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3 Ways to Tackle Rising Labor Costs

With new labor laws going into effect, restaurants are starting to feel the pinch—and they’re responding. Here are just a few ways you can tackle the rising labor costs:

1. Automation

At a bustling 2-story restaurant in San Diego known for cheap beers and tacos, raising food prices wasn’t an option. Fearing that they’d lose their loyal customer base by passing those costs to customers, the owners decided to make significant cuts to their waitstaff. Keeping the servers who stood out as all-stars among the staff, the restaurant let the rest of the team go and invested in kiosks for food ordering. Staff that remained became food runners, taking food from the kitchen straight to the numbered table—similar to what you see in many fast casual restaurants.

This type of automation isn’t without its risks. Drastic cuts to staff means less jobs in the community and could affect morale with existing staff. Plus, while the kiosks and number system found in many fast casual restaurants work well in that setting, it won’t work everywhere.

2. Pass the Buck

One of the arguments against the proposed wage increase was the increased costs to consumers. Restaurants already operate on notoriously slim margins, which meant that in most cases the costs associated with wage regulations would most likely hit consumers. I’ve seen restaurants post clear signs outside of their establishment notifying customers about an additional service fee that will be added to every bill. The transparency is great, but what will your customers think?

Alternatively you could raise the cost on menu items, which would be the sneakier way to pass the buck. But don’t think those menu prices will go unnoticed either. Customers are pretty savvy when it comes to costs, and even if you decide to enforce a no-tipping policy concurrent with the menu hike, it might not last.

3. Cut Costs Elsewhere

More often the not, the best way to tackle rising costs in one area is to cut costs somewhere else. First check into your food costs, which next to labor costs, is the highest expense on your list. If you have good relationships with your purveyors, chances are they might be willing to cut you a deal on some items; for example, maybe there’s an off cut of protein they’ve got too much of. Or, if you specialize in seafood look into ‘trash fish’ or bycatch fish that are less popular and therefore, less expensive—plus you’re preventing excess waste by helping to provide a market for these under-appreciated fish. Sustainability win-win!

Next after food costs, check your operating costs. It might not seem much now, but that leaky faucet could be costing you gallons of water per year (and water costs certainly aren’t going down). Eco-friendly plumbing supplies like low-flow faucets and pre-rinse hoses can help save you some big money long term. Pair those plumbing replacements with new LED lights and other efficient swaps and you’ll be a lean, mean, green machine.

Finally, there’s perhaps one wicked easy change you can make to your back of house: reusable cups/water bottles. Buying disposable cups for those on the line plus front of house staff like servers and hosts can add up quickly. Reusable cups not only eliminate the waste, but also prevents money being thrown in the trash (literally!).


How are you tackling the wage increase?

About Natalie Fauble

Natalie Fauble is the Online Marketing Manager - Content & SEO for Tundra Restaurant Supply. As a digital marketer with a passion for the restaurant industry, Natalie helps companies shape their brand through thoughtful, fun and innovative content strategies. When she isn't blogging for Tundra Restaurant Supply you can find her in her vegetable garden or in the kitchen whipping up one of her favorite dishes.

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