It’s no secret that labour costs are going up. In 2024, the national minimum wage will increase by 12% in Ireland and 10% across the rest of the UK.
So what can you do to keep your restaurant profitable while labour costs are rising?
Improving labour productivity is a step in the right direction. When done well, it can increase your profits, improve the customer experience, boost employee morale — and these are just a few examples of the benefits.
If you’re wondering where to start with labour productivity, you’ve come to the right place. In this article, we’ll outline what labour productivity is, why it’s important, and how to improve productivity in your restaurant.
What is Labour Productivity — and Why Is it Important for Restaurants?
Labour productivity is the amount of goods produced compared to the number of hours worked to produce those goods. It shows you how efficient you are at converting inputs (labour hours) to outputs (meals for customers).
But why is it such a big deal for restaurants?
Here are a few of the reasons:
- Increase profit margins. Achieve a higher output with the same resources to keep your profit margins healthy.
- Elevate the customer experience. Deliver a quicker service and reduce wait times, to improve the overall customer experience (and encourage customer loyalty in the process).
- Optimise staffing levels. Determine the right staffing levels for certain shifts to prevent overstaffing during quiet periods or understaffing during busy periods.
- Improve employee morale. An efficient and productive workforce can boost employee morale, increasing engagement and creating a positive work culture (which can increase retention).
On top of all this, labour productivity is good for business. It allows you to produce more food with the same (or less) resources. You spend less money, but you produce more food. It’s a win-win!
And with the hospitality industry changing rapidly, restaurants need to do whatever they can to encourage repeat business, maximise resources, and keep profits on the up.
How to Improve Labour Productivity in Your Restaurant
Let’s take a look at some of the ways to enhance labour productivity in hospitality.
Provide Staff Training
When people know how to do their jobs well, they can be more efficient with their time. And when they’re more efficient, they can focus on other tasks and be productive with their time.
Let’s use chefs as an example.
When a chef prepares a meal for the first time, they’re figuring out the logistics. They think about where the ingredients are kept, what equipment they need, and how to prepare all the items for the final dish.
By training kitchen staff, you can cover some of these areas to help chefs be more productive with their time. Show them where all the ingredients are stored, how items are categorised, and where the cooking equipment is kept.
As a result, they spend less time finding ingredients and appliances, which allows them to be more productive with their time. They can create more meals in shorter periods without compromising on quality.
Take a look at this article for more information on how to train staff effectively.
To increase labour productivity, efficient scheduling should be at the top of your list. It ensures you have the right number of people working each shift, which can increase productivity across your workforce.
Think about overstaffing during quiet periods as an example.
We probably don’t have to tell you that this isn’t good for productivity. Employees don’t have enough work to fill their shifts, making it hard for them to be productive. And the worst part? You’re paying them to be less productive.
So how do you improve scheduling to maximise labour productivity?
Creating a demand-based schedule is a good place to start, which you can do with an AI-powered platform like Nory.
A demand-based schedule involves allocating shifts based on predicted demand. If you’ve got a busy period coming up, the schedule automatically ensures you have a full rota to cover the shift. As a result, your employees can serve more tables and deliver a timely service to customers.
It also ensures that you have staff available with the right skills and expertise to run a smooth and efficient shift.
Technology is probably the most valuable tool for increasing productivity.
Because it can help in so. Many. Ways. Here are a few examples.
- Track productivity in real-time. Keep an eye on how productivity is going in real-time. Data will tell you what periods of the week your Kitchen teams are overloaded with orders that slow down service or when your FOH teams don’t have enough table turnover. This is gold dust for optimising labour deployment.
- Automate the manual processes. Nothing kills team productivity like having to wade through the treadmill of manual processes in a restaurant. The time spent counting stock before you call a supplier to order inventory or the time spent manually amend timecards and payroll or counting tips. These should all be automated to enable your team to focus on guest facing duties!
- Self ordering and checkout. At peak lunch times when customers are in a rush and teams are off their feet, look at options such as self order/checkout systems. This can help turn tables quickly in a pinch and give the guests the option to get in and out at speed.
With the right technology, you can streamline your processes and improve productivity throughout your entire workforce and across different locations.
Take a look at Nory as an example. Our AI features transform data insights into productivity recommendations. We’ll help you predict busy and quiet periods, create demand-based schedules, and improve your operations to streamline productivity.
If you want to see it for yourself, take a look at Josie’s success story. Working with Nory increased Josie’s sales per labour hour by +20.5% in just four months. Or Dr Juice, a juice bar that experienced a +43% increase in sales per labour hour after working with Nory!
Want to know more? Book a call with the team to get the ball rolling.
FAQs About Labour Productivity
What Is Productivity in a Restaurant?
Restaurant productivity refers to how efficiently you use resources to deliver meals to diners. It measures how well you convert inputs (like time and labour) into outputs for customers.
What Is the Formula for Labour Productivity Percentage?
There are different ways to measure labour productivity. Here are a couple of examples:
- Labour cost per table. This involves measuring how much it costs, in labour, to serve one table. To work it out, divide the total cost of labour by the number of tables served over a specific period.
- Sales per labour hour. This calculation shows you how much labour costs in relation to your total sales in a certain timeframe. Here’s how you work it out: Divide the total sales revenue by the number of labour hours that achieved that revenue.