How to Manage Food and Labor Costs in the Off Season
Do your restaurant food and labor costs go through the roof in the off season? Want to know how you can change that?
Watch this video to learn how.
If you own a restaurant that has any kind of seasonality – such as your peak season is in the summer months near a summer destination or your peak season is in the winter months near a ski destination – then you have likely experienced a drastic increase in labor costs when your sales drops.
If sales go down, labor cost goes up. Your food cost is probably the same – your sales mix probably doesn’t change – but all of a sudden you have no money because all your customers have left for the season.
Labor is use divided by sales – how much you spend on the sales that come in. If there’s no money, then everything is whole lot more expensive.
Video Notes on How to Adjust for Off Season Operation:
This is the time you change your staffing levels by reducing hours and let your seasonal help go. With this adjustment, you are gearing down and accommodating for the decrease in sales dollars.
The solution is going to be found in your menu.
First, you have to understand your restaurant prime cost. Total cost goods of sold plus labor cost is your prime cost. You should be shooting for 55% prime cost. If you’re like any other independent restaurant out there, you likely have room to cut points! I’m guessing somewhere in the range of 10 points. And that is before you even deal with your high and low seasons.
Definitely review the prime cost videos on this channel to fully understand how we get to that 55%. This video does cover the basics, but is intended to show you how to adjust your labor to keep your prime cost in line.
In the off season, you have to make changes. If you’re in the situation where you can’t cut your labor because you need them all year round, then you can look to your menu. Consider a seasonal menu that keeps your team employed and keeps your menu at a price point the locals can continue to afford.
For more information on managing seasonal restaurant traffic, read Gearing Up and Gearing Down.
If you’re interested in learning more about the systems covered in this video, read our special report, Breaking Away from the Insanity: How to easily take control of your restaurant and make more money. Download it here.