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Questions• How do labor costs affect cost control?
• What factors effect labor cost?
• How is effective scheduling achieved?
Budgeting Labor Costs
• Labor is a semivariable, controllable cost• Controlled by budget and scheduling
• Too many staff• Wasted money
• Too few staff• Poor quality product and service• Unhappy customers• Disgruntled staff/turnover
Factors Contributing to Labor Costs• Business Volume• As business increases, fixed labor (salaried) decreases. Variable labor
(hourly) increases
• Employee Turnover• Generally higher turnover is higher cost, newbies are being trained but
not producing much during training
• Quality Standards• Type of operation determines number and skill level of staff, and, in turn,
determines cost
• Operational Standards• If product doesn't meet operational standards both product and labor
costs increase
Scheduling• Sales histories and projections are used as a baseline to create a
Master Schedule: spreadsheet showing the number of people needed in each position for a given period of time
• Variables• Office opening• Plant closing• Weather• Holiday
Scheduling• Based on Master Schedule, create a Crew Schedule: shows
employees’ names, dates and times to work
Scheduling• Develop Crew Schedule with flexibility in mind• Have a clear policy (handbook)
• Post schedule far enough in advance
• Maintain open two-way communication
• Cross-train employees: Each recipe, technique or task should be practiced and understood by at least 3 employees
• Identify and train shift leaders: across shifts or kitchens
• Have on-call employees: prepared to answer call or call in
• Phone/text tree
• Have emergency plan