Running a Restaurant/restaurant staffing


QUESTION: Active Adult Retirement Community has Clubhouse with three venues for dining: a breakfast and lunch grill (75 seats); a bar and lounge with bar menu (12 bar stools and 60 seats) and a "formal" dining room (110 seats).   Lunch is only time there is more than one seating.  Hours of operation for all restaurants are 6-7 AM (depending on season) to 9:30 PM seven days/week.

Currently, staffing costs including management are about 62% of gross sales including liquor. Which I believe to be too high even with three venues and not much overturn of tables.

Management says cannot breakdown staffing by venue because of nature of operation.

How can we get a better handle on whether staffing costs are reasonable?

Thank you,

ANSWER: Hi Barbara,

Your labor cost as a percentage of sales is definitely high.  Many, many factors determine labor costs.  Are the servers tipped or are they paid at full minimum wage or above?  Just curious since it is a non-traditional type of location.

In order to isolate costs for each venue, I would build a spreadsheet with schedule hours (and rates of pay of course) and calculate labor costs per day for each day of the week and each venue.  I realize that there is bound to be some overlap of labor from one venue to another.  The only thing you can do in those cases would be to apportion the "shared" labor among the three venues either by time spent with each or equally if there is no other way to do it.

Typically, when labor is too high it simply indicates that sales are too low.  I am not sure what your sales volumes are, but focusing on growing sales through more guests, higher check averages, etc. will yield dividends when it comes to lowering labor costs.  Also, look at the tasks that are being done in the kitchen.  While shredding your own cheese may save you a few cents a pound, the tradeoff in labor costs simply doesn't usually justify many of the "from scratch" tasks we impose upon our kitchen staff.

Also, track scheduling by productivity.  Look at sales per man hour worked in both the back of the house and the front of the house.  I can't tell you what your targets should be but the first step toward improving labor costs are too measure them.  It goes without saying that minimizing or eliminating overtime will certainly help and is one of the first things you should look at.  Look at "fringe" periods as well.  Are people coming on or staying on shifts longer than necessary?  Schedule not based upon habit but upon sales projections.  If there are predictable variances in day to day sales from one day of the week to the next there should be equally different staffing levels scheduled.

We work with all types of restaurants across the country.  If we can be of any help to you, I would be more than happy to schedule a no obligation, no pressure phone call just to talk about the situation and explore what we might be able to do to help you.

I hope this helps you, Barbara!

David Foster
Foster and Associates
(417) 877-0428 office
(417) 849-1903 cell

---------- FOLLOW-UP ----------

QUESTION: thank you for your response.  Our annual food sales are about $1.1mil and liquor about $.5mil.  There is an automatic 15% service charge added to bill (not included in sales) divided among FOH staff.  Most OH employees are PT and don't recieve benefits and earn sl less than min wage.

Also the formal dining area is rarely full at dinner.


Thanks for the additional info.  When we work with restaurants, we typically target COMBINED food/liquor (Cost of Goods) and Labor including management to be at 60% or less.  Unless I misunderstood your first question, your labor costs alone are at 62%.  With this kind of cost, I would doubt that the business can cash flow at all.  If I have misunderstood and the 62% reflects food cost, labor costs and liquor costs, you are not too far from the mark.

If the formal dining room does not fill up for at least one full table turn, it may be time to make some concept and/or menu changes.  As I had said in my earlier answer, generating sales is the very best way to lower labor.  Short of curtailing operating hours, the only other thing you can do is really, really focus on scheduling and then monitor actual hours worked compared to what was scheduled.  That being said, the single WORST thing you could do would be to lower staffing to the point that guests do not have an excellent experience.

Another "guideline" that we use is total management compensation.  We like to see that somewhere between 6% and 10% of total sales.  This would include all managers and hourly supervisors (assuming they are not working positions as well).  Not sure how that fits with your situation, but it would be good to know if a big part of the labor problem is coming from the management category.

Don't hesitate to email or call.  We are always happy to visit and see if we can help you.

David Foster
Foster and Associates
(417) 877-0428 office
(417) 849-1903 cell

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David Foster


We have been in the restaurant industry for over 40 years and consult with restaurants, casinos and hotels nationwide. We love helping restaurant operators succeed and can answer any questions related to restaurant start-ups, business plans, operations, labor costs, food costs, liquor costs, employee turnover, marketing etc.


I am a seasoned foodservice veteran with nearly 42 years experience in the industry. My extensive background includes overseeing multi-unit, multi-concept restaurant operations ranging from cafeterias to fine dining, and everything in between. I have a strong hands-on operations and marketing background that give me a unique insight into the “Real World” challenges of the restaurant industry. I have extensive concept development, menu and recipe development and kitchen layout and design expertise. I am effective in analyzing operational needs and identifying practical solutions in today’s very dynamic foodservice environment. In the industry, I am respected by my peers and have served on the Board of Directors of the Missouri Restaurant Association and have been a featured speaker on the subject of Home Meal Replacement at various national events. I also served on the Culinary Advisory Board of the Ozark Technical College as well as serving on the Board of Directors of Big Brothers, Big Sisters of the Ozarks.

Member of the National Restaurant Association, Past Board Member of the Missouri Restaurant Association, Past Board Member of Big Brothers, Big Sisters of the Ozarks

The Consultant, Seasoned Views (a trade magazine for the restaurant industry)

Attended Drury College, Springfield, MO, Varsity Management, SRI

Awards and Honors
I have had restaurant projects featured in The Consultant (a magazine for foodservice consultants with worldwide circulation). I was honored for achieving the highest level of management competence by the Selection Research Institute.

Past/Present Clients
Sugar Creek Casino, Classic Rock Coffee Company, Mark Twain Brewing Company, Springfield Brewing Company, Bruegger's Bagels, M&M Grill, Paco Joe's, Holiday Inn, Hilton Garden Inn, Buffalo Run Casino, Golden Corral Corporation, Crosswinds Café, Chinese Chef, Mr. Dunderbak's Old World Market & Café, Bullfeather’s Wings and Grille, Mainstreet Market, Bear Rock Café, Cartoon's Oyster Bar & Grill, T's Redneck Roadhouse, Jim's Steakhouse, Neighbor's Mill Bakery & Café, Crazy Vine, San Francisco Oven, Maria's Mexican Restaurant, Andy's Frozen Custard, The Granite Club, Umi Japanese Steak, Seafood and Sushi, Springfield Grocer Company, US Foodservice, Premium Standard Farms, Smithfield, Dakota Organic, Kraft Foods, Allens, Inc.

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