Kitchen Labor Cost

You can figure this one out.

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.

:eek: :eek: :eek: 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:crazy: 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.

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, 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?

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

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

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.

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

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

Josh, do you have a kitchen of 24 like Kuan wishes he had:D ?
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:cry: ).

Have a wonderful New Year!:)

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

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

Well that was a rheterical question. Of course you don't get a bonus if the restaurant goes under. Not even if you run the whole place by yourself! :D But those outgoing managers are right Josh. You will always feel that you got screwed, mainly because your numbers will never agree with that of the Profit and Loss statement. MOST people will tell you that being happy at a job is not a matter of 1-2k dollars a year. Most will be happy to take an extra day off with no pay rather than be paid doubletime for that day.

Kuan

[Well, duh:rolleyes: I guess that should be obvious.

What I mean is what source do you use for industry standards to compare against, like 14%? Just based upon experience? I've always used 25% as a guideline, but I've also only been involved in full-service fine and casual dining. I haven't looked it up yet but I would assume big corps like the one I may be joining have both high food and labor.

You can use the NRA sourcebook. In my case it's a lot experience. You sit in enough *&@!# meetings and you get a feel for what numbers should be based on the types of establishments. That's if you're paying attention.

Kuan

sorry, small aside...

FUEGO!

I eat there everytime I visit Tuscon, which is a few times a year!
Delicious!

:bounce:

I'd be interested to know, what is the current labor cost? How much would it have to decrease to meet the goal? I mean, if its at 28% now, wow, that's a pretty big challenge. But if its currently at 18%, maybe that's a little (stess on "little"!) more manageable. What about payroll tax? Is that included? Comp. insurance? I've never worked anywhere with such a low percentage. I agree with the 25% goal, although I struggle to achieve even that (and rarely do). More volume would certainly help my situation, but only to a point. If anyone out there actually is operating (happily operating, that is) at 14% labor, I'd love to know the secret!!

I'm relieved to read comments re: profit driven bonuses. I've never been wild about that concept. I already pay people, don't I? Better than most same type businesses where I live. I mean, if we busted A** for a quarter & did really well, I might want to give bonuses for that as a reward. But not as an incentive. I guess even that could get tricky after a while, though. I'm certainly not there yet, in any event.

What is the correct way to figure in sales tax, by the way? I know that, technically, sales tax is money a business is holding in trust (sort of) for the state, but when I fill out that return every month, it starts to feel as much like an expense as everything else. Should labor/food cost be figured on the before tax price? And, if so, why? This is a constant source of confusion for me.

RF

MsFajita,
I was the same way with the sales tax issue. I actually hate the whole d thing of collecting monies for the state, and all the liabilities thaty come along with it. In my state no one can even understand the the statute reguarding baked good, including the tax office. 1 cookie-taxable, 5 cookies-taxable, 6 cookies in a bag-non taxable. A small strudel-taxable, cut it into six slices-non taxable. Anyway, you can add it to your gross sales and expense it as sales tax. Now, I actually make seperate deposit into a private tax account and pay the monies from there. I just set up the registars to break out the ST from daily sales. This way it does not feel like an expense. If you can get quartley reporting, you can even make a little interest. We still follow the same reporting as gross sales but it doesn't distort my checking account to have that extra monies in there.
My payroll is tipping the 24% mark. I really don't hav3e a choice, I truly need skilled labor, and the unskilled persons who stay to be trained should make the same. The 24% does not include me though:D
This time of year I will run 30-40% labor. I calculate annually so as not to cut persons out when we slow down. This puts a little pressure on meeting forcast and the only negetive would be a shortfall which come out of my 12%
:cry:

In general, you want to figure labor and food percentages pretax so as not to inflate your true revenues. Running labor at 14% all depends on the type of operation. It takes the same amount of labor to grill a filet as it does to make a reuben sandwich.

Every business should look into hiring an accountant. If you're interested in innovative solutions for your business, you should consider hiring a consultant.

Kuan

Yep, I took some accounting seminar and it was definitely pretax. After taking the seminar, I realized it's good to know what's going on, but get a pro, on retainer or part time, it's not that much, and it will save you a bundle in the long run.

Hey there fellow Chefs, I've had experience with all this like many of you and from what I've seen 18% labor is fairly normal...At a prior Hotel I was working as Exec Chef and after the budget meeting for the new year the labor was dropped to nearly 15% from 18....Yes that meant I was the bqt chef as well as having to fill in on the line when it got slammed for lunch and dinner occasionally.....brutal some days.....Since then now I'm a Bqt Chef at a hall that feeds from 50-1,200...and now after a meeting today I have only one cook for bqts up to 150, 2 cooks from 150-300 and 3 cooks or more for bqts over 300...Talk about cheap!...man I'm getting too old for this cr.......anyway just wanted to share with ya all....

 

Ooops back on track.....a 15% labor is tough for any situation I think.....Remember Chefs, You tell them what you need to be successful and at the same time deliver customer satisfaction without cutting into the budget too much....A good GM goes a long way and last thing remember the golden rule 50% of your job is getting along with your boss the 50% is actually doing the job!...If you don't llike the terms then time to start looking. In other words if your being asked to run a labor that's ridiculous....start looking elsewhere if you have to.....later....

 

What about benefits, pto, holidays, overtime?  

It is amazing what some chefs are willing to work for, I would tell your boss to cough up some more money or you should start looking for a new job. I don't know your credentials but I would say you shouldn't work for less than 50 after your bonus

This thread is from 9 years ago. Just saying. 

 

darn...lol...man well obviously wasn't payin attention to the time line.....was just focused on the topic...oh well...cheers....P

Why would you accept the proverbial  carrot of a bonus.When as a chef if you do not keep operational percentages what do you think will happen.The owners are hiring you to insure profit margins.Why would i accept a bonus program for being hired to do the job in the first place? Chef Keith