What is referred to as a “raw labor percentage, is an adequate view of actual dollars you’re spending however, a sales-per-man-hour can provide a better picture of how effective your schedule is.
Commonly used in quick service restaurants Sales Per Man Hour can be a valuable tool when used in any segment of our industry. As owners-operators and managers we need to assemble an arsenal of analytical “weapons” to combat rising costs.
It’s simple to figure your daily sales-per-man-hour (SPMH) and is accomplished by dividing the total number of hours by the gross sales. A higher SPMH results in a lower labor percentage without regard to individual rates of pay. It’s a good idea to calculate the SPMH for each department as well as a total number of hours.
- Front of House (dining room) = 35 hrs
- Bar = 24 hrs
- Back of House (kit / dish) = 26 hrs
- Total = 85 hrs
Sales by Dept.
- Front of House (food & bev) = $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
Totals Gross Sales = $2,500
Overall 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 may be able to achieve a much higher SPMH than say a restaurant offering table service.
You can be as specific as you care to. You can calculate the SPMH for each sub-dept (bussers, diswashers, bar-backs, etc.). After doing this for a few weeks you’ll begin to see patterns emerge within each department. Going one step further and calculating figures for day-parts (bfst, lunch, etc) will provide some very precise information. For most operations a simple overall 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 controlling labor. Constant evaluation of productivity is crucial to an effective written schedule.