LFTL: Seasonal Sales Cycles

At Harmony, we have found there is one element that stands out in ensuring long-term success: controlling labor costs. While the first principle is that labor spending needs to be at sustainable levels to ensure consistent profitability, we've noticed some clients struggle with the seasonal sales cycle. Your invaluable human resources must be managed with precision to ensure both profitability and a stellar customer experience.

Why Align Labor Scheduling with Seasonal Sales?

The driving force behind aligning labor scheduling with the seasonal sales cycle is the industry's inherently thin margins. Any discrepancy between labor cost and sales can significantly impact the bottom line. At Harmony, our Key Performance Indicator for Clients is no more than 30% of sales to be spent on labor (excluding benefits). To reach this goal, ensuring labor scheduling is in line with anticipated sales is critical.

Find the Floor

Setting a realistic labor floor is crucial to optimizing operations without compromising the quality of service and guest experience. A labor floor refers to the minimum number of staff required to ensure that the restaurant can function smoothly and deliver a satisfactory experience to its guests. Determining this threshold is a delicate balance: too few staff can lead to overworked employees, decreased morale, and a potential decline in service quality, while overstaffing can inflate operational costs unnecessarily and destroy any chance at sustainability.

The delicate balance makes setting a labor floor a great opportunity to examine assumptions around labor costs. To set a realistic labor floor, you must critically evaluate product mix, workflows, peak and off-peak operational hours, and the specific roles and responsibilities of each staff member. Continual monitoring and feedback are essential, as this ensures that the established labor floor remains adaptive and dynamic.

Last Year, Same Week: The Guidepost

A key data point in this labor-scheduling puzzle is to look at the 'last year, same week' sales figures. Historical data provides a reliable forecast, offering strong insights into expected sales – which is why we include it in the weekly reports to our clients. The sales figure from the same week last year will likely incorporate the same holidays so it is a reliable starting point to evaluate your sales and corresponding labor needs.

However, it's essential to note that while historical data is a guiding light, it isn't a crystal ball. Sales figures from the same week in the previous year can provide a solid foundation, but adjustments might be necessary, especially if significant external events have arisen (good high profile review, new entertainment options coming online, competition opening).

The 10% Swing Rule

In the restaurant business, while sales can be unpredictable, month-to-month swings of more than 10% are rare, barring any significant external events or the extreme seasonality of waterfront/beach establishments (who should use the previous year guidelines). The 10% swing rule is especially important when an operator’s desire to cut labor is tempered by the hope of operational and menu changes bringing increased sales, alleviating the perception of the need to cut labor. To be blunt, the promise of rising sales will almost never solve a labor challenge so it’s imperative to manage to the current sales levels.

Stay Updated: The Impact of Large Events

While historical data and the 10% rule provide robust baselines, it's equally crucial to keep an ear to the ground for any large events – think conventions, local festivals, or significant sporting events. Such occurrences can significantly drive up foot traffic and sales, necessitating more hands on deck. By staying updated on the local events calendar and integrating it into the labor scheduling process, you can preemptively scale your staffing needs to any special events and not be caught short-handed. 

Scaling Labor Throughout the Year: A Continuous Process

In the restaurant industry, complacency can be a silent profitability killer. Regularly reviewing labor schedules in line with the sales cycle isn't just a one-off task; it's a continuous commitment that should happen every time the schedule is being considered. As the year progresses, variables such as promotional campaigns, weather, cyclical changes in consumer behavior, or even macroeconomic shifts can influence sales. By continuously monitoring and adjusting labor schedules accordingly, you can ensure you're positioned best to maximize profits and minimize inefficiencies.

In Conclusion

The challenge of scaling labor according to the seasonal sales cycle is akin to a well-choreographed dance. It requires a blend of historical data insights, foresight into potential variances, and consistent attention. But when done right, it results in a harmonious balance of a great guest experience, staff morale, and profitability.

Given the thin margins on which restaurants operate, it's not just beneficial but critical to have a laser focus on labor. As we continue to navigate the ever-evolving landscape of the hospitality industry, let's prioritize aligning our most valuable resource – our staff – with the rhythms of our sales cycle, ensuring a win-win for everyone!

Last Bites

October 2023

Windy City Blows It

Chicago became the latest big city to look for a solution to something that’s not a problem and eliminated the FLSA tip credit. At Harmony we love and respect the professionals who work for our clients  and think they deserve to be compensated a living wage but tire of this disingenuous talk about “sub-minimum wage” (it doesn’t exist). We also know that these laws eliminating the tip credit don't increase the real wages for anyone. Nonetheless, it has created new layers of complexity and we are here to help all of our clients navigate this new complicated environment. Harmony Group is expanding into Chicago to help operators navigate these changes as we have with DC’s baffling rollout of Initiative 82.
 

Michelin on the March

The most powerful person in the food business might just be Bibendum. His smiling face can send a restaurant business, licking his lips signifies great value, and the stars he bestows are the most coveted awards in food. If you haven’t guessed Bibendum is the Michelin Man and the Michelin Guide has been the lingua franca for world-class dining. So it’s newsworthy that Michelin is expanding (not without some controversy) because while Michelin isn’t the sole arbitrator of quality it does recognize many truly magnificent establishments. At Harmony we are proud of all of our clients who’ve achieved this recognition because we know the tremendous amount of work that the Guide recognizes - big shout-out to Petite Cerise and Yellow who are among the new additions to this year’s DC guide.
 

Vibe Check

Trend pieces for food news organizations are like quarterbacks for NFL teams – everyone needs one but few are very good. This piece from Eater confirms something we’ve seen – that the current crop of “it” restaurants aren’t minimalist food-focused temples but bigger, noisier spaces that focus on the vibes and fun of the experience. You can find no shortage of pieces saying that kiddies (Gen Z) value vibes over most other elements. The takeaway here is if it fits your concept don’t be afraid to be over the top and lean into the fun elements.