how those incremental increases compound across your year.
Tom: Arguably the biggest one, and the one with probably the most detrimental effect on your labour at the end of the week, is rostered versus budget. Like we just said, if we’ve set that budget and rostered really well to it, that’s only proportionately relevant to how much we actually make. A really good report for managers to bring you each week is budgeted sales versus actual sales, and then rostered amounts versus actual roster.
It probably states the obvious, but if you’re not hitting your budgeted sales on a day, the expectation would be that the labour is decreased. There are lots of bits and pieces around that. If you only have really short services and there are minimum time periods, for example. But we should be building that roster so that it has some redundancies built in, so that if we do need to cut, we know who should be cut at certain times.
Tom: The biggest one as far as going over rostered times is closes. I chef’d for a very long time, and my pet peeve is closing a kitchen. I think it should be done really well, spotless and reset ready for the next team coming in early, probably the same team after a late night. But it needs to be done efficiently and quickly. So pre-close, and this isn’t just back of house, it’s front of house as well. Get a really solid pre-close plan or checklist for your staff to work through, and make sure they know exactly when those things should start to happen. It may be when the last table leaves a particular section. It may be the last mains plate you send out, or the last ticket that comes into your kitchen, that triggers it. Everyone, at least across your management tier, should know exactly when that comes into effect.
Do as much of that pre-close as humanly possible while we’ve still got customers in and revenue coming through. So the moment we close the doors and finish up for the night, it’s about tidying down, doing your checks, doing your ordering and things like that before you head off.
Tom: A GM once told me, and I’m still good friends with him to this day, that if you’re wondering whether you should send someone home, the answer’s always yes. This is something to instil with your managers. They should consistently be checking: do I need everybody here? If I sent that person on that section home, would it change anything? Would it change the outcome for the guests, or would everything crash and burn, or would we be absolutely fine? I’ve heard of people setting alarms on their phones every half hour to think about it. That might be excessive, but it might be what you need to pull you out of service, raise your head up and have a look. Keep asking whether everyone on shift is absolutely needed, or whether we can start to trim.
Tom: Rosters can become habit, and rostering to habit is the quickest way to start blowing out your wages. We can definitely honour set days for people. If they always work Fridays, that’s completely fine. But if we were to build this roster from scratch, is it the exact same roster we’d build? A big one I bang on about a lot is that we generally always roster on the hour or on the half hour. There are lots of arguments for that. But if someone starts at 10:15 rather than 10:00, and you do that across six different roles, five days a week, there’s a pretty healthy chunk of change hitting your bottom line.
That’s not to say we should short-staff everyone on our shifts. It’s about analysing the reason people are there. A really good example is starting all of your opening kitchen team at 10:00. I think a head chef and probably a sous chef should be there at 10:00. About half the time they’re spending is usually organising people for their prep, organising sections and getting a plan for the day. That 15 minutes can save you a lot of money, and it can also set them up for a far more productive day, with a bit of time together all by themselves to get up and running.
Tom: There’s obviously another side to this coin, which is going absolutely ham on your labour. There are a lot of negatives that come out of that: missed sales, guest experience, staff wellness. If we grind our staff down to the absolute bare bones, we’re leaving a lot of money on the table. If I can’t get my drink refilled, or I can’t order extra bread or an extra plate for my table, that’s a terrible guest experience, and it’s not a fun place to work. So it’s all a balancing act. That’s what makes it quite overwhelming, and also what makes it quite fun: working out the sweet spot where we have really productive labour hours, our spend per labour hour is nice and healthy, and we’re not sacrificing what’s going on on the floor.
Host: Sorry Tom, I’ve got another question from Lee. To summarise, Lee sets budgets every couple of months for the next two to three months, and also has a winter and a summer roster template. How often should they be reviewing those two things to make sure they’re still accurate?
Tom: I’d break that up into two conversations. You’ll set a budget for quite an extended period, whether that’s quarterly or annually at the start of the financial year. That should be separate from your targets to some degree. If we’re a venue in northeast Queensland and we’ve got a cyclone coming in for the next 10 days, I’d update my revenue targets as and when I need to, because I shouldn’t expect normal trade over the next 10 days to two weeks while we’ve got rain. Likewise, if you have a really good weather event come up, say you’re in the South Island near the ski fields and you get a huge dump of snow right at the start of the season and it’s bringing in the drive market, we should reflect that in our targets. So your budget is something you set and stick to. It’s what the accountant looks at and what you’re tracked against over the whole year. Your targets are a realistic expectation of the revenue you think is coming through.
With templates, people might shoot me for saying this, but I’m not overly a fan of them. If you do use them because they save you time and give you base rosters with all the sections and staff you’d typically need, the roster should be reviewed weekly. It’s completely fine to start from a template, but what the template is should not be what the posted roster is. Your roster should reflect what’s going on with those targeted sales.
Tom: Who is responsible for this is completely up to you, but it’s something you should be going through and checking. I used to do it generally in the morning with a coffee when I first got to work, reviewing the night before. Even more important, these are things you want managers to bring to you in a weekly meeting. Sales versus budget, which is your revenue versus your targets, the budgeted sales you’ve set. Talk about it. I’ve been in plenty of meetings where it’s just “we hit target” or “we didn’t hit target” and there’s no real conversation about why. The why is the important part. It’s really easy to get in your Loaded account, where you can see your rostered labour and your actual labour as well.
The next report we want to look at is rostered versus actual, with a gentle “please explain” to your managers to start painting a picture of why we’re going over. If we’re going over every single Saturday, it might be that we’re simply under-rostering, and what we need to work out is what we can do earlier in the day or later in the evening, outside of peak times, to start to fall into that target.
Every week this is what your managers should be bringing. We had a question last week about what managers should bring to management meetings. Wages versus sales, the labour percentage, is obviously really important and probably the one you currently chat about most if you’re having these conversations. Talk about where the bottlenecks were, whether on the sales side or the labour side. That’s where you can flag things like “we didn’t have enough staff on to open section five”, or “close took so much longer because the person who finished at 9:00 could have stayed until 9:30 and given us a big head start.” Adding some of those hours isn’t inherently bad. It’s still looking at the overall day.
Tom: To the earlier question, something I think is incredibly valuable, and that I don’t see enough people doing, is tying the remuneration of your managers, head chefs and venue managers to a financial incentive. There’s a really old-school thought that their financial incentive comes every week or fortnight at payday. It doesn’t need to be a large amount of money. Where I’ve seen management incentives of $50 or $100 a week, it starts to make a huge difference to your bottom line. A really small incentive really changes the way people interact with both labour and COGS. Here’s a quick example: 2% over across your $30,000 to $80,000 weeks adds up to a huge amount. If you run that $100 weekly incentive with your managers and they successfully hit it across the whole year, you’re only spending a bit over $5,000 to save yourself $30,000 to $80,000 across the year.
With incentives, the biggest thing is to start really simple. Depending on venue size, we used to run either $50 or $100 a week for COGS and the same for labour, paid out monthly. If they didn’t hit both, it wouldn’t be paid out. For bigger, more complex venues you can start adding things like review scores, pulse checks that make sure they’re not doing this at the downfall of the business. But start with an incentive that drives them to treat your business and your money as if it was their own. I can talk about this for ages, so drop questions in the Q&A or flick us an email, because there are lots of smart ways to drive engagement with your managers. If you’re not in a cash flow position to be handing out $400 a month, bar tabs work really well. Bottles of wine tend to work really well too. There are lots of ways to start managing that ownership from your management team.
Tom: To wrap up, you want to measure your labour against the correct places. If you’re just a bar, you’ll look at your overall wages against your sales. If you’re selling food, there may be a very valid reason you track your kitchen against your overall labour, but I’d challenge you to ask why, and what you’re achieving out of it, because being able to drill down on productivity is the quickest way to get a win in managing your sales.
Watch your sales and your wages against them really closely. This is one I wouldn’t wait until your Monday meeting for. I’d be focusing on it daily, inside a shift, with your managers. Then plan how to close the gap between where you currently sit and where you want to be. The overall goal is 60% across our COGS and our labour. For some of you that might be very close, for others a world away, and the mix does come down to your business. If you’re a really service-heavy restaurant, you’re likely to have higher labour costs, and hopefully you can save that in COGS, and vice versa for quick service or bars.
So work out how you’re going to get to that point, then make some incremental changes. It doesn’t need to be massive. It can just be trialling that extra person for half an hour, or getting that pre-close done. See whether two people can close the kitchen at the end of the night, or whether you do need the five. Then circle back around and see what that’s done for your labour across the week.
Tom: If you have any questions, throw them in the chat, and if you think of other questions an hour away, or tomorrow, or tonight at 2:00 a.m., flick us an email. We’ve all got a heap of hospitality experience and love chatting about it, so we’d be more than happy to help. Keep an eye out in Loaded for messaging, and on our Academy page for all our upcoming sessions. We also have a couple of big product announcements coming out really soon, and we’ll run a webinar on everything we’re aiming to get out to you before the end of the year, which is really exciting. Feel free to reach out as always at support@loadedhub.com if you need us, and we’ll see you hopefully same time next week. Thanks everyone, have a great afternoon.
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