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Hired a GM, now what?

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cpif

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I actually have so many questions for this topic but the one most pressing is with regards to labor costs. My GM is salaried so does not clock in/out. My POS will run a labor report but I feel without her included, the report is inaccurate. She feels her costs should be put into restaurant expenses, not labor percentage.

So do you include your managers salary in the daily/hourly labor percentage?
Do your managers work the line in place of an hourly employee to keep those percentages down? That’s about where I am at this point because my labor is entirely too high for sales.

Thanks!
 
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Absolutely. Her salary should be included in the daily/hourly labor percentage. The operations don’t happen without her labor.
 
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When I worked as a GM, I worked 10-7 5 days a week. Each daily or batch of paperwork we did had me down for 9 hours on the day I worked. I, as I presume most were, was a working manager. Not only did I do the ‘management’ type stuff, I was also the fastest guy at everything else in the store. If it was slow, an hourly employee would be sent home instead of me. Some places (Little Caesars) use their manager as a source of revenue because of how many hours they are able to save.

I wouldn’t call that an ideal way to run a store but that’s how I’ve seen it done.
 
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OK so adding her labor in, my percentage from Jan-Aug 2012 is at 45%.

The question is, how to drop labor down 20%? The only way I can think to do it is put her on a scheduled shift and start cutting other employees.

BTW my food costs are 40%. Between labor and this - I’m dying.
 
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Yep… you need to get those costs down. Without knowing more about your operation I can not say whether your food cost issue is menu pricing, portion, portion control, theft, waste etc etc. Also, without knowing what you are including in “food cost” it is impossible to say how far off your 40% is from ideal. If cost includes paper and supplies it could easily be 30% or higher and still be in line.

We run labor as high as 45% in our off seasons but more like 32% year round including a GM. I switched from paying a salary to an hourly rate with overtime and bonuses years ago. I found that managers who were on salary somehow came up with the idea that they were not supposed to be doing things like cleaning, cooking, etc etc which, of course in a small operation, they must be doing. Actual “manager” responsibilities such as ordering food, writing the schedule, taking inventory, reporting payroll etc really only take a few hours a week (i.e. 3-5)… if they are not running the kitchen those other hours, what the heck are they doing?

It sounds like a bit of work on your part to determine what is realistic for your business model and sales level might be in order before you set goals and strategies to reach them. In any case, VERY few operators run 20% labor unless they are over 1M in sales or taking no salary for themselves and acting as the GM. That figure is just not realistic for a low sales operation with a manager.
 
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Thanks everyone. The hardest part about being new to having help - is knowing just exactly what that help is supposed to be doing. And I’m getting the feeling it’s not what I need her to be focusing on.
 
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@cpif, a few questions to focus the discussion:
  1. Do you work in the restaurant? What are your duties?
  2. What is your average weekly sales volume?
  3. Are you a sit-down place? Delivery? Both?
Even with the manager on salary I would require them to clock in and out so you understand how many hours of work are going into the place. You need to draw your own conclusions about how many hours it takes to staff the business and hold the manager accountable for hitting the plan INCLUDING the manager’s hours. It is absurd to hold the manager’s wage cost out of the equation.

Based on 14 years ownership here are my thoughts on how much time various “manager” duties require outside of time spent in the basic day to day operation of the business:

Writing the schedule: 1 hour per week max.

Ordering food & supplies: 1.5 hours per week at roughly .75 hours each for two food orders.

Taking inventory and entering into computer: .75 hours per week

Payroll reporting: 1 hour every other week (.5 hours per week)

Hiring and training: from zero hours per week on up depending…

I expect my GM to run 5 shifts per week as the manager. Day shifts are 8-9 hours, evening shifts are 5 hours. He will generally run 3 day shifts and 2 nights and come in an hour or two early for the nights and do “manager” duties that can not be done during slow periods of the day shifts he runs. As a day shift manager he also does prep and cleaning like any other shift manager would.

Perhaps your business is different from mine, but I would not expect to have a manager that did not cover kitchen shifts unless my sales were solidly north of 1M.
 
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I agree with Bodge…

Are you including your pay in your labor percent?

If you aren’t going to include her wages then lower the percent. (I DO NOT think this is the way to go.) I would definately with out a doubt include manager pay in labor percent.

At this point, I think you should keep all employees on hourly. Perhaps down the road move into salary positions but for now they need to be hourly.

It sounds to me like you need to spend some hands on time in the store to see what it takes to get the jobs done.

We are coming up on 18 years. We have spent time as active working owners and we have spent time as absentee owners.
You can’t make money with those costs…you might make your bills but you are not going to make the kind of money that will … (enter your dreams)

Not only do our managers actively participate in store cooking, cleaning if I am there I would too.

We give a small labor bonus if they hit their labor percent which is 23%.

It’s tough…Food and Labor is where the money is. When you can get a handle on it you can make some money.
 
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And to answer your question…how do you get it down 20%

I would imagine you will not switch your GM to hourly. So use it to your benefit. A GM’s responsibility is to make labor…but so it yours. So the two of you need to be there actively working until you do what you are getting paid for…making labor.

I am going to assume your pay (if any) is not included either. So if your Labor is 45 and food is 40 right there is 85% and to include your pay, and all your other bills you are suffocating.

The only time you all need to have staff is during rush. I would pick up prepping, opening, closing all of it. Your labor is “free” and your manager should be working extra to meet the expectations.
If you aren’t controlling costs you don’t get time off…LOL

Another thing I want to say is why are you asking your GM how they “feel” about whether or not this is to be included? This is your business. Your deal their feelings on some issues are irrelevant.

When making the schedule bring in people an hour later or an hour earlier. Friday nights are a great night to save labor…everyone wants to leave. 🙂

You got this…get in there and do it.
 
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I am so appreciating all the help so far!

I had a little pizza carry-out for a couple years and we could see the need for getting into a larger place and offer sit down. So a year and a half ago we renovated and moved into what was supposed to be a turn key restaurant. I’ve been plagued with nondisclosed issues and repairs since which have drained my savings. Moving into an expanded menu and sit down was another animal I wasn’t familiar with, hired a manager who did have experience and we moved forward. That manager did not work out so I hired my current GM who at first was a consultant and has had previous experience in the industry as well. It’s been a year since she’s been here.

I have not taken any pay yet. I’m struggling to make payroll. I averaged this years sales by the last 8 months and I gross about $6800/wk. Our carry-out and dine-in run about 50/50. We also started delivery about 3 months ago which is going so-so. There is not a liquor license available in this town. I tried.

I ended up closing on Mondays because after running the numbers I have but maybe twice made enough to open the doors. So Tuesday lunch I have 1 in the kitchen/1 on the floor, pm shift 2 in the kitchen/1 on the floor; Wed & Thur 2 in the kitchen day shift and again night shift, 1 on the floor day and night; Friday day 2 in the kitchen, 1 on the floor with my help, pm shift has 3 kitchen including delivery kid (who I have washing dishes and prepping when he’s not out) and 3 on the floor; Saturday am 2 kitchen, 1 floor and pm 3 kitchen + delivery kid and 2 floor; Sunday lunch is big so 3 kitchen, 3 floor, evening 2 kitchen and 1 floor. The GM and I are here about 70 hrs a week. I’m trying to do the paper end of it and I try to leave all the day-to-day to her.

We live in a small community and although we have the highest unemployment in the state, it is harder than hell to get employees. It’s unbelievable. I feel like we train non-stop and we even have dumbed down our menu because we are so tired of the screwed up orders and lack of common sense. Today when I walked in I was informed the server gave a customer sweet tea - but after getting a funny face from the customer she realized she has salted the tea. Then they realized someone in the kitchen dumped a 25 pound bag of salt on top of the sugar. I am not kidding and this type of stupidity happens more than I’m embarrassed to say.

When I hired my GM she admitted she does not do paperwork. I can handle the paperwork side of it so we split duties. She’s more hands on, I’m trying to do the papers and marketing and whatnot, while also being in the kitchen or floor supervising/helping whenever. She does inventory but I do scheduling. I feel like I do more hands on day to day anymore that I’m behind on my paperwork as well, and don’t keep a close eye on the numbers.

We recently put in a salad bar/pizza buffet to try and get more lunch customers. Before they couldn’t get in and out timely and we lost a lot of business. The buffet has increased the traffic and increased the difficult customers. How many of you have customers who will eat buffet, then tell the waitress they changed their mind and want to order off the menu instead? Oh yeah I’m not kidding. This has happened about half a dozen times in the last month. Of course we make them pay for the buffet, then they get rude and bring attention from other customers.

With the news of the price of food increasing so high, some suppliers are saying November, some are saying January, we have thought about doing breakfast to help in getting some more income. But it terrifies me when I can’t control what we have so far.

I’ve got a mess…
 
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Just my little bit of input, and keep in mind I just opened up my own delco a year ago, and before that my only experience was as a manager (GM and then Area) for Papa John’s.

I know you say it’s hard to get new employees in there, but you need to. Otherwise you will have the same mistakes again and again, apparently people do not want to learn or are not capable of learning.

Secondly, a GM that doesn’t do paperwork? What are you considering paperwork (Scheduling, P&L, Budgeting, Planning, Prep Sheets, Inventory, Ordering, etc?) If they do none or almost none of those then I don’t see how that is warranted as a GM (not sure how much you are paying them though). The only reason to hire a GM is if you are unable to (either because of other engagements, or skillset) do the work. Otherwise just be the GM yourself, and hire shift leaders at a smaller hourly pay. If you are dead set on having a GM, then they need to be all around the GM in order to be effective. The person you have no, in my opinion, is a shift leader on salary.

I would personally reevaluate why you have the GM, and adjust accordingly. If they are there just to “split” duties, hire someone on as an assistant manager at a lower pay, and be the GM yourself. If they are there because you cannot do the duties of a GM (which is fine) then hire someone who will do EVERYTHING a GM does.

Again just my input
 
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I’m late responding… its been a busy Labor Day weekend.

First of all, maybe not a direct answer, but something to think about… Do you have an EXIT strategy? Have you already passed that milestone??

As for the GM… I currently have 3 businesses, and I’m the “GM” of all 3. I’m just not big enough to have independent stores run completely absentee by GMs. I have “Managers.” All of my managers are salary. They all work 50+ hours a week in return. They all are competent from front to back and fill in as needed. Helping them when they’re off, are “Assistant Managers.” All Assistant Managers are trained as Managers and can fill in when required.

As for percentages… at 85% food and labor you’re dead. Period. Raise prices, market, trim staff, fire GM, work yourself. If you continue on the 85% path you will fail terribly.

And when you count percentages, don’t fool yourself, make it easy. For me, labor is ALL INCLUSIVE: its any and everyone I’m paying, including myself. For me, I track COGS, Cost of Goods Sold, that’s everything you buy running your business. That’s paper, cleaning, food, supplies, beer, wine, water, beverages, etc…

One last thought. All new businesses take time to develop a customer base. It doesn’t happen over-night. And during that development period, labor and food costs WILL run much higher than a mature business. Focus on growing your business, both operationally and your customer base.

I wish the very best for you!!
 
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Yes, there’s no meat left on the bone for you. Both labor and food costs must be reduced.

Without knowing exactly all the issues you face, OP, or watching the people working, I’d be leaning toward dumping that expensive GM and taking over her duties. This would put your labor in line.

Since both your labor and food are too large in comparison to sales, it’s likely you are not charging enough for the items on your menu.
 
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When figuring out labor percentage I take my NET sales (excluding sales tax). This includes all wages including managers. It does NOT include employer taxes or Workers Compensation. Our goal is 25%. Anything less for OUR operation we have found customer service suffers.

Anyone figure labor percentage INCLUDING sales tax?
 
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I’ll second what “Uncle Nick” has said. Unless there is good reason why you aren’t able to be at the store, which doesn’t sound like the case, you don’t need a “General Manager” at this point, especially one who “doesn’t do paperwork”.

Having no idea of your books and scheduling situation, it appears as if you would be better off with a couple of assistant mgr. types maybe even going so far as to dedicate the ordering or the scheduling to one of them. If you are the one pushing papers, making payroll, filling the work schedules etc. then it would sure appear to most that you are in fact the General Manager.

I do so feel your pain on the hiring! I think most any operator on here knows that song. It always amazes me the grade of applicant one seems to attract and we’re a clean, well run operation and pay well above average for the job open.
 
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When figuring out labor percentage I take my NET sales (excluding sales tax). This includes all wages including managers. It does NOT include employer taxes or Workers Compensation. Our goal is 25%. Anything less for OUR operation we have found customer service suffers.
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Anyone figure labor percentage INCLUDING sales tax?

RobandCindy,

I don’t figure anything with SALES TAX. It’s not yours, its not sales, it’s taken already. When I look at monthly or annual sales, IT DOES NOT INCLUDE SALES TAX.

As for labor, I include all payroll taxes. Worker’s Comp falls under insurance, like property and liability.

Cpif,
Moving into an expanded menu
Why did you move into an expanded menu?? Moving into a bigger setup for dine-in does not require a bigger menu, just more seats for what you have already.
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I looked at what your staff levels were, and it appears way heavy in the kitchen for your sales, $7K/wk. I have 3 to 4 in the kitchen when doing $5-7K/day. Every operation is a little different, but that leads me to think that you could tighten up your BOH, both in staffing and what you’re offering in product. The ‘expanded’ menu may be hurting more than helping. What type of equipment are you using? I’m guessing you don’t use a conveyor oven for your pizza… This might help you.

Look at your prices… You’re not going to make any money selling $7 pizzas.
 
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“The GM and I are here about 70 hrs a week. I’m trying to do the paper end of it and I try to leave all the day-to-day to her.”

If you are there 70 hours you do not need a GM. Certainly not one on salary! The only reason to have a GM is for an owner that is not in the shop day to day.

For the sales you do, averaging $1000 per day we would have a manager and a cook in the kitchen. If it was all dinner business, we might also have a phone person for 2-3 hours. For the shifts mentioned in my post above, that manager would be the GM. If I were acting as the GM (as you should be since you are there) I would be the “manager” in the kitchen.

Our kitchen staffing for $1000 per day would be:

10:30AM through dinner rush: Day manager (handles all prep)
5PM to close: Night manager
5PM through rush: Phone person/cashier

If you are doing some $500 days I would have the day manager and the night manager and that is ALL for the kitchen. We would add a cook from 5PM to close above $1500.

That is it. 14 manager shifts per week. If I were in your shoes I would be doing 6 of them and assistant managers would be doing the other 8.

@rob&cindy: Nobody counts sales tax in the gross but I am pretty sure you will find that most everyone counts employer share of taxes and unemployment etc in labor cost. I also count work comp but many people include that with insurance instead.
 
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Cpif,

I’m still catching up so please bear with me…
My GM is salaried so does not clock in/out.
For me, EVERYONE clocks in, including ME.
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So do you include your managers salary in the daily/hourly labor percentage?
Forget hourly stuff… waste of time. Breakfast, lunch, and dinner. I look at labor percentages on a monthly and quarterly basis. I look at them from a ‘books’ point of view, the bottom line (not the POS). I do monthly and quarterly reports, P&L, Balance Sheet, and Cash Flow.
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Do your managers work the line
OF COURSE!!! That’s why I hired them! From time to time, when its very busy, I also work on the line, in the front, wherever I can help the most. Of course, it depends on the store I’m at, but, when its busy, I’m at the busy store!
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At $360K a year, your store does not have to go bust… If you’re running a very tight operation, with you working (on the line) 70hrs/week, you can even make a decent paycheck, probably around $25-$50K/yr. But you cannot do this with a GM. You have to be the GM and head cook/chef/marketing director/CEO/CFO, etc…
 
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