Labour is one of the biggest costs in most hospitality businesses.
And when profits are under pressure, the first instinct is often:
“We need to cut staff.”
Sometimes reducing hours is necessary.
But cutting staff isn’t always the best solution.
If you remove the wrong person at the wrong time, you can create longer wait times, poorer service, frustrated customers, stressed staff and even lower sales.
The better question is:
“How can we get more productive hours from the labour we’re already paying for?”
That starts with understanding where your labour is actually going.
Know Your Labour Cost
Before changing your roster, you need to know your numbers.
Look at:
- Total wages
- Superannuation
- Payroll-related costs
- Labour hours
- Sales
- Labour cost percentage
- Sales per labour hour
A simple starting calculation is:
Labour Cost % = Total Labour Cost ÷ Sales × 100
For example, if you spend $3,000 on labour and generate $10,000 in sales:
$3,000 ÷ $10,000 = 30%
The percentage itself doesn’t tell you whether your business is performing well.
Different hospitality businesses have different operating models.
The important thing is to understand your own numbers and track how they change.
Don’t Roster Based on Habit
One of the biggest problems with hospitality rosters is that they become repetitive.
Monday looks like Monday.
Tuesday looks like Tuesday.
Friday looks like Friday.
So the same number of people get rostered every week.
But your sales probably aren’t identical every week.
You might have:
- A quiet Tuesday
- A busy Friday
- A public holiday
- A local event
- A large booking
- Bad weather
- A school holiday period
- A seasonal change
Your roster should respond to demand.
Match Labour to Sales
Look at your sales by hour.
For example:
| Time | Sales | Staff |
|---|---|---|
| 7am-8am | $700 | 5 |
| 8am-9am | $1,200 | 6 |
| 9am-10am | $1,500 | 7 |
| 10am-11am | $900 | 6 |
| 11am-12pm | $500 | 5 |
| 12pm-1pm | $350 | 5 |
You may discover that the busiest period is already well staffed, but you’re carrying almost the same number of people into the much quieter period.
That’s where the opportunity is.
Measure Sales Per Labour Hour
One useful measure is:
Sales ÷ Labour Hours
Suppose your business generates:
$10,000 in sales
and your team works:
250 hours
That’s:
$40 sales per labour hour.
You can track this over time.
The goal isn’t necessarily to push the number as high as possible.
You still need enough people to deliver good service.
But if the number changes dramatically between different days or shifts, it can highlight a staffing problem.
Don’t Confuse Being Busy With Being Productive
A team can look extremely busy while still being inefficient.
People might be:
- Walking unnecessarily
- Looking for equipment
- Repeating tasks
- Waiting for someone else
- Re-entering information
- Cleaning the same area repeatedly
- Preparing too much food
- Doing jobs that could be combined
- Standing around waiting for customers
If your processes are inefficient, adding another employee can hide the problem rather than solve it.
Fix the Process Before Adding People
Ask:
“Why does this task take so long?”
Maybe the problem isn’t the employee.
Maybe it’s the system.
For example, if staff are constantly walking to the other side of the kitchen to collect packaging, moving the packaging may save more labour than hiring another person.
If staff spend five minutes every hour looking for equipment, improving storage could recover several hours of labour every week.
Small inefficiencies add up.
Watch Your Handoffs
Hospitality businesses often have multiple people involved in the same process.
For example:
Customer orders.
One person takes the order.
Another enters it.
Another prepares it.
Another checks it.
Another delivers it.
Another clears it.
Sometimes those steps are necessary.
Sometimes they aren’t.
Look at where work changes hands and ask:
“Can we simplify this?”
Every unnecessary handoff creates an opportunity for delay, mistakes and duplicated work.
Cross-Train Your Staff
A highly specialised team can become difficult to roster.
If only one person knows how to:
- Make coffee
- Work the bar
- Open the venue
- Close the venue
- Use the POS
- Prepare a particular dish
- Handle a particular machine
then your roster becomes dependent on individual people.
Cross-training gives you flexibility.
A team member who can perform multiple roles can move where they’re needed.
This can reduce the need to roster additional people simply because you need a particular skill.
Build Multi-Skilled Staff
Think about your team in terms of capabilities rather than just job titles.
For example:
Team Member A
Coffee + POS + tables
Team Member B
Kitchen + prep + dishes
Team Member C
Bar + POS + tables
The more capable your team is across different areas, the easier it becomes to respond to changing demand.
Train People to Work Ahead
Productive hospitality staff don’t just respond to the current customer.
They prepare for the next one.
During a quieter period, they might:
- Restock
- Prep ingredients
- Clean equipment
- Refill packaging
- Prepare garnishes
- Organise storage
- Check stock
- Set up the next service period
That means the next busy period runs more efficiently.
Give Staff a Priority List
When there are no customers standing in front of them, staff shouldn’t have to ask:
“What should I do?”
Create a simple priority list.
For example:
Priority 1
Serve customers.
Priority 2
Keep the service area operational.
Priority 3
Restock essential items.
Priority 4
Complete cleaning and preparation tasks.
Priority 5
Complete lower-priority jobs.
This gives staff something productive to work on without requiring constant management.
Don’t Overstaff Quiet Periods
One of the easiest ways to increase labour costs is to keep the full team on during predictable quiet periods.
If your sales regularly drop at 2pm, ask whether you need the same staffing level at 2:30pm that you needed at 11:30am.
You might be able to:
- Finish someone’s shift
- Stagger start times
- Move staff between roles
- Reduce overlap
- Schedule cleaning during the quieter period
- Use fewer people with broader skills
The objective isn’t to leave the business understaffed.
It’s to match staffing to actual demand.
Stagger Start and Finish Times
Not everyone needs to work the same hours.
Instead of:
Five staff: 7am-3pm
you might find a better structure is:
Two staff: 6:30am-2:30pm
Two staff: 7am-3pm
One staff: 9am-1pm
The exact roster will depend on your operation.
But staggered shifts can create better coverage around your busiest periods without paying for unnecessary labour during quieter times.
Look at Your Opening and Closing Routines
Opening and closing can consume a surprising amount of labour.
Ask:
How many people are needed to open?
How long does opening take?
How many people are needed to close?
How long does closing take?
Then look at every task.
Could anything be:
- Simplified
- Combined
- Reorganised
- Prepared earlier
- Removed
- Automated
If you save 15 minutes per shift across five employees, five days a week, that’s:
6.25 labour hours per week.
Over a year, that can become a significant amount of paid time.
Standardise Repetitive Tasks
If every employee performs a task differently, some will naturally take longer than others.
Create simple procedures for repetitive jobs.
For example:
Closing the coffee station
- Remove used items.
- Clean equipment.
- Restock cups and lids.
- Refill beans.
- Wipe surfaces.
- Check supplies.
- Record anything that needs attention.
A simple checklist can make the process faster and more consistent.
Use Checklists
Checklists aren’t about treating experienced staff like children.
They’re about removing unnecessary decision-making.
If someone has to remember 20 things at the end of every shift, something will eventually be missed.
A checklist makes the standard visible.
It also makes training new employees easier.
Don’t Pay People to Wait
This doesn’t mean every employee needs to be moving constantly.
People need reasonable breaks and downtime.
But if employees regularly spend significant periods with nothing productive to do, investigate why.
Ask:
Is the roster wrong?
Is the process wrong?
Is demand lower than expected?
Is there other useful work they could be doing?
The answer isn’t always to send someone home.
Sometimes the answer is to use the time better.
Use Quiet Periods Productively
A quiet period can be valuable.
Instead of simply waiting for customers, staff can complete work that would otherwise happen during busy service.
For example:
- Stock preparation
- Cleaning
- Food preparation
- Stock rotation
- Equipment checks
- Ordering
- Restocking
- Training
- Maintenance checks
This reduces the workload later in the day.
Don’t Let Cleaning Become an Excuse
Cleaning is important.
But it can also become a way for staff to fill quiet periods unnecessarily.
If someone is wiping an already-clean table for the fifth time while essential stock hasn’t been replenished, your priorities aren’t clear.
Create standards for cleaning and make sure staff understand when something actually needs attention.
Review Overtime
Overtime can quietly increase labour costs.
Look for patterns.
Are people regularly staying late?
Are shifts routinely running over?
Is closing taking longer than expected?
Are staff arriving early?
Is someone doing work that could have been completed during their normal shift?
Don’t automatically blame employees.
Find the reason.
If someone regularly needs an extra 30 minutes to finish a task, the process may need fixing.
Watch Split Shifts and Penalty Rates
Hospitality rosters can become complicated.
Depending on your operation and applicable employment arrangements, different shift structures and working times can have significant cost implications.
Make sure your roster is being built with the applicable award, agreements and employment requirements in mind.
The cheapest roster on paper isn’t necessarily the best roster if it creates compliance problems.
Don’t Cut Your Best People
When trying to reduce costs, it can be tempting to simply remove hours from the highest-paid employees.
That can be a mistake.
A highly skilled employee might:
- Work faster
- Train other employees
- Reduce mistakes
- Handle difficult customers
- Increase sales
- Improve service
- Take responsibility
- Reduce the need for supervision
The question isn’t:
“Who costs the most per hour?”
It’s:
“What value are we getting from each labour hour?”
Look at Productivity, Not Just Wages
Imagine Employee A costs $30 per hour and Employee B costs $35.
It might appear that Employee A is cheaper.
But suppose:
Employee A completes the work of one person.
Employee B can operate two stations and train another team member.
The $5 difference isn’t necessarily the important number.
You need to consider capability and output.
Teach Staff to Sell
Your team can also influence revenue.
A staff member who knows how to suggest:
“Would you like to add a cake with that?”
or:
“Would you like to upgrade that to a large?”
can increase average customer spend.
You still need to pay the employee.
But if their work generates additional profitable sales, your labour becomes more productive.
Automate Where It Makes Sense
Technology can remove repetitive administrative work.
Depending on your business, this might include:
- Online ordering
- Automated bookings
- POS reporting
- Digital stock systems
- Automated customer communications
- Payroll systems
- Digital checklists
Don’t automate something simply because you can.
But if staff spend hours every week performing repetitive administrative tasks, investigate whether technology could reduce that workload.
Measure the Results
After changing your roster or processes, don’t simply assume it worked.
Compare:
- Sales
- Labour hours
- Labour cost
- Labour percentage
- Sales per labour hour
- Customer complaints
- Service times
- Staff feedback
- Overtime
You want to reduce unnecessary labour cost without damaging the customer experience.
Don’t Chase the Lowest Labour Percentage
This is important.
A business can reduce its labour percentage by cutting staff.
That doesn’t automatically make it healthier.
If customers wait longer, service gets worse and sales fall, your “saving” may cost you more than it saves.
The objective is not:
Minimum labour.
The objective is:
Optimal labour.
You want enough people to deliver excellent service and generate sales, without paying for unnecessary capacity.
Start With One Shift
You don’t need to redesign your entire roster tomorrow.
Pick one problem.
Maybe your afternoon period is consistently quiet.
Look at:
Sales
Staff numbers
Labour hours
Tasks being completed
Then make a small change.
Test it.
Measure it.
Adjust it.
Then move onto the next problem.
The Hospitality Takeaway
Reducing labour costs doesn’t have to mean cutting staff.
Often, the bigger opportunity is improving how your existing team is used.
Start by asking:
Do we have the right people?
At the right times?
Doing the right jobs?
Using the right processes?
With the right level of training?
For the level of customer demand we actually have?
When you improve those things, you can often reduce unnecessary labour hours while maintaining – or even improving – your service.
Your staff aren’t simply a cost on your profit and loss statement.
They’re an investment in your ability to deliver your product, serve customers and generate revenue.
The goal isn’t to have the smallest team possible.
The goal is to have a team that produces the best possible result from every paid hour.
