Salary/labor cost question
Who is responsible for coming up with the budget and who is paying attention to it? Are they aware that budgets are tools but also just pieces of paper?
If the money being spent on salaries is recorded under kitchen labor or under another category it doesn't really change the bottom line of the business. Either way the same amount is being spent and the profit or loss remains the same. If the powers that be don't understand this concept, it can definitely complicate things quickly.
Just out of curiosity, can you elaborate a little more on the differences for me? It's not my first sous job, but I've never seen it done like this.
If it were set up differently, your target number would also be different, so it basically wouldn't be different at all, if that makes any sense at all.
If your salary was recorded under the same category as the chef's, then your salary would be backed out of the kitchen budget so correspondingly your target labor cost for the kitchen would be lowered proportionally to reflect that fact and the target number for the salaries category would be increased proportionally to reflect that fact.
It is basically six of one and a half dozen of another, just pray that the people at the top understand that. Whether the numbers are reasonable or not is a whole nother story and hard to say without seeing the full budget and p&l statement.
I personally wouldn't include your salary into my kitchen labor cost budget if I were setting up the financial charts because your salary is more or less a fixed cost.
By doing so I reduce the effectiveness of tracking the labor cost as a tool to help me with scheduling etc because it is not a true reflection of costs that I can control. You get paid, work or not, low hours or long hours.
To me it does not make sense but it really doesn't matter either way to the actual bottom line. I just get to use a tool with diminished effectiveness in to helping me to make decisions concerning running the business. Kind of like a dull knife...WHY????
How do you control a fixed cost? Yes it is beyond important to track cost.
Rent/mortgage is a good example of a cost that needs to be tracked, but at the same time it is a fixed cost and won't change so thereby can't be controlled.
Salaries fall into the same definition of fixed cost so if you lump them into your labor cost with hourly pay rates (which you can control by cutting back hours, number of employees working at one time, etc) then your feedback received from your spreadsheet will be skewed and not a good representation of cost that you can control or impact.
Lets just say I see the salaries in my labor cost reports. They put them us in Monday to Friday daytime, regardless what we work! Bad accounting IMO the hours should be costed when accrued as to not skew the rest if the data.
Just saying you can cut salaries just as well as any other form of pay. It all affects the bottom line.
Cutting a salary usually comes with budgetary repercussions that increase other segments of a spreadsheet such as hourly.
To me it is more beneficial to view salaries as a fixed cost even though they can be cut, adjusted, or eliminated, whatever and yes it will effect the bottom line, but for the most part salaries should stay fairly consistent over a time period such as a month or week or day. So as to scheduling or whatever there isn't much I can do that will impact salaries contribution, hourly on the other can be adjusted, jockeyed, fine tuned, tweaked enough to where their impact is easily felt.
How would you go about cost/accrue a salary position. Would you do it on a hourly rate? What if the salaried position works 12 hours one day and then 16 hours the next? Not really going to work too well that way. How about a daily rate? Except one week they work 5 days and then the next week they work 7 days. Problems there as well. That is why salaries are usually inputted M_F day times. Do I agree with it as an accounting practise, no; and yes it skews the rest of the data. That is exactly why I prefer not to lump them into labor.
FWIW, you can cut paying rent and yes it will effect your bottom line
Edited by cheflayne - 10/29/14 at 10:10am
They want to work for free the rest of the week....
In my position thankfully I don't have to worry about it being that sporadic hour wise. A lkt of Chefs dont like to track their hours for the obvious reasons hat if they are putting in 60 hrs a week their hourly pay gets slashed.
Just the wag it is at my place of work, not trying to reinvent GAAP here.
But then wouldn't that be like
50 k is 24/ hr
Chef clocks in at 6 am 24 goes into that hours wage cost x 12 hrs until 6 pm= 288 for the day. Same is done for all employees BOH. 2 cooks that day? 8 hrs each@ 12$ 16x12= 192$ + 288= 480. Sales were 2,000. 480 hrs/ 2,000$ = .24 or 24%. Don't forget to add stewards on top of that.
This is all in spreadsheet and shows exactly the budget and actual sales. This is important the budget must be realistic.
If you only count end of month numbers and do not micro manage at all it may be ok to spread salary over the whole week: month / year. Just dont cherry pick numbers that are not real. I.e GM calls kitchen office mad, why labor so high bla bla cut someone...... Oh maybe cause your paying the chef who isnt here at the moment and its tuesday afternoon.....