How to Determine Restaurant Labor Costs and Savings Using Automation

The restaurant industry and the foodservice world are quickly transitioning to a more automated way of doing business. The recent labor shortage and the Great Resignation that continues to make staffing a challenge have hastened this trend. Is your restaurant making good use of automation? Have you explored how automation can at least partially make up for labor challenges? How can it contribute to your bottom line and help with restaurant labor costs?

One of the keys to using automation wisely in the foodservice and restaurant industry is being able to calculate your labor cost and see whether it makes sense to automate that function from a cost perspective.

Calculating Your Restaurant Labor Cost

To accurately calculate your restaurant labor cost, you first need to know the total costs of running your operation. Basically, there are three areas you need to concentrate on–labor costs (servers, cooks, dishwashers, bussers, managers, etc.), food costs, and overhead (rent, utilities, cleaning service, security system). For this purpose, we’re not going to consider costs like interest on loans for new equipment, depreciation on that equipment, and taxes.

Next, you’re going to calculate your labor cost percentage as a percent of sales and as a percent of operating costs. To arrive at those figures divide your total labor cost by your total sales and your total labor cost by your total operating costs.

Guidelines from White-Hutchinson Leisure and Learning consulting group say that with good restaurant labor management, labor costs should come in at less than 30% of restaurant sales revenue, and food and labor costs should be less than 60% of the revenue. Fine dining, however, may have higher labor cost percentages than fast, casual eateries.

Saving with Automation

What if you could bring down your labor percentages by automating part of your operation? Not only would you save money, but you’ll be more attractive to investors, and you won’t have to worry about someone quitting or calling off on a Saturday night. Here’s a few examples of how automation is helping in foodservice:

    • In the kitchen, automation and robotics can be used to do things like prep food, operate the fryer, and flip burgers.
    • An increasing number of restaurants are using automation via table-top devices. These devices can be used to promote specials, process credit cards, and call for service.
    • Implementing iOT in restaurant kitchens helps with food safety and utility costs by automating reporting and monitoring energy usage.
    • Using automation can help with accuracy and consistency in how dishes are prepared, helping save money.

While automation can be a huge game-changer for restaurants, it’s important to know your current operations cost and labor costs, so you can determine whether an investment in automation technology is a wise investment for your operation.

Ready to rethink cooking and learn how automation can help?


The ROI of Automation

Topics: Automation, Restaurants