Controlling labor costs feels like a constant battle. Unexpected overtime or overstaffing during slow periods cuts profits. Set a labor budget by daypart. This gives you precise control. It maximizes efficiency.
Analyze Your Current Labor Costs
Get clear data before setting new budgets. Review past sales and labor reports. Look at hourly wages, tips, and benefits paid over the last few months.
Find your total labor cost as a percentage of sales. If your average sales were $50,000 last month, and your total labor cost was $15,000, your labor percentage was 30%. Lavu POS reports provide this data. Pay attention to busy and slow periods. This analysis shows where you overspend or understaff. Understanding these trends helps you budget better.
Define Your Restaurant Dayparts
Your restaurant runs differently all day. Break operating hours into ‘dayparts.’ This allows focused budgeting. Common dayparts are Breakfast, Lunch, Dinner, and Late Night.
Consider peak hours and menu offerings. A coffee shop might have a ‘Morning Rush’ (6 AM – 10 AM) and an ‘Afternoon Dip’ (2 PM – 5 PM). A fine-dining spot might only have ‘Dinner’ (5 PM – 10 PM) and ‘Bar Service’ (5 PM – 12 AM).
Define the start and end times for each daypart. This ensures consistent data collection. It applies budgets accurately. Be specific about time blocks.
Project Sales for Each Daypart
Accurate sales projections drive labor budgeting. Use historical sales data from your Lavu POS system. Look at sales trends for each daypart: week over week, season over season.
Consider external factors. Are local events, holidays, or school breaks happening? These greatly impact daypart sales. A downtown restaurant might see a lunch spike during a convention.
Marty, Lavu’s AI analytics, predicts future sales from past performance. This intelligence helps your sales forecasts. Aim for a realistic sales target for each daypart, every day.
Determine Your Target Labor Percentage
A target labor percentage guides your budget. This is the sales portion you can spend on labor. Industry averages vary. They often range between 25% and 35% for full-service restaurants. Quick-service might aim lower, 20-28%.
Your specific target depends on your concept, menu prices, and desired profit margins. If food cost is 30% and other operating expenses are 25%, a 30% labor target leaves a 15% profit margin. Work backward from profit goals.
You may use different target labor percentages for different dayparts. Lunch might be 25% due to high volume and lower menu prices. Dinner might allow 30% for more specialized service.
Calculate Daypart-Specific Labor Budgets
Combine sales projections with target labor percentages. Multiply projected sales for a daypart by its target labor percentage. This gives your total allowable labor cost for that time block.
For example, project $1,000 in lunch sales. If your target labor is 25%, your lunch labor budget is $250 ($1,000 x 0.25). Repeat this for every daypart, every day.
This budget includes all wages: hourly staff, managers, and a portion of salaried employees. Allocate them to specific dayparts. Account for any tips affecting minimum wage calculations.
Schedule Staff Based on Budget
Create smarter schedules with a clear daypart labor budget. Assign the right staff to match projected sales volume and customer traffic. Avoid overstaffing during slow periods.
Review employee availability and skill sets. Ensure adequate coverage for all positions. Stay within budget. A server making $15/hour means you afford about 16-17 server hours for a $250 lunch budget.
Adjust staffing dynamically. If sales are slower, send non-essential staff home early. If it’s busier, call in extra help if the budget allows. Lavu POS provides real-time sales data. Use it to guide these decisions.
Monitor and Adjust Regularly
Setting the budget is only step one. Constant monitoring ensures success. Compare actual labor costs against daypart budgets daily and weekly.
Lavu POS reports track labor versus sales in real time. Marty, Lavu’s AI, alerts you to potential budget overruns. This saves money.
Identify variances. Understand why they happened. Was sales forecasting off? Did an event cause unexpected labor needs? Adjust budgets and staffing plans based on insights. This continuous cycle improves accuracy.
FAQ
What is a good labor percentage for a restaurant?
A good labor percentage often falls between 25% and 35% of sales. It varies based on your restaurant type and profit goals.
Can my labor percentage differ by daypart?
Yes, your target labor percentage can certainly differ by daypart. Busy lunch shifts might have a lower target than slower dinner shifts with higher average checks.
How often should I review my daypart labor budgets?
You should review your daypart labor budgets daily and weekly. This ensures you catch variances quickly and make timely adjustments.
Does Lavu POS help with labor budgeting?
Yes, Lavu POS provides detailed sales and labor reports essential for budgeting. Marty AI also offers predictive analytics for sales forecasting.
What if my actual labor costs consistently exceed my budget?
Re-evaluate your sales projections, staffing levels, or target labor percentages. Find ways to reduce hours or improve efficiency during specific dayparts.
Should I include management salaries in daypart labor budgets?
Yes, you should allocate a portion of management salaries to specific dayparts if managers primarily work those shifts. This gives a more accurate picture of daypart profitability.
Is it better to overstaff or understaff?
Neither is ideal; aim for optimal staffing. Overstaffing wastes money, while understaffing hurts customer experience and future sales.
