How to cut labor cost on slow shifts, not your best people

Cut hours, not people. Pull sales by hour from your POS, set a cut line from your own wages, and trim only the hours that fall below it: later starts, earlier finishes written into the schedule, and a cross-trained crew that can cover the lull. Your best people keep the busy hours. Before you send anyone home early, check your state and city rules, because some places require pay for a shift cut short.

Start with sales by hour, not the week

A weekly labor percentage tells you labor ran high. It doesn't tell you when. On a slow day, look first at three places: the gap between lunch and dinner, the first hour of a shift before guests arrive, and the last hour after the kitchen slows. You find those hours in your POS, not in payroll.

If you're not sure what labor percentage you should be aiming for in the first place, start with the labor cost guide: it has the targets for each type of restaurant and how to count labor. This post is about the next step, what to do with the slow hours.

1. 01In your POS, find the report that shows net sales by hour of the day. If yours only exports checks, export them with their close times and total them by hour in a spreadsheet.
2. 02Pull the same weekday for the last four weeks, say four Tuesdays, and average each hour. One week can be thrown off by a game, a storm or a party of 20.
3. 03From your time clock, count how many hourly staff were on the clock in each of those hours. Someone who worked 11 to 3 counts in four hours.
4. 04Put the two side by side: sales and staff on the clock, hour by hour. Leave out holidays and days with private events, or compare them only with each other.

Use net sales, after discounts and comps, before tax and tips. Count hours actually worked, not hours scheduled: early clock-ins and late clock-outs are paid hours too, and they belong in the count.

Set your cut line from your own numbers

Sales per labor hour is sales divided by the hours your staff worked. On its own it says little. Next to a cut line, the sales per labor hour below which labor runs over your target, it tells a manager whether this hour is paying for the people on the clock.

Salaried managers and chefs are paid whatever the sales, so they use up part of the target before any hourly hour is worked. The free labor cost calculator takes them out first, which raises the line:

Juniper Table's labor ran at 38.5% against a 35% ceiling, the top of RestaurantDoctorAI's target for full service. At 35%, last week's sales paid for $10,500 of labor. Take out $1,650 of salaries and $8,850 is left for hourly staff: 536 hours at $16.50. The team worked 600. So the question for Juniper Table isn't who to let go. It's where 64 hours a week went that sales didn't pay for.

Find the hours that run under the line

Divide each hour's sales by the cut line and round down. That's how many hourly staff that hour's sales pay for at your target. Here is Juniper Table's average Tuesday afternoon and late evening, from four Tuesdays of POS and time-clock reports.

The busy hours pay for more people than are on the clock. The problem is five hours: the afternoon lull from 2 to 5 and the last two hours of the night. Two things keep this honest.

• There's a floor. Juniper Table can't open with three people. Say it needs four to run safely: a cook, a dishwasher, a server and someone on the bar and the door. No hour goes below that, whatever the sales.
• One slow hour before a rush is normal. The hour before dinner can run under the line while the crew sets up. The line is a reason to look, not an order to send people home.

With a floor of four, the hours Juniper Table could trim on that Tuesday are 4 from 2 to 3, 4 from 3 to 4, 2 from 4 to 5, 2 from 8 to 9 and 4 from 9 to 10: 16 hours, about $264 at $16.50. If Monday to Thursday look like this Tuesday, that's 64 hours a week, the same gap the calculator showed. Your own days will differ; the point is that the hours sit in a few predictable places.

Stagger the starts and plan the cuts

Once you know which hours run under the line, change the schedule, not just the shift. A shorter shift written into next week's schedule gives your staff notice, where a long one cut short on the day doesn't, and in some states the two are treated differently in law too (see the rules section below).

Later starts

At Juniper Table, eight people are on from 4 to 5 and the hour pays for six. Two dinner servers who start at 4 could start at 5, when sales double. The same applies to the morning: if the first guests arrive at 11:30, a prep cook may need to start early, but a server probably doesn't.

Earlier finishes, written in

The lunch crew is the other half of the afternoon. If two lunch servers are scheduled until 4 and sales drop by more than half after 2, schedule them until 2:30 and let the dinner crew pick up the floor. Do the same at night: write the closing crew into the schedule by role, so the 9 to 10 hour runs on the floor of four rather than on whoever is still around.

A written cut order

For the days that come in slower than forecast, put the cut order on every schedule: who goes first, second and third, and who closes. Order it by role and by the hour, not by who's in favor. Ask who wants to go first; some people want the hours and some want the night. Then the manager on shift doesn't have to decide under pressure, and nobody reads an early cut as a verdict on their work.

Give the lull useful work instead of empty time: prep for dinner, restocking and deep cleaning can move into 2 to 5, so those tasks aren't paid for during the rush.

Cross-train so a small crew covers every station

A floor like Juniper Table's is what keeps the lull expensive: you can't send the bartender home if nobody else can pour. Cross-training can lower the floor without lowering what guests get.

• Train a server to make the drinks on the short list that sells in the afternoon, so the bar can open later or close earlier.
• Train the host to run food and bus tables in the quiet hours, so one person covers the door and the floor.
• Train a line cook on dish and prep, so the dishwasher can start with the dinner rush.
• Train a second person on every station, so a call-out doesn't turn into a double shift.

Train on slow shifts, a station at a time, with a short written checklist for each. Start with the people you most want to keep: someone who can cover two stations has more ways to stay on the schedule when it's slow. Where cross-training moves someone into a job paid at a different rate, check how your payroll handles the hours.

The rules that differ by state and city

Rules on cutting a shift short and changing a schedule differ by state and city. Some require pay when a shift is cut short. Others require schedules posted in advance and extra pay for late changes, and the ones we read are written for large employers and chains. Here is what the official pages we read say. It's a sample, not a list of every place with such a law.

California: reporting time pay

The California Labor Commissioner's reporting time pay FAQ says an employee who reports for a scheduled day and gets less than half of it is paid for half the scheduled day, never less than 2 hours or more than 4, at the regular rate. Its own example is a 6-hour shift sent home after 1 hour: 3 hours of pay. The FAQ lists exceptions, such as a utility failure or an employee leaving by choice, and says the extra pay doesn't count toward overtime.

New York State: call-in pay

New York's Hospitality Industry Wage Order (section 146-1.5) says an employee who reports for duty at the employer's request or with its permission is paid for at least 3 hours for one shift, or the hours of the regularly scheduled shift if that's fewer. Time actually worked is paid at the usual rate less any tip credit; the rest of the 3 hours is paid at the basic minimum rate with no tip credit.

Predictive scheduling and fair workweek laws

These set notice periods and extra pay for changes after a schedule is posted. Oregon's predictive scheduling law is statewide for employers with at least 500 employees worldwide, with schedules 14 days ahead. Seattle's Secure Scheduling Ordinance has the same 500-employee line, and a full-service restaurant also needs 40 or more full-service locations. Chicago's Fair Workweek Ordinance covers restaurants with 250 employees and 30 locations, and only staff at or under a pay ceiling the city sets. Philadelphia's Fair Workweek law uses 250 employees and 30 locations worldwide and calls for schedules 14 days ahead. New York City's Fair Workweek Law for fast food covers chains with 30 or more establishments nationally, franchises included.

A restaurant with one location is under the location lines in Chicago, Philadelphia and New York City, and under Seattle's for full service. The two state pages are different: California's FAQ sets no employer size, and New York's wage order covers every employer in the hospitality industry. Other states and cities have rules of their own, and rules change.

This week

1. 01Pull net sales by hour for the last four of one slow weekday from your POS, and staff on the clock by hour from the time clock.
2. 02Enter last week's sales and payroll in the labor cost calculator and write your cut line at the top of the sheet.
3. 03Mark every hour where sales pay for fewer people than were on the clock. Write down the smallest crew that can run the room safely.
4. 04On next week's schedule, move one start later and one finish earlier in the slowest stretch, and write the cut order and the closing crew by role.
5. 05Pick one station to cross-train on a slow shift this week, with a written checklist.
6. 06Look up your state's and city's rules on reporting pay and schedule changes before the new schedule goes up.