As the push to increase the minimum wage on a national scale continues to grow, restaurateurs are developing an increased sense of foreboding. The earliest impacts of a sharp minimum wage increase are being seen in metropolitan areas like Seattle and New York, with a mixed bag of results. While some restaurants in these areas have managed to maintain business, many are struggling to balance their restaurant and a minimum wage increase.
Restaurants Unlimited, a Seattle-based restaurant chain, filed for bankruptcy, citing the increased wages as the reason. In New York City, restaurants are cutting services and staff in attempts at survival, and the social impact is showing in the form of affected workers losing benefits employers cannot afford as a result of the wage increases. As the push to move the country to a national $15/hour minimum wage continues, there are things that you as a restaurant owner can do to prepare and offset a potentially looming wage hike.
Examine Restaurant Operations for Cash Flow Improvements
The importance of sustaining consistent cash flow is important in a number of ways. First, it gives you a known quantity from which to operate and plan. Second, you have ensured a buffer in the event of a slowdown or increased costs from suppliers, insurers, or wage increases. While seasonal businesses have long understood the importance of managing a successful cash flow strategy, brick and mortar restaurants, QSRs, and cafes often neglect this aspect. You open your doors, the people come in and order, your staff prepares their items, serves them, and then the customer pays. Simple, right?
Wrong. You need to know what is coming and going if you hope to tighten your belt and rein in unnecessary expenses and all avenues of product leakage. Diving deeper into your cash flow will yield data that can be used to develop a strategy for restaurants and minimum wage increases. Analyzing and collecting this data can be a challenge if your POS software is not up to snuff. This may mean that your first step down the road of cash flow success is to implement a few updated POS functionalities to aid in keeping your eyes on the prize.
A state-of-the-art POS solution can provide you with multiple avenues of cash flow tracking, timekeeping, performance monitoring metrics, and inventory management. When blended into a singular environment, cloud storage for safekeeping is simplified and most any level of custom reporting is at your fingertips. This presents you with a clearer picture into where you can realize efficiency promoting process improvements, or make spending cuts, to provide you with the extra cash you may need for an increase in wages.
Understanding Your Staff’s Needs
Looking at restaurants and minimum wage increase will force you to look at a variety of financial data points. Offsetting increased staff wages may be done by passing the costs to the customer, or lowering the quality of needed ingredients, or even shortening operating hours or menu options. These choices, which might appear to make sense, could turn off your customers and turning off your customers is never good. Remember when IHOP pretended they were turning into a burger restaurant? Yeah, it didn’t go over well. There are better solutions available to you for offsetting the costs of an increased minimum wage.
There are four important items to consider when looking to get the most bang for your labor dollar. Exploring these four areas will most likely lead to increases in productivity, better operational efficiencies, and a happy workforce.
- Reducing staff turnover. Studies indicate that the process of replacing a restaurant employee is $5864. Finding applicants, background checks, interviews, and training all take valuable time away from existing staff and may induce higher levels of stress in the process.
- Understand the local job market. Is the new restaurant down the street paying 10% more to its servers? Did a large employer just move into the area, or depart? Keeping your finger on the pulse of the happenings in your local employment market will help you to prepare for increases in business or any potential decreases in staff that may mean a reduction in available hours.
- Increase base pay to slightly over minimum wage. How does this save you in the long run? Not only are you most likely out-paying your competitors, but you will also attract higher-quality applicants to position postings and are far less likely to encounter a high turnover rate. This also means that a minimum wage hike will have little impact on your bottom line.
- Provide incentives and bonuses. Offering a bonus or incentive package, from employee referrals to a “server of the month” award does wonders in promoting high morale and pride in their work, which has the added bonus of not escaping the notice of your customers.
With a modern POS system in place, you’re better equipped to spot these opportunities. You can build a database of productivity data points, from hours worked and tipping rates per server to identify peak times to gain precision in your scheduling. You can see if staff are falling off, find areas of product leakage, and gain time to keep tabs on employment and experience trends in your local community.
Analyzing Data to Reduce Leakage Throughout the Business
Looking under the hood at how your money is moving throughout your operational process is important. You will identify potential places where you are lacking financial efficiency, which can be frustrating. You may even want to consider upcycling your space to refresh your brand and save money. Shaking your head in wonderment at the money you have bled away over the months or years should not be dwelled upon. Rather, looking at this from the perspective of gaining an opportunity to streamline operations gives you a healthy, productive outlook to taking on this challenge.
You will need to have a POS software solution in place that can handle multiple aspects of your restaurant operations. Cloud-based data gathering, storage, and reporting are just the start. Staff can check schedules, submit hours, or adjust their availability with a touch. You can examine menu items, determine underperformers, and update ordering and menu selections from your smartphone. Inventory management and product leakage tracking become fast and easy, and alerting options can be configured so that you never run out of stock on any ingredient.
A sleek, modern, POS solution presents you with a variety of customer-facing features that help with retention and will quickly gain notice around town. Online table reservations, pre-ordering meals, and having an easy-to-manage customer rewards program make you the trendsetter in your area. Plus, by leveraging a CRM email campaign, you’re collecting valuable marketing data and nurturing the customer. This requires a complex examination into every aspect of your restaurant, and a high degree of technical knowledge to get the right solution in your door.
Guidance for a Larger Return Through Restaurants and Minimum Wage Increase
Integrating technology within your business processes can improve your profit margin while greatly reducing the impacts of a higher minimum wage. Examining every aspect of your restaurant operations, while improving the working environment of your staff, are crucial elements to securing a growing profit margin. Your POS software must be up to the task, and innovative enough to grow and change as your business does.
Our expertise is helping restaurateurs find effective ways to leverage technology. We dive in and learn more about your business to recommend solutions that will help you grow your profit margins while minimizing the impact of surprise expenses. With talech at your side, you gain an indispensable partner that will work with you from start to finish in identifying and implementing a profitable solution. Contact us today to sign up for a demo and to learn more about how talech can be your expert POS partner.