Advice and Tips

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Advice and Tips

MANAGING YOUR ROSTER FOR PROFIT

15 OCTOBER 2019

 

 

Effective Rostering allows a Manager to respond to the unpredictable nature of customer demand and impacts profitability more directly and immediately than any other aspect of operations.

Labour Cost is one of the two most expensive manageable costs in your Restaurant and Café, but the only one that can be managed in real-time, in response to daily fluctuations in revenue.

The impact of getting a Roster wrong is considerable; too many staff and the cost of sales increases, productivity drops, and service decreases. Too few staff result in poor customer service, lost sales, and frustrated, overworked staff.

Effective Rostering is the single most proactive means of achieving sustainable profitability and is too important to ignore.

 

What does a Roster Do?

A roster details when and in what role employees will work in the one to two weeks ahead, and performs four key roles.

  1. controls labour costs
  2. meets customer demand
  3. manages staff availability
  4. meets government regulations and contractual obligations

Controlling costs through effective rostering is a challenge; no two employees have the same skills, productivity, availability or desire to work the same number of hours, and customer demand fluctuates significantly across both the week, and seasonally throughout the year.

 

How do we measure the performance of a Roster?

A Rosters performance is measured through what is called Labour Cost, or Wage Cost percentage. This is calculated by adding up the wage cost (the dollar value) of all the staff rostered that week (including salaried staff and any staff that are on Annual Leave) and dividing it by the revenue generated that week.

When we write a roster, we calculate the value of that roster (including super contributions and Workers Compensations fees) and divide it by the anticipated revenue that will occur over that period. We then compare this roster to the actual week’s events; the revenue that was achieved, and the cost of the staff in servicing that revenue.

A high performing roster does two things; the roster’s labour costs are close to the costs of the actual trading weeks labour cost (as a percentage of revenue), and secondly close to or at the pre-defined labour cost target that has been determined to be ideal for the business to be profitable.

Steve is new to Management; he Manages a 100-seat Fine Dining Restaurant in Sydney. He has 23 staff on his roster and writes his rosters two weeks in advance.

Steve uses the typical Industry approach of assuming that next week’s revenue will achieve the same revenue as the corresponding week last year; the week starting August 13th 2018 earned R36,000, so he assumes that the week starting August 12th 2019 will do the same.

He uses an excel spreadsheet to write the rosters, and to roughly calculate the wage cost of that roster and estimates his roster costs R14,000, give or take. Steve didn’t really worry about the cost of his roster; he rostered by how many staff he needed on every shift, which is the same as every week, and it usually took care of itself.

The wage cost of last week’s payroll was 36% (including addons), and Steve assumes that trade will pick up and be higher than the R36,000 he noted from last year, as it was the week before. But trade didn’t pick up. Revenue actually dropped, and the 38.9 percent roster became a 47 percent payroll. Steve also hadn’t accounted for Super contributions and Workers compensation in his roster, underestimating what the true roster cost would be.

As a result, the business lost R3,480 in just one week, and the roster and the Manager, Steve were largely to blame. He had miscalculated the roster; it actually came in at R15,000, and Revenue had dropped to R32,000.

Had he maintained a roster cost and then the payroll at the previous weeks wage cost of 36% he would have adjusted his roster to be R11,520 in value. Steve has a meeting with the owner next week to explain what happened.

 

What is Labour Cost Percentage?

It is the total cost of staffing your venue. It must include Superannuation and Workers compensation costs. It should also include accrued entitlements, such as annual leave.

The Labour Cost percentage = Payroll Cost (cost of all labour across the trading week including Super contributions and Workers Compensation fees) divided by Revenue earned in that week (less GST).

Labour Cost = R15,000 /R32,000

= 47%

The Roster Cost = Roster Cost (cost of all rostered staff plus Super contributions and Workers Compensation fees) divided by the anticipated revenue to be earned in the corresponding period.

Roster cost = R14,000 /R36,000

= 38.9%

 

What went wrong?

When we write a roster, it becomes a mostly fixed cost in anticipation of an uncertain revenue; we simply don’t know how much money we will take each day, each service or from each guest.

On average Managers spend 4 percent more on rosters than they should; Managers and Owners often under-estimate the amount of revenue in the week they write the roster for and spend more labour cost than they should to meet that increased demand.

A 4 percent saving in Labour cost is a significant increase in profit; for a typical Restaurant it would mean a 110 percent increase, a Café a 120 percent increase.

But Steve made a larger error, common to Managers and Owners that use spreadsheets instead of Rostering Technology.

Steve didn’t accurately cost his roster and didn’t accurately forecast his revenue. He forgot to plan for tasks that can be controlled, such as receiving a beverage order.

And finally, Steve didn’t react to changes in revenue; the roster he had written in advance was different to the one he would have written in hindsight.

He hadn’t controlled the labour cost, nor met the customer demand; fewer customers dined in his Restaurant, and his Labour cost blew out, resulting in thousands of dollars lost, in just a week.

Effective Rostering is quite simply the cornerstone to sustainable profitability. And conversely, ineffective rostering can undermine profitability more rapidly than any other aspect of operations.

A beautiful fit-out, and perfect food are for nothing if a roster sends a business broke.

 

The Role of Scheduling in Labour Cost Management

Effective Rostering for Profit involves Four stages;

  1. Forecast Customer Demand.

Forecasting demand is a cornerstone of profitable rostering. Whilst a forecast is little more than an informed guess, it is much more effective than rostering without a forecast.

Forecasting involves two stages; firstly, reflecting upon what happened 12 months ago in the corresponding week last year. Was there something different about that week? A local event that drew customers away, poor weather, a public holiday, Easter or other special event? Was that week last year significantly different from the 4 weeks before it?

Secondly, we assess the last 19 weeks of trade for the business; what is the average Revenue over the last 19 weeks, per day? That is what is the average Monday trade, the average Tuesday etc?

We take the average of the last 19 weeks Revenue, per day, consider if any adjustment is necessary due to special events or the weather, and write a roster to a predetermined Labour Cost target.

For example, Steve now has a labour cost target of 34% (including addons). The average of the last 19 weeks revenue is R31,500. The Labour Cost target for his roster is;

Roster Cost Target = Average 19 weeks revenue multiplied by the Labour Cost target

Roster Cost Target = R31,500 x by 34 percent = R10,710

  1. Determine Staff Availability

Define availability for staff; what days can and cannot be worked, are any staff unavailable over the rostering horizon, do staff have limitations as to the number of hours they can work, will salaried staff be rostered to work over-time, and understand regulations such as minimum duration required between two shifts.

A good Rostering Software package like Roubler will manage this on your behalf and provide feedback if you attempt to roster a staff member beyond their availability.

  1. Schedule Staff on the Roster

Roster Staff to a total cost no more than the target Labour cost percentage value.

A great Rostering Software will include all of the addons, such as Super contributions etc, automatically cost in Public Holidays, and penalty rates over the Rostering horizon, has automatic award recognition for new staff, and staff with differing experience levels and determines an exact calculation of the Roster.

Great rostering software tags specific staff with qualifications, and experience. For example only staff members with experience as a Barista can be rostered as a Barista.

  1. Adjust the Roster to Real-Time information.

A Roster revolves around an assumed customer demand, which is unpredictable. If the predicted daily revenue is not achieved, the roster must be revised.

For example, Steve’s average Monday revenue is R3,500. He has 4 Front of House staff, and 2 chefs rostered, and a roster value of R1,400.

Tuesday morning Steve realises that Monday’s revenue was only R2,500, though the wage cost was R1,375.

The weeks revenue, even if the balance of the weeks predicted revenue is correct, will be R1000 lower than the revenue the roster was written to.

Based upon the predicted R31,500 weekly Revenue, Steve had R10,710 to spend on his roster to achieve a 34 percent Labour Cost. With the loss of R1,000 Revenue on Monday, Steve now has a Roster cost of R10,370 for the whole week. He needs to find R315 savings from the next six days.

The best rostering software has automatic award recognition for new staff, and staff with differing experience, and a payroll function, which allows a manager to know exactly the cost of completed shifts, allowing the facilitation of adjustments in the roster across the balance of the week.

 

24 Hints to Managing a Roster Profitably

  1. Utilise Rostering software with built in award recognition. Excel spreadsheets cannot be easily read on smartphones, and staff often don’t have personal computers, and awards are complex and ever-changing. Also Rostering Software has communication channels directly to staff, and some have intuitive rostering which offers suggestions, reducing the time spent when rostering.
  2. Choose a Rostering solution with integrated Payroll.
  3. Integrate the Rostering Software with your Point of Sale
  4. Approve completed shifts in the rostering solution after every shift. Do not leave completed shifts to be approved by Managers that did not work that shift, or the following day.
  5. Roster no more than two weeks in advance, adjust the second week as required.
  6. Roster start times in 15-minute windows. Instead of staff either starting at 5pm or 5:30pm, include 5:15pm.
  7. Include all addons in a costed Roster. A roster must include Super Contributions, Workers Compensation and Payroll tax (if applicable).
  8. Roster based upon a dollar value, not based upon the number of people required each shift.
  9. Consider the weather of the upcoming week
  10. When changes are made to a roster, ensure the staff member replacing is of the same skill set and hourly rate. Good rostering software will facilitate this.
  11. Schedule controllable work, such as polishing cutlery, or receiving a beverage order
  12. Align labour costs with the revenue that they generate; Don’t let the work of one shift spill into another shift, and if it does, link that cost to the previous shift. The aftermath of a lunch shift needs to be completed by the lunch staff. Staff starting an afternoon shift focus upon the tasks that relate to the afternoon shift first.
  13. Decide how to manage Annual Leave (AL) accumulation. Either the AL will be accrued in a sub-account to be paid when the staff member either takes leave, or leaves the business, or AL will be taken out of the cash flow of the business. Accruing the AL payment is preferred.
  14. Roster experienced staff on quieter nights that have variable demand. Some shifts, such as a Monday to Wednesday, can fluctuate considerably. Staffing must be orientated to the average revenue range, and experienced staff have the capability to increase productivity or complete the shift ahead of time.
  15. Measure the success of Individual days by Productivity rather than wage cost percentage. Quite often the mid-week shifts may have 40 percent or higher labour cost percentages, but their revenue per labour hour is equal to or higher than peak trading shifts.
  16. Develop and independent measure of good service, such as average wait times and maximum wait times on mains, and the time between a customer being seated, and a customer ordering for a Restaurant. The number of orders per hour would apply to a QSR or Café.
  17. Record the value of the Managers, the Front of House and Kitchen Staff into separate areas in the back end of the Rostering platform.
  18. Ensure Salaried staff are always on the roster, and clock in and out. This includes the Manager.
  19. Add up the total cost of the Managers salaries (including super) and determine the daily cost of salaried staff. Salaried staff are a cost across seven days of the week, whether they are working on that day or not.
  20. Record when a staff member starts and finishes their shift independent of the rostering software. Every shift Manager should have a printout in their pocket of who is rostered on, and when they start and finish. Staff can sometimes forget to clock off, or end their shift at their managers behest, only to get changed, and have a chat to a friend, and then clock off; time theft by employees is not prevented by clock in and clock out software.
  21. Keep to the Rosters cost; the roster is written based upon a specific revenue forecast and Labour Cost target. If the labour cost increases beyond the roster as it was written, it must be justified by the Manager on Duty, and should ideally be offset by an increase in revenue.
  22. Keep labour savings out of the roster; if a day in the week performs better than expected, for example Monday’s revenue is R5,000 instead of the forecast R3,500, and the Wage cost on Monday only increased by R100, a manager may think they have extra money to spend over the balance of the week. They don’t. Tuesday’s labour cost may well be higher as some of the clean up was left for the opening staff to do, the kitchen now needs more prep time to replace the prep that was used unexpectedly, and finally, revenue may drop later in the week.
  23. Cross-train staff, so that staff members can perform a range of tasks as required.
  24. The Roster is a guide; the Manager on Duty has the final say when a shift ends. Some staff see a roster as a set time they start and importantly finish and can disappear when the shift is busier than expected. Make sure staff understand that the roster is a guide and confirm their finish time with the relevant manager.

 

Labour Cost percentage Targets?

Just what is considered a good Labour cost percentage for a restaurant and café? The answer depends on the strategy employed by the business, and the segment it is in.

Steve Manages a Fine Dining Restaurant; it is licensed, and it is a table-service restaurant, and formal. Across its total menu, the restaurant has a food cost of 20 percent, and the wine list enjoys a mark-up of 220 percent. Table turns are slow, average spend is high, and the total business wage cost is over 30 percent. This is deceptive, because the kitchen wage cost is over 40 percent, which forces the Front of House Wage Cost to be less than 30 percent.

Carmel’s Café is a Quick Service Café, where orders are taken at the counter, and menu items, like their enormous muffins, are bought in already made. Carmel’s Food Cost is higher, but she doesn’t have any kitchen staff, and the service required is much lower than in Steve’s Restaurant. Carmel’s target labour cost is 25 percent.

Neither Food Business is wrong; they are pursuing the ideal Wage Cost Percentage for their specific business in their specific segment of the industry.

 

Conclusion

 Rostering is a fundamental role for a Manager or Business Owner, and its complexity and impact on the business not only justifies but demands sophisticated Rostering Software with integrated payroll and automatic award recognition.

Rostering software requires a minimal labour saving to make it cost neutral. But using a powerful rostering solution like Roubler provides an opportunity to not only save time, and save money, but to actually provide the business with a tool that improves the profitability of the restaurant or café beyond its cost.

The business can make more money when partnering with Roubler than not. And no restaurant or café can ignore that.

 

Words by Ivan Brewer

Advice And Tips

TEN WAYS TO GET SUPERIOR SERVICE IN A RESTAURANT

23 AUGUST 2019

 

  1. Be patient. Returning a dish or requesting a substitution is fine, but it may take some time. Also, your server is juggling many other guests’ needs, especially during the dinner rush.
  2. Read the menu. Asking the waiter’s opinion between two choices is perfectly acceptable, but asking him to detail the entire menu in lieu of actually looking at it is tedious and inconsiderate.
  3. Think ahead. If someone at the table orders a drink and yours is one-third full, and you know you’re going to get another one soon, go ahead and order yours at the same time. Don’t wait for her to come back with the other patron’s drink just to send her right back to the bar.
  4. Be polite. Don’t respond to “Good evening, how is everyone tonight?” with “I’ll have the Riesling.” Engage in the bare minimum of pleasantries; say please and thank you.
  5. Talk to the right person. Ask the support staff to send your waiter over if you need something, rather than for a desired item. Bussers often do not have access to the electronic POS system that allows them to ring in an order, nor the authority to approach the bar directly.
  6. Don’t shoot the messenger. The waiter didn’t cook the dish, nor set the menu prices. If you were unhappy with the food make sure to clearly tell your server so management can remedy the situation instead of just leaving a bad tip.
  7. Refrain from using your cellphone. Especially when ordering.
  8. Send a thank you note. Telling the management in writing that you had a wonderful meal or fantastic service guarantees you will be remembered and welcomed warmly the next time you make a reservation. Detailed notes are kept in reservation systems, especially for regular patrons.
  9. Don’t get personal. Inappropriate questions obvious flirting with the staff is awkward and uncomfortable.
  10. Remember it’s a person. Someone has to deal with what you leave behind – gum under the table, shoe dirt on the chairs, the remains of blowing your nose into the linen napkin. Please proceed with grace.

 

Ten Ways to Give Superior Service in a Restaurant 

 

  1. Be patient. Don’t clear any plates until everyone has finished. An empty plate is far less obtrusive than making the remaining diners feel rushed or making the first person done feel they ate too fast.
  2. Be pleasantly vague. Don’t ask a guest if they want another margarita or some more bread—just ask if they need anything.
  3. Timing is everything. Wait for right moment to recite a long list of specials (with prices, please) or interrupt an intense conversation.
  4. Be discrete and professional. Don’t laugh or gossip with coworkers within earshot of customers, or eat or drink within site of them.
  5. Be upfront. If your restaurant charges an automatic gratuity on parties of six or more, and your eight top just tipped you generously in addition to that, point out the included service charge.
  6. Pay attention. Don’t ignore a table that isn’t yours. If you see a guest clearly in need of attention, help them immediately or promptly tell them you’ll send their server right over.
  7. Good service flows. Bring all of the appetizers or entrees to a table at the same time. Never leave one guest stranded and plate-less while everyone else in their party has their meal.
  8. Read silverware signals. Cutlery crossed in the shape of an X means the diner isn’t finished. A knife and fork together in the 10 o’clock and 4 o’clock position means they are. Think of it this way: X means no, hands off, and a straight line means you can take it straight away. (That is, presuming everyone else is done too. See #1 above.)
  9. Left/leave, right/retrieve. Generally one serves from the guests’ left and clears from the right, using the respective hand (ie: placing a dish with the left and picking up with the right).
  10. Remember you’re there to help. Never answer a guest’s question with “I don’t know,” without immediately following it up with “…but I’ll find out.”

Tips and Advice

RESTAURANT MANAGEMENT TIPS: FIVE TIPS FOR SUCCESS

22 AUGUST 2019

 

How to be successful in the competitive restaurant business.

 
1.   Define the Concept of Your Restaurant Business

Research what works for your restaurant’s location, and develop a strong concept that suits your potential clientele. Choose a theme that will be familiar enough for local patrons but distinguishable from other restaurant businesses in the area. Once you have decided the overall vision of your restaurant business, don’t underestimate the power of a catchy name.

2.   Develop a Budget

Possibly the most important phase of restaurant management is developing a budget and sticking to it. Many experienced restaurateurs say that underestimating start-up costs is one of the most common mistakes of new restaurant business owners. If you’re interested in working with investors, you’ll need to design a business plan that illustrates your restaurant concept and includes risk assessment and plans for return on investments.

3.   Design an Appropriate Restaurant Space

Everything from the lighting to the table settings should be consistent with the general vision of your restaurant business. An effective restaurant design has two main elements: a relaxing ambiance and functionality. A restaurant should feel warm and inviting to customers while being easy to clean and maintain. You’ll need ample storage and kitchen space along with enough room for customers to sit while waiting for a table.

4.   Hire and Retain Quality Employees

The success of any business can often be measured by the happiness of its employees. Give yourself plenty of time to find a great staff. During construction, post a “Now Hiring” sign in the front window and place ads in the newspaper or online. As early as six weeks before opening, start interviewing and developing training schedules for kitchen and wait staff. Once your restaurant business is open, maintain a positive work environment by immediately addressing any issues among employees and establishing incentive programs that encourage teamwork and creativity.

5.   Publicize Your Restaurant

While your restaurant business is still in the construction phase, start your marketing campaign by hanging a banner that reveals the name and the expected time frame for opening. Attract potential customers by sending press releases to local media groups and throwing an opening night party with free samples of the food. Once it’s open, continue to promote your restaurant business by hosting local food events and investigating ways to advertise without spending a lot of money.