Labor costs over 50%

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

  1. Mondo

    Mondo Active Member

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    I share the thoughts of bohegahwy. We have prep work to do and most days I have administrative stuff to do. Since we will be there anyways, might as well be open. Even if labor is super high in the morning, anything over breaking even is gravy. It also opens the door for those big lunch orders that you get here and there. When somebody orders a personal from you 2 times a week, you're going to be the first person they call when it comes time to order 20 pizzas for their work crew. Anyways, I'm interested in how the change works out for you. Good luck.
     
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  2. Lee Kim

    Lee Kim Member

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    Our whole January was like that. We had crazy spikes and then dead silence. I'm planning on pushing catering orders and special events. I'll definitely let you know how it goes. Again, thank you for the post that changed my approach!
     
  3. Jeremy

    Jeremy Member

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    Lee I was in the same boat as you. I use to grind away opening for lunch and working 15 + hour days 9am-12pm. After a while of working that many hours conistently for a few thousand in extra sales a week just isn’t worth it to me. I eventually just cut back my lunch operation to Thur-Sunday but even then most people would come in for lunch on fridays. Eventually I said to hell with lunch and now open sun-Thur 4-10 and Friday and Saturday 4-11. We do about 15 k a week in sales in a small town and it’s best thing I could have changed. I was able to not work my life away , utility bills went down, labor went down, sales actually increased.
     
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  4. bodegahwy

    bodegahwy Well-Known Member

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    We made a similar decision with respect to late night years ago. I know there is business to be had and a couple of other places in town stay open late but we close at 9PM every night. Back in those days, before we took CC, we took a lot of checks. When we started closing earlier our bad checks dropped by about 75%.

    As my parents said when I was a teenager... "Nothing good happens after 10PM"

    For us, I can't see closing for lunch. We would need someone in the store from at least 1PM anyway to prep for the night so the incremental cost to us for being open during the day is another 3 hours of manager time plus a driver which totals about $100 in labor. As long as we do more than $150 we are coming out ahead and we average about $300 per day before 4PM and sometimes do quite a bit more.

    From time to time I promote lunch business to local businesses and elsewhere using email blasts and facebook. We always have a slice special which brings in employees from neighbor businesses and some locals.
     
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  5. durbancic

    durbancic Active Member

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    Jeremy I see where you are coming from. But why not try and train someone to run those shifts for you. Or train them to close for you. You open-8, they come in at 5 and close.
     
  6. Jeremy

    Jeremy Member

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    Since we are in a very small town with very little foot traffic lunch was never very busy, mainly Fridays. It was a good way to get all the prep done though. I could easily train someone but for amount of business lunch was producing I make more money by opening at 4 and not paying anyone from 9-4. Those 6 hours add up over the course of a week. Even if I did open for lunch I would need atleast one driver and another cook and that could be stressful if it did get busy randomly. Most likely I would need atleast 2 employees and 2 drivers. Mainly because we have either huge corporate orders that places all want delivered at noon and small pizza by slice customers so you have to have front counter help. It was only worth the time and effort on Friday’s honestly. I have thought about just opening for lunch on Fridays again though.
     
  7. Jeremy

    Jeremy Member

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    I’m trying to maximize profit and be as efficient as possible. Take a breakfast place for example. My buddy owns 5 very successful breakfast places. His hours are very short. 7-1. He used to be open 6-3. Those couple extra hours a day just to have open to cater to a few people doesn’t suffice. Yes in restaurant industry there are always things to do but I come back to this point we already work hard enough guys, life is not about work. If you have a successful business that works for you why change it? If it’s not working for you then something needs to be changed. There are points all across the board for both sides-to stay open or to close. In my personal experience shortening my hours and closing for lunch was the best decision. Now if I go in early it’s for huge catering orders at my discretion. For lee it sounds like to me maybe trimming his hours would be ideal for his situation. Now if I was in a college town or a city with a lot of traffic I couldn’t imagine being closed for lunch. There are so many factors that go into that decision. I say do what’s best for you.
     
  8. URNUTS

    URNUTS Active Member

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    At one point, many years ago- I had Domino's stores that did lunch Fri, Sat Sun. All other days we opened at 4.
    Those were the days 4-11pm!

    "My buddy owns 5 very successful breakfast places"
    He need an assistant? I could be like his Mr Belvedere. I'll have his slippers ready when he gets home, clean the pool.... whatever.... :)
     
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  9. Lee Kim

    Lee Kim Member

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    It’s been a month since we cut our hours and started opening at 4pm, so it’s time to report the results. Turns out, it was the best decision we’ve ever made! We have slightly less revenue, but our labor costs are now 35%, down from over 50%. It’s still a bit high, but only because we list 4 people who didn’t like the new hours and had to train new staff (oh, well). So, our labor costs next month will be even lower. Most importantly, we’re PROFITABLE! Also, now I have the time and energy to market catering and develop school business. Thank you all for your support and advice!
     
  10. URNUTS

    URNUTS Active Member

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    Thanks for the update- sounds like some good results and better to come.