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Hotel Industry Trends |
Tuesday February 9th, 2010 |
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Minimum Wage Increases Necessitate Changing Scheduling Practices - By Michael Beam and Juliette Boone |
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In order to protect profit margins, restaurant owners will be required to react to rising wage rates. Operators will be forced to examine their scheduling practices to ensure that increasingly costly labor hours are not wasted. |
Minimum wage increases are under consideration or have passed in many state legislatures in 2007. Nationally, President Bush signed into law a supplemental appropriations bill (H.R. 2206) on May 25, 2007, which contained a provision that will increase the minimum wage rate. The increase will be phased in over a two-year period in the following three steps: By July 24, 2007, the minimum wage will be raised to $5.85, then to $6.55 by July 24, 2008, and finally to $7.25 per hour by July 24, 2009.
In order to protect profit margins, restaurant owners will be required to react to rising wage rates. Operators will be forced to examine their scheduling practices to ensure that increasingly costly labor hours are not wasted. We recommend to our clients four basics steps that will help to efficiently prepare labor schedules. Each of these steps is discussed below:
Generate a Sales Forecast
Any efficient labor schedule starts with a detailed forecast of daily sales. The sales estimate should be broken down by meal periods and incorporate private events, while considering weather forecasts, local events or other factors that might affect restaurants sales.
Plan Labor Hours
Determine how many hours are necessary to produce the sales forecasted in the previous step and input it into a schedule format. Be sure to consider all positions necessary within both the front-of-house and back-of-house. Also, for particularly busy periods, close attention must be paid to ensure enough staff is available to service demand. Lastly, consider staff competency and skill levels as well as any training taking place.
Compare and Adjust the Budget
Based upon your estimate of sales and labor hours scheduled, you can calculate a labor cost forecast for the week. Once prepared, compare it to the budgeted labor cost for your restaurant to determine if adjustments must be made. Please consider that your labor budget must include all benefits and additional labor costs.
Measure Performance & Learn
The last step in the process is to compare your actual labor costs and sales for the week against the estimates you arrived at during the scheduling process. This feedback is vital to improve future scheduling performance and reduce labor costs.
Utilizing the practices we have outlined above will help to efficiently schedule your staff while minimizing labor costs. Please note that we do not suggest using a static schedule that is simply a replica of your previous week's schedule. Sales volumes rarely remain consistent from week to week; schedules should always be adjusted to reflect these fluctuations. In today's environment, cost escalation is often times out of the operator's hands; however, a measure of control can be regained by following the four steps described above.
For more information, contact:
Michael Beam
Email: mbeam@hvs.com
372 Willis Avenue
Mineola, NY, 11501
Phone: +1 516 248-8828 ext. 280 (Work)
+1 585 737-6176 (Mobile) Juliette Boone
Juliette Boone
Email: jboone@hvs.com
2229 Broadway
Boulder, CO, 80302
Phone: +1 303 301-1130 (Work)
+1 303 938-8884 (Mobile)
By Michael Beam and Juliette Boone
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Contact Information:
372 Willis Avenue
Mineola, New York 11501
516-248-8828
516-742-3059 FAX
Click for Website
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Since 1980, HVS International, the leading global hospitality consulting organization, has provided financial and valuation consulting services for more than 10,000 hotels in all 50 states and more than 60 foreign countries. |
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