Kitchen Labor Cost

[Joshua Tomczyk]

The chef/owner at my work wants to give me a bonus based on kitchen labor cost. He wants it to be at 14% I know that labor cost varies between kitchens but that seems very very low. I was wondering what some of you ran for labor cost %.
If you were to ask me the kitchen is already run a man down leaving me many production tasks and almost no time to actually run the kitchen. I can work to get more out of my employees though I am not sure how, and reducing labor sounds like I would have to spend more time at work which I will not do. 55hrs a week is enough, I have a wife and kids and they are too important to me.
Any input would be greatly appreciated.

[Peachcreek]

To me, labor cost is about a lot of things. How busy you are. It all gets down to making sure the employees that are working at a high production capacity or more. Or maybe the sales per customer aren't high enough. Maybe there are too many labor intensive menu items. And it doesn't hurt to lean on you a little, too. I get in more um, "discussions" about labor cost more than anything else with my partner even after all these years so don't feel too bad.

[chef1x]

Yikes!14%???
Wow.
Like Peachcreek, I agree that labor cost is about a lot of things, and that includes what kind of operation and circumstances you are working in. Is it fast food, fine dining, hotel?? Having been in and around Tucson, AZ and having worked at a very popular and successful multi-unit operation there (many years ago, and I have kept my ear on the heartbeat of Phoenix), I would say 14% is completely LOCO and personally, I rarely like to get into those kind of performance bonuses unless MAYBE you are in a big corporate environment. I also tend to agree, and I'm sure many here would DISAGREE, that 55 hours is enough and why saddle yourself with a near suicidal situation that requires probably more hours with only a small chance of more pay. There's got to be more incentive than that....Having said that, I do also agree with Peach in that it's pretty common to be "leaned" on; we all want to be better, stronger, faster, more efficient, etc. and we all need motivation and a little push....

BUT, I have never personally experienced 14% labor cost nor have known any with such a number, realistically speaking.

I'm sure there's lots of people out there with more experience than I in this matter, so let's hear it folks!!!

In any case, good luck to you and keep us posted on how this all plays out.

[kuan]

14% is wicked low, but a lot depends on how you calculate it. Is this before your sales tax? Do you count your salary? The average exec. chef takes costs between 4-6% of total sales.

14% is not low if you're a steakhouse. It's even easier to achieve if it's a high end steakhouse. It's achievable if most of your volume is banquets, but I've never seen anything below 17% in regular full service family style restaurants. But like I said, it all depends on how it's calculated.

Kuan

[Joshua Tomczyk]

Thanks for the input everyone.
Here is our web sight http://www.fuegorestaurant.com/
We are a fine dining restaurant with a huge menu and if we have the product we will make anything.
The percentage is based off all kitchen employees including me and my Sous (salary) and based off sales before sales tax. The sick thing is when we are busy we will run 9% and lower.
Oh on that 4-6% for exec chef I wish. We do over $4 mill a year and I make $29,500 slightly over 1/2 of one percent. Of course I am only Chef de Cuisine.

[chef1x]

Joshua, how long have you been there? How long cooking?
Do you get any benefits and/or other bonuses?
Sounds like you're working for a very accomplished chef and you may working for the opportunity to do so? Depending on all these factors it doesn't sound like a big deal for you to reach 14% if you often perform under 9% (wow!); on the other hand, your salary seems a bit low. I'm sure you've checked what other chefs make for salary in the area?

[kuan]

4 mil is huge, bigger than many 200 room hotels. From experience, the average restaurant does between 500k on the low end to 1.5 mil. 4 mil is a lot of revenue, especially since many fine dining restaurants do 60 covers a night if they're lucky. Even Victoria and Albert's maxes out at 100 a night.

The problem with bonuses based on labor or food costs is that the restaurant can still lose money. In fact, a lot of restaurants which meet their labor goals still lose money. If you cannot manage your other variables you're SOL. Most companies which are truly concerned with profitability offer bonuses based primarily on profits. These are parsed out based on the performance of individual departments. For example, if the restaurant makes a profit of 100,000 and your department met all your goals and exceeded them, your department might be rated 1.1. The FOH may have lagged behind a little this year and achieved a rating of only .95. The restaurant can then use these ratings to distribute bonuses.

But managing labor using percentages is old school. These days many more people use covers vs. labor hours. You project the number of covers you're going to do and then schedule accordingly. This method is generally more stable and eliminates the need to nip and cut labor minutes on the fly. It also comes very close to matching your labor goal in terms of percentages. I would try this method and see if it works for you.

Kuan

[panini]

The sales tax thing is funky. Proper accounting would not include sales tax in any calculation. The business is collecting funds for local Gov't and should be completely seperate. I even have a seperate account for it.
I've always been opposed to bonus driven anything. If it is not absolutely done right where the calculators are unknown to the recipient, just compensation for a job well done,the customer or guest will suffer. If you put the recipiebt in controll of variables the descisions that person makes are usually based on greed. This type of business will usually result in mediocrity. ie, already happened in the purchasing aspect.
just my opinion

[chef1x]

I agree, the motivation becomes solely greed oriented, probably at the expense of coworkers, customers, the operation and ultimately your own position.

The method Kuan relates of determining how much labor you need is the way to go and bonus or no, over the long term it will make you a more adept Chef de Cuisine, and a more marketable candidate for advancement.

[chefboy2160]

Hey Josh . Youve gotten some good advice here . Your wage is not great but its not good , just enough to keep you hanging in there , especially with a family . I have noticed through my career that in order for me to make more money and better hours I have had to change jobs many times . I also changed my food venues from coffee shops , fine dinning , hotels and then finally healthcare . Yeah its a different path but now Im the food service manager responsible for my department ( dietary ) . I have a chef of my own training that works for me and as I train the kitchen staff , well things pretty much go my way . I produce better hospital food than any place Ive seen and the big wigs brag on having a real chef as there manager . My cost is laid out annually
and I get a raise every year .I now make 40 + salary and work normally mon through fri day shift . My last job I left I turned on to a fellow chef friend of mine and he is now making close to 50 a year with great bennies . Another thing I enjoy is I still do some internal catering which just blows there minds away at just the simplest of menus . I did the rat race for 20 years and now I have time and more money for my children while still doing what I love . Good food can be taken many places and remember you do not have to play other peoples games . Maybe you can do as I have done and make your own game . People want good food and we should be paid to give it to them .
Your friend in food , Douglas

[kuan]

Come to think of it, after paying you and your sous chef, you could still run 24 full time employees at $10/hr. I think it's do-able.

Kuan

[chef1x]

Josh, do you have a kitchen of 24 like Kuan wishes he had ?
K- Where do you come up with all these awesome stats?
Hee, hee,


Have a GREAT New Year!!

Don't eat too much lute(AH)fisk (I am hurt you didn't notice my special link for your sick habits ).

Have a wonderful New Year!

[kuan]

1x, I look at a lot of numbers. In Josh's case the place does 4 million and 14% is $560,000. Minus his salary and sous chef it should be right around $500,000. Divide that by 2080 hours (40 hours a week) and you get about $240 dollars per labor hour available to you. Figure average wage is $10/hr and you get 24 full time employees.

Kuan

[Joshua Tomczyk]

Kuan your right I was way off on total sales actually it was 1.5 mill not 4. I'm sorry just goes to show you how tired running a 14% and lower labor cost leaves me sorry for the mix up. All the other numbers were correct though.

[kuan]

Well, 14% at 1.5 mil is extremely low. What does that give you, two dishwashers and five full time cooks? I don't know how that figure came about. I still think that a bonus program based on percentage labor is silly. The restaurant can still lose money. What if you make labor at 13% and FOH screws up? Will you get your bonus if the restaurant can't pay its bills?

Kuan