Top 5 Ways to Reduce Your Restaurant Labor Costs

Managing labor costs with restaurant crowds

As the owner or manager of a restaurant, you have a lot on your proverbial plate. Taking care of customers, making sure staff shows up on time, and having enough inventory to cover the menu is just the start. Through it all, you must also have a continuous eye on the bottom line. There are some costs of doing business, like taxes and insurance, that you can’t control. The trick to seeing a positive impact is to concentrate on the costs you can control. The largest of those controllable costs are your labor costs.

Overstaffing, improperly managing schedules, and overlooking state and national labor laws are some of the ways that managers make mistakes that end up costing the restaurant money. Check out our five quick tips for restaurant managers to control labor costs and add to their bottom line.


1. Understand Restaurant Labor Laws

Are you aware of your state labor laws regarding restaurant workers? If not, it could cost you and your restaurant a lot of time and money. Knowing how many breaks workers are entitled to, if employees are responsible for customer walk-outs, whether managers can take tips, and what the minimum wage is for wait staff and bartenders are just a few of the laws you need to be familiar with. Violating them could lead to fines, lawsuits, or even the business closure.

2. Cross-Train Employees

When you have a diverse and flexible team, costs almost always go down. Can one of your waitresses pull double duty as a bartender? Is your host comfortable with bussing tables if she sees a need? Idle workers are costing you money. If you can train your restaurant staff to fill in the gaps, your restaurant will run smoothly and efficiently.


Restaurant staff

3. Reduce Employee Turnover

Training servers, chefs, and bartenders is a time-intensive and costly process. The more you can reduce turnover, the more you save on these costs and increase the overall brand consistency of your restaurant. It’s crucial to create a fun workplace that encourages high morale. This may include paying good employees more than the minimum, arranging team outings, providing benefits to entice workers to stay with you, and instilling an overall pride in them for the restaurant and their career.

4. Evaluate Schedules Regularly

To ensure you are not overbooking or under-booking staff, you need to evaluate schedules on a regular basis. Do you have too many workers scheduled during slow times? Not enough on busy Friday nights when you have drink specials? As your restaurant evolves, your scheduling needs will evolve with it. Setting schedules and expecting that they will be accurate month after month is not realistic.


Labor cost management software

5. Use Labor Management Software

Restaurant labor costs revolve around so many changing factors that keeping track of them can be a full time job in itself. Consider using management software specifically designed for restaurant managers to help take tasks off your plate and ensure accuracy in your reports. The right software can save you time and money by tracking payroll, employee performance, and legal compliance. Get out of the back office and into the parts of your restaurant that need your attention.


To ensure your restaurant thrives, always keep an eye on your controllable costs, mainly the expense and management of labor. Remember, in the restaurant business, it’s not about the finish line, it’s about the bottom line.

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