One of Restaurant365’s Carl’s Jr. franchisors shared concern over the newest law to be passed in California that that will require QSR brands to adjust their minimum wage to $20/hour starting in April of 2024.
Restaurant365 looked at the five states in five areas of the country with the highest number of food and hospitality businesses, according to the U.S. Bureau of Labor Statistics’ Quarterly Census of Employment & Wages. Those include New York, California, Illinois, Texas, Colorado, and Pennsylvania. BLS data is for the first quarter of 2023, the latest available.
One of Restaurant365’s Carl’s Jr. franchisors shared concern over the newest law to be passed in California that that will require QSR brands to adjust their minimum wage to $20/hour starting in April of 2024. With approximately 70% of Carl’s Jr. locations being in California, they are looking for innovative ways to overcome this new challenge.
To prepare for the impact of minimum wage increases, it’s essential to streamline your labor costs. Consider implementing these best practices to balance controlling labor costs while ensuring a great customer experience.
It is important to understand how to control labor costs while also obeying wage and labor laws that vary between states and cities. Especially if you are a multi-unit operator with locations in multiple states or municipalities, this can be a challenge. For example, there are approximately 40 cities and counties in California that have local minimum wages that apply to all employees and/or certain employment sectors and are usually higher than the state minimum wage.
Ensure your payroll and management teams understand what laws may apply, including leveraging restaurant scheduling software to consider predictable scheduling laws, split shift penalties, and minor restrictions when scheduling employees.
After you forecast your labor needs, another powerful tool for controlling labor costs is consistent, real-time analysis. You should be monitoring your labor frequently to address real-time labor issues. Checking labor merely on a monthly or quarterly basis allows for costly overruns that add up over time.
Manage your restaurant labor cost in real-time using data. For instance, if you know your sales per labor hour (SPLH) goals and your current labor costs, you can arm your store-level managers with up-to-date data from your POS so they can make informed decisions about breaks, cuts, and call-ins.
Your most effective employees are essential for making the most out of your labor budget. Strategically schedule your high-value employees to leverage the strengths they bring to the team. Analyzing productivity reports such as sales per labor hour, average sales per server, and labor cost per staff role will help you schedule your servers with the highest average sales during the peak sales times, to increase your revenue and therefore improve your labor margins.
One essential tool for controlling labor costs is using sales forecasting, pulling historical sales information from your POS to help you project your sales and demand in comparable time periods. When used with restaurant scheduling, forecasting allows you to make a schedule based on data, not just “manager’s gut instinct.”
If you are tracking your detailed labor metrics, you understand which areas of your labor are contributing the most to your total labor cost. Leverage this information by scheduling the different areas of your restaurant separately. Applying tools like smart employee scheduling based on SPLH percentage goals to your management, FOH, and BOH teams individually helps you optimize each part of your labor cost.
A restaurant has many moving pieces, which means there is always room for improvement. Reviewing even your smallest processes can provide labor efficiencies. This may cover everything from streamlining your menu so your BOH can be more efficient to changing the service station set up so that servers can take care of tables faster.
The more flexible your team, the more efficient your labor. Teach your host how to bus tables after the evening’s reservations wind down. Perhaps have a server work as a bartender on the slow lunch shift. By training your staff to fill in gaps as needed, you are making the most efficient use of your labor and optimizing labor costs.
Optimizing your restaurant labor cost, while delivering a great customer experience, is key to maintaining navigating through labor wage changes. As minimum wages increase, it is more important than ever to look at your labor strategies with a fresh perspective.
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