Prescriptive Analytics: The Solution to Rising Food Labor Costs

06.07.2016 by Ken Claflin

Labor costs are possibly the largest decision driving factor in the food industry. Food service operators are struggling to efficiently manage rising labor costs. Minimum wage regulations like “Fight for $15” and new overtime standards are forcing employers to cut costs in other ways that—while they fix the problem short-term—cost them more in the long run. 

The most effective way to manage rising food labor costs is to utilize prescriptive analytics. Implementing an analytics solution will help your food service organization more efficiently manage increasing costs across the board by improving the way you coach and onboard new employees, monitor employee performance, and schedule employees.

Coaching New Employees
According to AlixPartners’ 2016 Restaurant Outlook, restaurant employment is up four percent and earnings are up two percent from last year but employee turnover is the highest it’s been in eight years. As labor costs continue to rise, investing in and creating engaged employees to reduce turnover is more important than ever. Organizations with engaged employees see, on average, 65% reduced turnover, 21% more productivity, and 22% more profitability.

Prescriptive analytics can help food service employers create engaged employees and bring new employees up to speed. By tracking employee compliance, you can ensure that new employees fulfill the action items necessary to succeed in their role. You can also monitor new employees during their first few months to make sure their sales and performance are up to par.

Monitoring Employee Performance
Ensuring employees perform their best and push the promotions they’re supposed to is essential in managing labor costs. Analytics will allow you to determine which employees are meeting performance requirements and which ones need some coaching. You’ll see which employees are top sellers and, by knowing product purchase frequency, which employees are pushing promotions to upsell and cross sell customers. By knowing which employees aren’t selling as much as they should be, you can advise managers to take action in coaching underperforming employees. A solution like Spark Analytics will then track compliance by monitoring employee progress via self-reporting checklists and verification when necessary.

Improving Employee Scheduling
Maximizing employee scheduling efficiency is important for any food service organization, especially in the face of increased scheduling regulation. This regulation could result in overstaffing and payment of appearance fees, according to AlixPartners’ 2016 Restaurant Outlook. Analytics will help you overcome these obstacles by allowing you to schedule your employees when and where they’re most effective. Based on your sales, labor, and traffic data, our solution can inform you which employees perform best during which daypart so your managers know who to schedule when and where in the future. You’ll also know which locations are under- or overstaffed, allowing your leaders to immediately remedy staffing miscalculations and better manage future employee scheduling.

It’s essential that food service operators find long-term solutions to rising labor costs. As minimum wages continue to increase, employers need to be more proactive in engaging employees rather than cutting staff. Continual monitoring of performance and enhanced scheduling capabilities will allow you to effectively improve employee performance, thus helping you better manage increasing food labor costs.

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