Home – New Forums Money matters Reducing Wage costs in Small hospitality business?

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  • #995668
    johnnycashflow
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    ok, so ive been in hospitality FOH as a worker for many many years ranging from cheap casual to fine dining to international hotels,
    ive also run my own small restaurant before,
    my family is also in hospitality

    when I had my place, obviously I tried to keep costs minimal and tried for good margins etc. etc. etc. the usual stuff

    however, I also tried to keep wage costs down quite low,
    I probably did push a little hard in keeping costs down

    eg if there were no/few bookings, id work on skeleteon staff,

    if it was dying down quickly, id cut casuals off quite early and got the others to do the work

    I used to think, ok so an employee is on $20 per hour for arguments sake, have 2 extra for 30 mins unecessarily its $20-$40 wagesthat dont bring in any revenue nor do I need them to maintain the existing business, Ill get them to finish

    I used to put emphasis on finsihing what I consdier to be unecessary staff early to maintain wage costs,

    however all the other places that I have worked for (assuming smallbusines) it seems that although wage costs are considered nad often trimmed, I find that I was by far the most most most on the ball with wages

    the chefs were on salary and FOH staff casuals,

    My reasoning was that an extra $20-$40 per night all adds up, and its a bottle of spirits or a kg of meat, so the efforts I went to sourcing the lowest price for these prodcuts, any marginal saving would be multipled offset by unnecessary wage costs

    Does anyone else observe what I am observing, in the small business hospitality industry???

    Im just curious

    my last place I worked at the experiecned manager said to us, our turonver was getting better, and there fore he could be a bit more lenient in keeping staff on who wanted more hourse because the wage % was good,

    to me, if there is unecessary staff abouts, regardless of whether you are making $0 or $1m, the same mindset should apply

    #1203326
    James Millar
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    In hospitality payroll costs and rent are the biggest profit killers. Given the number of staff needed to run a typical small restaurant (or cafe) it is very easy for these costs to blow out. A few staff x a few extra hours x 52 weeks and you can get into the tens of thousands of dollars easily. So yes I completely agree with you. Payroll must be very carefully monitored in all hospitality businesses.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1203327
    bb1
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    Payroll is important in any business, gee I refuse to pay myself if I am sitting here typing on the forum. But, you may consider those staff redundant, but what about the customer, if they have to wait an extra 5 minutes to get their next drink, or how many times have you sat in a restaurant and the waiter doesn’t walk past so you can order another drink or the desert, and you end up leaving, thus the restaurant is missing out on further sales. I have seen the manager send people home, and the customers are left waiting, so they leave. And I wonder if they come back because of a negative experience.

    Sure save money (I just turned my clock off), but consider are you really loosing money by saving it.

    #1203328
    Rowan@quaotic
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    I agree with Bert, Focusing on money sometimes means you miss the bigger picture – frustrated customers, and staff who feel unvalued. This costs more money in the long run.
    Maybe you need to up your prices and give customers a better reason than low prices to keep coming back. This is just my view as a restaurant customer. I will always return to a place where staff are unrushed and friendly, and the service is exceptional, and I am willing to pay more.

    #1203329
    Rohan@TD
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    bb1, post: 241202, member: 53375 wrote:
    And I wonder if they come back because of a negative experience.

    You’re not encouraging repeat customers with negative experiences which is what cafes need to survive.

    Cutting your staffs hours to save your business a few dollars here and there can send a poor message to your staff. I understand it may be important to you, but what about them? How does that impact on their lives? Does it increase their commitment to your business and its goals or encourage them to look for a more stable employer?

    If you’re inadvertently encouraging staff turnover, the dollars you appear to save here and there will quickly disappear with recruitment, selection and training costs. It also has a second order impact of disrupting the faces your business presents to its customers – which for some may be an important factor in why they are a customer there.

    I completely agree with James, payroll needs to be managed. But, it needs to be managed in a way which considers both the positive and negatives of decisions.

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