SITUATION: Company C, a multi concept company with concepts ranging from ultra-fine dining to fast casual, and revenue near $50 million, had company-wide labor costs hovering near 40%. The high labor costs were challenging the company’s business model and had to be brought under check. Since every extra labor dollar spent, is a dollar wasted (unlike cost of goods purchased, which can to some degree be recouped), there was need for immediate action.
SOLUTION: A labor efficiency metric (Sales Per Labor Hour) was established and benchmarked vs prior year figures for the same metric. The restaurant operators were provided progressively more challenging targets, which were met across the board resulting in over $1 million in savings over the course of 7 months (vs prior year figures).