How employee tenureship is affecting business productivity, and why it often isn't the manager's fault that labor cost is high.

A quick 3 minute read today.

First of all, a big thank you to this week's lead sponsors. Helping to keep this newsletter free for you every week:

BlackFox | Restaurant Daily Cash-Out Application - makes your restaurant Cash-Out process faster and more accurate, while literally saving a restaurant thousands of dollars a year in time and by eliminating costly errors.

Vnu Mngr is a first-party?ordering and guest engagement enterprise software?that helps venue operators to increase exposure, Sales & Manage daily tasks more efficiently than single solution platforms.

Boosting Productivity for Sustainable Growth.

In a recent analysis conducted by Benchmark Sixty across all 12 locations of a restaurant company, a compelling trend emerged—sales were on the rise, but achieving consistent labor cost percentage targets proved to be a persistent challenge.

Sales Soaring, But...

Across the board, all 12 locations experienced a commendable surge in total sales, ranging from 12% to an impressive 20%.

Increased guest count and spending were the primary drivers behind this growth. However, despite maintaining similar management teams, in both front and back of the house, none of the locations could consistently meet the established labor cost percentage targets.

Unveiling the Productivity Puzzle.

A comprehensive front and back of house analysis conducted by Benchmark Sixty revealed a significant productivity decline across all locations compared to the benchmark year of 2019.

On average, businesses witnessed up to a 25% drop in productivity, leading to an undesirable increase in cost %.

Connecting the Dots with Employee Tenure.

Further investigation revealed a critical factor -> The average employee tenure had shortened significantly.

In 2019, the average employee had been with the company for approximately two years, while in 2022, the average tenure was just under four months.

This shift necessitated increased staffing levels for adequate service, training, and stress management. However, more staff, coupled with rising wages, posed challenges in achieving targeted labor cost percentages without operating short-staffed.

Strategic Collaboration for Sustainable Solutions.

Taking proactive steps, Benchmark Sixty collaborated with executive, finance, and operations teams to set realistic productivity targets for each location. By reverse engineering data, we sought to provide a clear roadmap for boosting productivity, helping all 12 business units return to the exemplary levels witnessed in 2019 while achieving profitability targets.

The moral of the story

Understanding the changes in staffing dynamics, and how they impact the overall business model in a restaurant environment these days can be the difference between winning and losing.

In this case, the ultimate cause that was discovered to be causing the lack of performance by a seasoned management team had nothing to do with financials at all... It had to do with the levels of experience, confidence, training and exposure to the job that their teams had.

In essence, prior to this discovery, the only way that their teams could have hit their labor cost % targets would have been to run short staffed.

We all know where that goes...

Now here are a few ways I encourage restaurants to look at things in order to stay ahead.

1. Don't worry so much about food cost % -> Focus more on the variance between your actual food cost, and your theoretical food cost. This is important because unless you sell the exact same number, of the exact same items every week, your food cost % will never be the same.
2. Don't worry about labor % so much -> Instead, pay attention to controlling cover count, employee hours, average wage and average spend. Those 4 factors are what make up revenue and labor $, therefore they make an impact on labor %.

If you follow any of my content, then you have heard me talk about employee workload. Labor cost % can be largely impacted by training and hiring cost, so employee retention is typically a huge opportunity.

Measuring, and managing employee workload can lower stress, anxiety and burnout in a restaurant, and in turn it can dramatically lower turnover... saving thousands of dollars per year.

Lets chat about the employee workload concept... If the NBA, NHL, NFL and MLB all do it, then restaurants probably should too right?

Does your restaurant have a workload issue? Take this quiz!

DM me so we can have a conversation. It might just change your business forever.

At the end of the day, the restaurant business model has changed so much, and is changing so rapidly that unless you properly compartmentalize information like this, it becomes extremely hard to know which direction to head.

But it doesn't have to be ;)

Until next time.

Jim

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Ps. Whenever you are ready here are a few other ways I help people like you every day.

• If you are a restaurant operator or owner who realizes that increased productivity, improved employee workload, and lower turnover are the only responsible ways to succeed in our industry these days... I've got you covered. Book yourself some time here.

• If you are a consultant, or service provider to the restaurant industry and you are wondering how to create opportunity, looking to build your business in 2023, or find it to be lonely as a solo-preneur there is a spot for you right?here and I would love to meet you.

• Take a minute to join me for more detailed strategy in order to become a smarter restaurant manager in just 5 minutes per week. No matter what level you are at, what country, state, or concept.