Being a best-in-class operator

Opinion Piece by Alastair Scott Nowadays, the integration of tech in hospitality has become synonymous with success. I talk to companies who mistakenly think they are best-in-class, simply because they use a software package to support operations. That is so far from the truth. As with all tools, having it is one thing, and using it well is completely another. You should see me versus my finance team on Excel!  This is certainly true when it comes to using technology to help grow profits. In which case, numbers 1,2,3 and 4 on the list are to grow sales. After that, people use tools to help focus on gross profit, and then they give operating costs an inspection. It’s only when all of those areas are exhausted that people look at labour management.   I get it. Labour is hard; labour is people; labour gets a reaction and some resistance. But to be a best-in-class operator, labour can’t be ignored, because it affects both cost and service. With the gap between best-in-class and average accelerating, I think understanding and managing labour better will become the determining factor.   So, how do you measure the effectiveness of your labour management? Labour ratio has been the historic measure of success, but the challenge with labour ratio is that a beer-led operator can run at a ratio of under 20% (coffee and cocktails make it harder), and a fine dining establishment might be heading towards a 40% ratio, so the success of labour management is difficult to measure this way.  In our restaurants, our preferred measure is slack, which is a measure of the excess labour over the agreed service standards of the business.   For many businesses, whether they are wet-led, food-led, high-end, or quick service, 25% slack is good. But even within this, scale matters.   The bigger the business, the lower slack can go. This is because shift patterns can be better designed with more team members, so a slack measure of 15% is not unachievable for large sites.  Why is it important? Service and staff. We have repeatedly evidenced that having too many staff on shift leads to worse service than too few staff. But even so, running shifts with too few staff causes a lot of stress for the team, who will feel no job satisfaction or reward from what could be a really energising session.   That’s why rightsizing your business is important, because it will lead to happier staff and better service.   Over the last decade, our attitude to labour management has been forced to change as labour is more expensive and good people are scarcer. People are also less tolerant of an unhappy, pressurised, or boring workplace.   The tools to become amazing have become increasingly good. We can now measure most of what we need to, and design and determine programs that will improve the quality and profitability of our industry.    Best-in-class has gotten better. Labour is becoming a much bigger differentiating factor between thriving and surviving than it has been historically, so maybe, it might move up the list.