Dave, I just opened my first pizzeria a couple of months ago. Labor has consistently been running
between 20-22 percent. At times, I feel short-staffed, but I really can’t afford to hire new help right now until I get sales higher. Do you have any suggestions for me? Is my labor where it should be?
Davie P’s Pizza
The industry average pushes 30 percent of gross sales. If you are computing wages, salaries and benefits correctly, you are running a phenomenal operation. Since new operations generally are not well-oiled machines, they will often run labor in the high 30s. By the way, to clear up a common misconception, labor cost is not what the computer says in its on-the-fly report. Most POS systems are fantastic time clocks that can keep a running total of clocked-in employees to the minute. Divide that amount into the sales (less sales tax) and you get a labor report.
Most accountants worth their fees will describe labor costs as the sum of:
1. Hourly wages
2. Salaried managers
3. Workers’ comp insurance premiums
4. Unemployment contributions
5. Medicare and Social Security matching fees
6. Any paid vacation or medical insurance charges
8. Basically, any cost associated with providing a job for someone
You are to be congratulated on your 20 to 22 percent labor. Please ask your financial person to compute in accordance with Generally Accepted Accounting Principles (GAAP) and get back to me. I believe you are working your guts out with a fair amount of in-training crew.
If you feel like your customers aren’t receiving extraordinary guest service at every step of the hospitality process, you are doomed.
My drivers are complaining about doing extra work during non-peak times, such as cleaning and answering phones. But I don’t have enough delivery orders for them to do nothing but deliver. What should I cross-train them to do?
A&K’s Pizza Pub
Your problem started at the time of hire. As the owner, you have failed to make job descriptions crystal clear. I developed an employee handbook as well as a power point presentation that new hires had to watch. Afterwards, they were tested to make sure they understood the material.
I’ll assume that you accidently hired a couple of ‘prima donnas’ and they are resisting doing the dirty work. If you think you can turn them around, take them back to square one. If you know they are not going to adapt, help them with a career change. And get to work on that employee handbook! u
Big Dave Ostrander owned a highly successful independent pizzeria before becoming a consultant, speaker and internationally sought-after trainer. He is a monthly contributor to Pizza Today.