5 Tips to Help Restaurants Control Labor Costs


  • Hiring challenges and increasing costs means restaurant managers need to pay close attention to the cost of labor.
  • While some of the cost can be reduced by improving the productivity of employees, most of the strategies involve better management of staff.
  • From optimizing shifts to better onboarding and training processes, managers have a significant influence on labor costs in their restaurants.



Like any business, restaurants need to control costs to stay solvent. One of a restaurant’s most significant expenses are employees. Wages are rising all across the United States and small businesses are hard pressed to keep up with these increasing costs.

The below article will help you see where improvements can be made to control labor costs and how your restaurant can be more profitable.

1. Optimize Employee Schedules

Employees are often not scheduled efficiently. To maximize profit and make workflow easier for both you and them, follow these tips.

Create a staffing plan and follow it. If you need information on how to create a staffing plan, check out this article, which explains staffing plans in detail.

Split shifts. Divide your employee’s shift into two shorter shifts with a break in between. Generally, this break is for lunch or a meal. Providing a meal break is appreciated by employees, and also reduces expenses by allowing you to reduce the costs of employee salaries after a rush when fewer staff is actually needed.

Many employers provide unpaid breaks. However, some states legally require breaks to be paid. Research the laws in your state.

Scheduling software may help you optimize schedules even further. Consider purchasing professional scheduling software, instead of simply using a spreadsheet. We partner with 7Shifts, which offers a free trial. You can find out more information about 7Shifts here.

2. Minimize Overtime Hours

When creating your employee’s schedule, always keep overtime in mind. Ensure that all tasks are communicated clearly and organized well. This minimizes the amount of work having to be redone and should reduce overtime hours.

Tasks must be completed efficiently. As a manager, create methods and procedures to ensure that tasks are completed on-time, and no overtime is accrued. For instance, pre-bagging orders or preparing food items in advance will help reduce overtime appreciably.

3. Reduce Employee Churn With a Better Onboarding

Another issue that all restaurant managers face is employee churn. Retaining employees is of prime importance to any manager. New employees are less productive, and don’t provide the same level of customer service as more senior employees.

To avoid employee churn all managers should have an onboarding process .Welcoming and preparing employees for their new roles is crucial in improving employee retention.

In fact, 69% of employees are more likely to stay with their employers after experiencing a great onboarding.

Take a look at HigherMe’s onboarding tool, such as paperless onboarding and text-to-apply, which can help you create great onboarding experiences for your new employees.

4. Cross-Train Employees to Perform Multiple Tasks

Having only one employee trained to do a critical task creates a single point of failure – which is dangerous for any business. What happens if your crucial employee quits or becomes ill?

A much better approach is to cross-train employees to perform multiple tasks. That way, if an employee is indisposed for any reason, you have access to a quick replacement. Creating a schedule to cross-train and ensuring that adequate training is available are winning strategies when managing employees. Make sure to assign tasks based on employee strengths to boost confidence.

To further build confidence, encourage employees to shadow each other when your restaurant’s not busy. This will encourage employees to consult amongst themselves and take on more responsibility, improving your labor costing formula.

5. Improve Employee Efficiency With Incentives and Technology

As a manager, make sure that employees are supported through incentives and technology.

Using the latest up-to-date technology will help streamline order taking and payments, creating a cost savings in labor. Customers may also be happier, as order-taking will be more accurate.

Similarly, using phone apps to track tasks that need to be completed allows you to monitor progress, while providing employees with the incentive of checking off all tasks that need to be done during their shift, creating a sense of fulfillment.

Consider offering bonuses or commissions for meeting sales goals, or simply for high customer satisfaction ratings. Making your employees feel appreciated for excellent work reduces employee churn and encourages more efforts towards excellence.


We hope this article will help you and your restaurant find success in managing labor expenses. Managing labor costs is no easy task in this economy. New tactics will most likely be necessary for managers to ensure a profitable labor costing formula, despite the difficulty in dealing with your restaurant labor costs. Following these tips should help your restaurant stay open and service customers during this challenging time.

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