What is known as a “gross labor percentage” is a good view of the actual dollars you are spending; however, man-hour sales can provide a better picture of how effective your hours are.
Commonly Used in Quick Service Restaurants Man-hour sales can be a valuable tool when used in any segment of our industry. As owner-operators and managers, we need to assemble an arsenal of analytical “weapons” to combat rising costs.
It’s simple to calculate your daily sales per man-hour (SPMH) and is accomplished by dividing the total number of hours by your gross sales. A higher SPMH results in a lower labor percentage regardless of individual pay rates. It is a good idea to calculate the SPMH for each department, as well as the total number of hours.
Example:
Working hours
- Front of house (dining room) = 35 hours
- Bar = 24 hours
- Back of the house (kit / plate) = 26 hours
- Total = 85 hours
Sales by Dept.
- Front of house (food and drink) = $ 1,800
- Bar (bev only) = $ 1,000
- Back of house (food sales) = $ 1,500
Sales per man hour
- Front of house = $ 51.43
- Bar = $ 41.66
- Back of house = $ 57.69
Gross Sales Totals = $ 2,500
General SPMH = $ 29.41
Of course, each type of restaurant operation is different and has different expectations when it comes to staff productivity. A fast food operation can achieve a much higher SPMH than, say, a restaurant offering table service.
You can be as specific as you like. You can calculate the SPMH for each sub-department (brush cutters, dishwashers, bar-backs, etc.). After doing this for a few weeks, you will start to see patterns emerge within each department. Going one step further and calculating the figures for the parts of the day (breakfast, lunch, etc.) will provide very accurate information. For most operations, a simple general SPMH is sufficient.
SPMH is a great tool and can be used to help you write more effective schedules. The written schedule is your most effective method of managing labor. Constant evaluation of productivity is essential to an effective written program.