Labour is one of the biggest costs in hospitality.
And when the numbers aren’t working, the first solution many owners reach for is simple:
Cut the roster.
Sometimes that is necessary.
But cutting staff isn’t always the answer.
If you take one person off the floor during a busy service and suddenly customers are waiting longer, orders are being missed and staff are struggling, you may save wages while losing sales.
The better question is:
“Are we getting enough value from the people we already have?”
Controlling labour costs isn’t about having the fewest staff possible.
It’s about having the right number of people, with the right skills, doing the right work, at the right time.
Start With Your Actual Numbers
Before changing the roster, understand what you’re currently spending.
Look at:
- Total wages
- Superannuation
- Payroll-related costs
- Hours worked
- Overtime
- Penalty rates
- Labour cost by day
- Labour cost by trading period
- Sales by trading period
You want to understand how your labour cost changes throughout the week.
For example, you might discover:
Monday: $3,000 sales / $1,050 labour
Tuesday: $3,200 sales / $1,000 labour
Wednesday: $3,100 sales / $1,050 labour
Friday: $6,500 sales / $1,400 labour
The Friday roster costs more in dollars.
But it may be considerably more productive because sales are much higher.
This is why simply looking at the wage bill isn’t enough.
Don’t Judge Labour by Dollars Alone
A $2,000 wage bill isn’t automatically bad.
A $1,000 wage bill isn’t automatically good.
The question is:
What did the business generate with those labour hours?
A team working during a busy service can generate significant revenue.
The same number of staff standing around during a quiet afternoon can create a very different result.
Labour needs to be considered alongside sales and productivity.
Look at Labour by Hour
One of the most useful things you can do is break your day into smaller periods.
For example:
| Time | Sales | Labour |
|---|---|---|
| 7am-9am | $1,200 | $550 |
| 9am-11am | $1,800 | $650 |
| 11am-1pm | $2,400 | $800 |
| 1pm-3pm | $900 | $650 |
| 3pm-5pm | $350 | $500 |
The final two hours immediately stand out.
If your sales drop dramatically but your staffing level stays almost the same, you have a potential efficiency problem.
This is much more useful than simply saying:
“Our wages are too high.”
Build Your Roster Around Demand
Your roster should follow your trading pattern.
Not the other way around.
If your business has:
Low demand
then you need fewer people.
If demand increases:
Add staff.
If demand peaks:
Have your strongest team available.
This sounds obvious.
But many hospitality rosters are created around staff availability rather than customer demand.
That’s backwards.
Staff Availability Shouldn’t Drive the Business
It’s tempting to build the roster by asking:
“Who is available this week?”
Then filling the gaps.
But your first question should be:
“What staffing does the business require?”
Once you know that, you can work out who is available to fill those positions.
Otherwise, you risk creating a roster that suits the staff but doesn’t suit the customers.
Identify Your Peak Periods
Look at your sales by day and time.
Find your busiest periods.
Then make sure you have enough people during those times.
For example:
7am-9am – busy
9am-11am – very busy
11am-12pm – moderate
12pm-2pm – extremely busy
2pm-4pm – quiet
4pm-6pm – very quiet
You don’t necessarily need the same number of people across all six hours.
Your roster should reflect the demand curve.
Stagger Start and Finish Times
This is where staggered shifts can become extremely useful.
Instead of:
Everyone starts at 7am
you might have:
7am – early team
8am – additional staff
10am – lunch team
12pm – peak support
2pm – early finishes
4pm – reduced team
The exact structure will depend on the business.
The principle is simple:
Don’t pay for capacity you don’t need.
Don’t Cut Staff During Your Busiest Period
This is one of the biggest mistakes businesses make when trying to reduce labour costs.
If your busiest period is already under-staffed, cutting another person may reduce your costs on paper but damage the entire operation.
You could see:
- Longer wait times
- More mistakes
- Poor customer service
- Lower table turnover
- Fewer sales
- Staff stress
- More complaints
- Lower repeat business
The cheapest roster isn’t necessarily the most profitable roster.
Look at Productivity
Two teams can have the same number of people but produce very different results.
Why?
Productivity.
Look at what your staff are actually doing.
During a quiet period, are they:
- Cleaning?
- Restocking?
- Preparing?
- Completing admin?
- Preparing catering?
- Maintaining equipment?
- Organising storage?
Or are they simply waiting for customers?
A quiet period can still be productive if you have useful work ready for the team.
Create a Quiet-Period Task List
Don’t expect staff to automatically know what to do when trade slows down.
Create a simple list.
For example:
Quiet Period Checklist
- Restock service areas
- Clean coffee equipment
- Refill condiments
- Check display cabinet
- Prep ingredients
- Rotate stock
- Clean fridges
- Restock packaging
- Check bathrooms
- Wipe down high-touch areas
- Prepare catering orders
- Complete required cleaning tasks
This turns spare capacity into productive time.
Don’t Keep Everyone Doing Everything
Another common problem is unclear roles.
If five people are working but nobody knows who is responsible for what, productivity can fall quickly.
During busy periods, define responsibilities.
For example:
Barista
Responsible for coffee and bar.
Kitchen
Responsible for food production.
Floor
Responsible for customers, tables and service.
Runner
Responsible for getting food and drinks to customers.
The exact roles depend on your operation.
The point is to reduce duplication and confusion.
Cross-Train Your Team
Cross-training can make your roster much more flexible.
If only one person knows how to:
- Operate the coffee machine
- Run the POS
- Open the venue
- Close the venue
- Prepare certain dishes
- Handle catering
- Complete stock receiving
then you can become dependent on particular individuals.
Train multiple people to perform important tasks.
This gives you more options when building your roster.
But Don’t Make Everyone an Expert at Everything
Cross-training doesn’t mean every employee needs to be capable of every job.
That can actually create unnecessary complexity.
Identify the key skills your business needs and make sure you have enough coverage for each.
The goal is flexibility, not chaos.
Put Your Best People Where They Matter Most
Not every shift requires your strongest team member.
But your busiest periods probably do.
If your most experienced employee is working Tuesday afternoon while your newest team member is running Saturday lunch, your staffing strategy may be backwards.
Think about:
Who needs to be there when the pressure is highest?
Your strongest staff can also help newer employees develop their skills during busy periods.
Train Staff to Work Efficiently
Labour efficiency isn’t just about the number of people.
It’s also about how well they work.
Poor training creates unnecessary labour.
For example:
A poorly trained employee might take five minutes to complete a task that an experienced employee completes in two.
They may also:
- Make more mistakes
- Waste ingredients
- Need more supervision
- Slow other staff down
- Create rework
Good training can therefore improve both service and labour efficiency.
Fix the Process Before Cutting the Person
If a task takes too long, ask why.
Maybe the equipment is poorly positioned.
Maybe staff have to walk across the kitchen repeatedly.
Maybe ingredients aren’t prepared correctly.
Maybe the POS system is creating unnecessary steps.
Maybe the bar is badly organised.
Maybe the menu contains dishes that are too complicated.
Before deciding you need fewer staff, ask:
“Could we make the job easier?”
Sometimes improving the process produces a much better result than cutting a position.
Look at Your Kitchen Layout
Kitchen layout has a direct effect on labour efficiency.
If your chef needs to walk several metres every time they need an ingredient, that movement happens hundreds of times during a week.
If the dishwasher is positioned badly, staff may spend the entire shift moving dirty dishes around the venue.
If your bar stock isn’t organised, bartenders spend time searching rather than serving.
Small inefficiencies multiply.
Your Menu Affects Labour Costs
Your menu can create labour problems.
A huge menu with dozens of ingredients and complicated preparation methods can require more staff and more preparation time.
A tighter menu can sometimes:
- Reduce prep
- Reduce training requirements
- Reduce waste
- Improve consistency
- Speed up service
- Simplify stock management
This doesn’t mean every venue should have a small menu.
It means you should understand the labour cost of your menu decisions.
Look at Preparation Time
A dish that takes 15 minutes to prepare doesn’t just use ingredients.
It uses staff time.
If a dish sells for $25 but requires significant preparation, cooking and plating, its contribution may be very different from a $20 dish that can be produced quickly.
When reviewing your menu, consider:
Food cost
Selling price
Gross profit
Preparation time
Kitchen complexity
Sales volume
The most profitable menu isn’t necessarily the one with the highest prices.
Reduce Unnecessary Rework
Rework is labour you shouldn’t have needed to pay for.
Examples include:
- Incorrect orders
- Remaking drinks
- Re-cooking food
- Incorrect preparation
- Missing ingredients
- Miscommunication
- Poor handovers
If a kitchen makes a meal incorrectly and has to remake it, you’re potentially paying twice for the labour.
Train the team to get it right the first time.
Watch Your Opening and Closing Procedures
Opening and closing can contain a surprising amount of paid time.
Review what happens during these periods.
Ask:
Does everyone need to be there at opening?
Does everyone need to stay until closing?
Can some tasks happen during the final service period?
Can responsibilities be staggered?
You must still meet all applicable workplace, food safety and operational requirements, but there may be opportunities to remove unnecessary overlap.
Don’t Ignore Overtime and Penalty Rates
Roster planning needs to account for the actual cost of the hours you’re scheduling.
Depending on your business, award and employment arrangements, additional costs can arise from things such as:
- Overtime
- Weekend work
- Public holidays
- Late-night work
- Minimum engagement periods
- Other applicable entitlements
Make sure your roster and payroll practices comply with the relevant Australian workplace requirements.
Cheap-looking hours can become expensive hours if they’re structured incorrectly.
Track Sales Per Labour Hour
One useful management measure is:
Sales รท labour hours
For example:
Your team works 40 labour hours and generates $4,000 in sales.
That’s:
$100 sales per labour hour.
The next week, you have 40 labour hours but generate $4,800.
Now you’re at:
$120 sales per labour hour.
This doesn’t tell you everything about profitability, but it can help you identify changes in labour productivity.
Don’t Chase a Percentage Blindly
You may hear businesses talk about maintaining labour at a particular percentage of sales.
Like food cost percentages, this can be a useful measure.
But it isn’t a universal target that applies identically to every hospitality business.
A hotel, cafe, restaurant and pub can have completely different operating models.
Use your labour percentage to understand what’s happening.
Then compare it against:
- Your own historical performance
- Sales levels
- Profitability
- Service requirements
- Business goals
Look at Labour and Sales Together
Suppose your sales increase by 20% and your labour costs increase by 10%.
That may be a positive result.
Your business has increased capacity without increasing labour at the same rate as revenue.
On the other hand, if sales fall by 20% while your labour cost stays exactly the same, you have a problem worth investigating.
This is why labour should always be considered alongside sales.
Don’t Forget the Cost of Understaffing
There is another side to the equation.
Understaffing can be expensive.
If customers can’t get service quickly, they may:
- Leave
- Spend less
- Avoid returning
- Leave poor reviews
- Order fewer items
- Choose another venue
If your team is too small to handle demand, you may be saving $200 in wages while losing considerably more in sales.
The goal is balance.
Build a Flexible Team
A flexible team can be incredibly valuable in hospitality.
You want people who can adapt to changes in demand while still working within their role and training.
For example, when trade suddenly slows:
The floor team can help with restocking.
The kitchen team can complete preparation.
The bar team can clean and reset.
When trade suddenly increases, everyone knows where they need to be.
This requires training and clear systems.
Don’t Use Staff as a Substitute for Systems
If your business constantly needs extra people because basic processes aren’t working, adding more staff may simply hide the problem.
Ask:
Could technology solve this?
Could a checklist solve this?
Could better layout solve this?
Could training solve this?
Could a simpler menu solve this?
Could better communication solve this?
Every recurring problem should be examined before another person is added to the roster.
Review Your Roster After Major Changes
Your roster shouldn’t be permanent.
Review it when:
- Trading hours change
- The menu changes
- Sales increase
- Sales decrease
- A new competitor opens
- Customer patterns change
- A major contract starts
- You add takeaway or delivery
- You introduce catering
- You change your service model
Your staffing requirements change as your business changes.
Have a Weekly Labour Review
You don’t need an elaborate process.
Once a week, look at:
Sales
Labour hours
Labour cost
Sales per labour hour
Overtime
Quiet periods
Busy periods
Then ask:
What happened?
Why did it happen?
What should we change next week?
This makes labour management an ongoing business process rather than something you only look at when the bank balance becomes uncomfortable.
The Goal Isn’t Fewer Staff
This is the most important point.
The goal isn’t:
“How do we get the wage bill as low as possible?”
The goal is:
“How do we get the most productive, profitable operation from the labour we’re paying for?”
Sometimes that means fewer staff.
Sometimes it means better training.
Sometimes it means changing the roster.
Sometimes it means improving the menu.
Sometimes it means changing the workflow.
Sometimes it means putting more people on during your busiest period.
Sometimes it means investing in equipment or technology.
The answer depends on where the inefficiency actually exists.
The Hospitality Takeaway
Labour is expensive.
But good staff are not simply a cost.
They’re the people who produce the food, serve the customers, make the coffee, sell the products and create the experience that generates your revenue.
So don’t start by asking:
“How many people can I cut?”
Start by asking:
“Where are we using labour inefficiently?”
Then look at your sales patterns, roster, workflow, training, menu, technology and processes.
Build your staffing around demand.
Put your strongest people where they matter most.
Use quiet periods productively.
Train your team properly.
Measure the results.
And remember:
The cheapest roster isn’t necessarily the most profitable roster.
The best roster is the one that gives you enough people to deliver great service while making the most productive use of every labour hour you pay for.
