Labor costs over 50%

Discussion in 'The Think Tank' started by Lee Kim, Feb 8, 2018.

  1. pizzapiratespp

    pizzapiratespp Well-Known Member

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    We have reduced hours over the years also. Originally we copied dominos type hours by staying open till 1 am. I’ve notched it back little by little. Now we close at 10 and 11 on the weekends. Makes for happier employees also.


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  2. Bluebird

    Bluebird New Member

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    I planned on being open more, and most likely I would have the business, but have concluded all the employee drama, as echoed here, makes me think it’s just not worth it. It’s slamming when we are open though, we knock out the pies. It’s a neighborhood pizzeria, tons of regulars. The trick is to make your pizza addictive;). I’m female BTW.
    You’re always going to have people unsatisfied with your hours. You can be open 10 to 11 every single day, and you’ll still hear, “You should stay open later” What for? So I can have 3 people stand around another hour to sell you a slice, ha-ha. Its simple math.
    I think downtime can really inhibit your ability to offer value, perceived, or otherwise, to the customer. Puts you on the defense, where you feel you have to make it up somehow. There’s no denying that value is as important as ever. I’m in the Bay Area, and frankly, when I go out to eat I’m appalled at the lack of it. But, since I happen to own a restaurant, I know what they are going through…
     
  3. URNUTS

    URNUTS Active Member

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    Domino's is now requiring stores that do $60-100 (started at $60 then was to go to $100) in their last hour to be open another hour.
    So, if you close at 11pm and your 10-11 hour is $60 (for a period, on average, I believe) then you will be required to stay open to midnight.
    This was in the pipeline and being discussed when I sold my last store in 2015.
    I knew people open until 2am and it was pushed to 3.... 4am pushed to 5am.
     
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  4. Mondo

    Mondo Member

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    I'm curious, what kind of volume does a typical Dominos do a week?
     
  5. pizzapiratespp

    pizzapiratespp Well-Known Member

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    Our minimum labor $ for 1 hour of "open" is around $50.
     
  6. URNUTS

    URNUTS Active Member

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    Now, close to $20K I'd bet.
     
    Last edited: Feb 13, 2018
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  7. paul7979

    paul7979 Well-Known Member

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    Last figures I saw showed per store average in USA at just over 900k annually.
     
  8. Lee Kim

    Lee Kim Member

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    Bluebird, your posts inspired me to reconsider my entire operation. Over the past two days I ran a very detailed analysis. I broke down my labor costs by hour over the last year, and what I discovered is that from 11am to 4pm my labor costs are anywhere from 70-80%! That's not counting the cost of food and electricity. When you add those, I'm actually losing quite a bit of money during those hours. From 4pm to 9pm my labor costs go down to 30-40%, which is totally acceptable in California. I've tried over the last two years to build up lunch business, but with only marginal success. And that's despite the fact that we're the highest rated pizzeria in the three surrounding towns. Our location just doesn't work for that. So now I'm considering changing my hours of operation to 4pm to 10pm Mon-Fri. I will keep my regular hours 11am-9pm for Sun and Sat. It's a huge change and I'm a bit scared, but my numbers are pointing me in this direction. At any rate, thank you for this idea!
     
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  9. sparrowspizza

    sparrowspizza Member

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    Lee kim. I think that is a great Idea. I am only open from 4pm to 10pm. I could probably do a pretty decent amount for lunch in my area, but I just dont want to. I want to be in the store every open hour.
     
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  10. Lee Kim

    Lee Kim Member

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    I'll start next week and let everyone know how my experiment goes. Thanks for the support!
     
  11. Gavin

    Gavin New Member

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    We’re open 5-9 Sunday thru Thursday and 5 - 9:30 Friday and Saturday. Neighbourhood pizza place. We do great volume with 3 guys. Limited hours take the stress out of managing/staffing.
     
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  12. Lee Kim

    Lee Kim Member

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    What is your weekly volume, if you don’t mind sharing?
     
  13. Gavin

    Gavin New Member

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    Super steady. $10k a week.
     
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  14. pizzaboi

    pizzaboi Member

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    Have you tried to see if having a bare minimum crew for those hours, would bring the costs down?
     
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  15. Lee Kim

    Lee Kim Member

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    I’m trying that now!
     
  16. Lee Kim

    Lee Kim Member

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    We do about the same now. Let’s see what happens when I cut my hours. At any rate, I’d rather lose volume than money
     
  17. sparrowspizza

    sparrowspizza Member

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    10k a week, 4 hours a day, and 3 guys. I must meet these 3 guys. :)
     
  18. bodegahwy

    bodegahwy Well-Known Member

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    At least in our store, a good portion of that time is needed for prep in order to do the business in the evening. Once I am paying someone to be there for 4-5 hours of prep the incremental cost to add a driver is not much.

    We do a decent lunch business. Typically we have about $400 in by 4PM. If I am paying a manger to be there to work on prep for perhaps four of those hours then my incremental labor to be open rather than just prepping is two hours of manager time and 5 hours of driver time. Pretty good deal even if we only do a couple of hundred in sales.
     
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  19. Lee Kim

    Lee Kim Member

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    I figured I can open at 4 and still have enough time for prep. I wish I could have more lunch business, but I think I’ve tried everything, under the sun, but the volume just isn’t there.
     
  20. Bluebird

    Bluebird New Member

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    Yes, let us know how it goes. I'd love to do lunch as well, but it is what it is. I've definitely noticed places around here aren't as busy for lunch anymore. I will do big orders on occasion - if they are worth it only. I creep hours back sometimes too, to at least take phone orders, changing the times on yelp and google. This helps ease the rush that happens at 4. This way if business slows, I'm not committed, and I'm always open during my posted hours. This last week was crazy for us, literally 90% of our business was done in a 2 hour span each day. Ugh
     
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