What is your time worth... how are you using it?

The day to day creeps up on you. Surrounds you. Occupies your attention and pretty soon there are no hours left in the day. You are staring at the ground right in front of your feet rather than thinking about what you want to do differently next month, next season and next year.

You are running the day shift to save labor… doing the books, payroll, marketing and equipment maintenance when you can find a minute. You are covering for employees that no-show or quit. You are making the dough because otherwise you would be paying someone to do it and it is quiet in the afternoon anyway.

Don’t get me wrong. Labor cost control is important… but often we see posts from operators that do not have the time to get involved in the community, brainstorm new ideas, figure out how to change the marketing plan…

This is not a suggestion that you don’t work all those hours… just to consider whether what you are doing with those hours is the best use of your passion as an owner. What if you paid someone to run one of those day shifts every other week so you come in at 4 instead of 9 or 10 and you used those 6 hours every other week to build your business? How much would that cost you? In my store it would cost me about $200 a month.

I promise you that if I focus on marketing and community relationships for 12 hours per month I will gain a whole lot more than $200! Don’t save pennies and miss dollars!

Join a local service organization (I belong to Rotary). Go out and meet the front desk and manager staff at all your local hotels. Find out who the contacts are at boy scouts, girl scouts, club soccer, little league and get to know them and offer to help with their next event.

Take the time to learn how to do emails, adwords, text programs and direct mail. Dig into your POS and learn which offers really worked, what time of day people really order, what days of the week. (Yes, I know, we think we know these things but my experience has been that when I actually trouble myself to get the data there is generally a surprize or two in there)

Make a comprehensive list of every promotional activity, advertisement, sponsorship etc that you have done in the last two years and figure out what your cost in $$ AND the time spent was… you may be shocked. Then rank order them for cost effectiveness and cut off the bottom 20-30% (by dolars/time) and re-allocate those dollars and hours to either something new or to increasing one of the things that is working better.

Review ALL of your costs. Which ones have you evaluated for savings or for shopping costs in the last year? The last 3 years? I bet most of us have several thousand per year in wasted costs either from not shopping or from just doing what we did last year…

Don’t say you don’t have the time… remember where this post started… 6 hours every other week… 150 hours per year. PAY someone else to do that busy work. It will cost you $2000 and my guess is that the average shop owner that is not doing these things because they don’t have the time will find $3,000 to $5,000 and possibly as much as $10,000 in cost savings and find ways to increase sales overall by 10% by creating relationships and spending marketing dollars better… Time well spent.

Ideas?

Relations for sure help! I am on the board of 2 neighborhood organizations and an active member of the chamber of commerce. all 3 bend over backwards to make sure the restaurant is well publicized in the neighborhood. that being said their reach only goes so far most of the neighbors are working class and they don’t have time to be involved…I like the Walt Disney and Ray Crock model of marketing “Get em while there young” so most of my donations go to schools. also, are biggest event of the year is a fundraiser for the boys and girls club down the street.

I did staff 2 lunch shifts during the week so I can get out there and drumming up more catering business but I find myself spending that time working on my house (my wife and I just purchased our first home) I really need to refocus on the business January was really rough here. this month has been better.

Quite honestly even with the hours I spend at the counter and marketing the restaurant and doing everything myself; my labor cost are still very high. I really need more business to justify giving up more roles. I guess that’s a catch 22.

If you use 150 hours a year (6 hours every other week) to work on building sales and reviewing costs I believe that the return will be many times the $2,000-$3,000 it would cost most of us to cover those hours with someone else. The process of reviewing my costs, and more importantly getting my crew to understand it, is an example of using a few hours to focus on a cost center that saved me a lot of money.

This story is a good example of a way that a couple of hours brainstorming and fiddling with data gave me a tool that I think saves me between $5,000 - $10,000 per year.

Our tipping point where labor starts to get reasonable is around $8,000 a week. It does not get what I think of as good until we are running about $12,000. Because we are in a resort town our sales history is a roller coaster we do not have a simple staffing model to hit our labor goals. We do $4,000 a week during the slowest week of the year (when we are a town of 12,000 people that has 100 restaurants and many local people are either between seasonal jobs or working short hours) and we do as much as $30,000 in our biggest week. We have to have a model for target costs for those levels and every point in between. After years of messing with it and trying to get managers to grasp % costs I finally started looking at how I measure acceptable labor cost in a different way that has worked for me.

I struggled for years to raise awareness in my managers and assistant managers regarding labor cost. I talked about it. I posted goals. I paid bonuses… still it always seemed pretty hit or miss… almost random… “wow we got the bonus” rather than " what do I need to do today to get the bonus?" At one point I sat down to attack the problem with some time brainstorming. I was looking at my costs and our inconsistent ability to run the costs that I thought we should. I was charting the hours worked and trying to get the team to understand that it was simply too many hours… getting bogged down in debates about late rushes, clocking in early, not getting people off after the rush. I produced color coded charts showing the hours that I thought were “extra” explaining that we had 30 too many labor hours in one week and 25 in another and that is what started me talking about hours rather than dollars… I discovered that hours rather than dollars worked to connect to my team.

I decided that I needed goals that were easily understandable and demonstrably reasonable. I pulled three years of history and charted the weekly sales and the total hours worked for each week. I bracketed them in $1000 increments. i.e. sales from 4-5000, 5-6000, 6-7000 etc and looked to see how many labor hours we worked to get the job done. There was a LOT of variation. For example from 8-9000 in revenue we might have had between 200 and 250 hours worked in a dozen or more weeks where our sales fell into that range. For sales of 8500 this produces a range of $34 per labor hour to $42.50 per labor hour. To set the goals I picked a number that we had met or exceeded at least a couple of times in the past but was better than our average. In this case, our goal for sales between $8,000 and $9,000 per week is $40 revenue per hour worked. On $8,500 revenue that would mean that the goal is have 212.5 hours or fewer worked during that week. The manager can see revenue per hour easily from any daily report simply by dividing the sales by the total hours which appears on the report and we pay part of the bonus based on whether the team hits those goals each week.

I don’t think I would ever have come up with this had I not taken some time to sit down and focus on something that is not tied to the day to day operation of the store. If an owner does not have time to do this kind of thing because they are busy running the shift and keeping the wheels on all the time, I think they will cost themselves far more than they save. I believe that the same is true of building sales through marketing activity and building community.

Great advice @bodegahwy

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I have taken your advice and setup a manger “paryoll bonus” based on door time, make time, $MH and Food cost. Not sure if I am just not talking about it enough or if they don’t want to make any more $$$, but we have only hit our goal 1 time in the past 6 months. It’s like it just rings on deaf ears! But I do like the concept of $MH. It makes more sense and is simple. I set mine up just like yours, by graphing our sales into $1000 increments.

Dan

Once years ago I had a bonus based on door time… and when I was not paying attention the manager turned up the oven temps to shorten the bake by two minutes hoping to get a jump on door time by having the pizzas ready to go 2 minutes sooner… so… we were delivering nice brown pizza with raw dough in the center. ugh! Be careful what you ask for with an incentive!

Also, if your crew is only hitting bonus once every few months your incentive is doing nothing for you. Employees will not spend any time thinking about a bonus they almost never get.

I find that I need to talk about the Rev per hour thing a couple of times per week in addition to reviewing it for every paycheck. I am going to make it part of the nightly text message going forward. They already text me every night with Revenue, Door Time, Over/Short and hours worked so having them do the division rather than me will keep them thinking about it.