Franchises wage war on high labor costs

In most franchise businesses, labor is one of the most expensive line items, so brands are always trying to schedule efficiently and make employees more productive. Many turn to technology. But the difficult balancing act is improving labor costs without cutting staff and risking an interruption to customer service. Boosting productivity, efficiency, planning, scheduling and logistics are all moving parts when it comes to improving labor costs without dramatically reducing staff and keeping within budget. For MOOYAH Burgers Fries & Shakes chief operating officer Michael Mabry, the schedule is often where most of the low-hanging fruit lies for controlling the labor line. “Staggering employee start times is the easiest way to ensure that you have the appropriate amount of employees working at the appropriate times to optimize restaurant efficiency,” Mabry said. The Dallas-based brand also began cross-training employees to effectively manage costs. Training employee A to do the task of employee B and vice versa makes each position more efficient and each worker more skilled. This tactic also identifies job expansion, helps with the retention of talented employees and allows for brands to promote from within. However, cross-training does require an investment in training. While labor costs are unavoidable, creativity when using your assets can go a long way, Mabry said. “From franchising perspective, this is an issue that will continue to pose interesting challenges for brands that are looking to grow,” he said. “Investing and reinvesting in more efficient operations is something that fast-casual brands have done over the past few years and will continue to be integral for future success.” According to the Bureau of Labor Statistics, companies on average lately have been more efficient with their employees. The bureau’s Productivity and Costs Report for the second quarter found that productivity increased 3.1 percent in the nonfinancial corporate segment. Labor productivity is a measure of output per hour, which the BLS calculates by dividing an index of real output by an index of hours worked by employees, proprietors and unpaid family workers. Unit labor costs fell 1.2 percent in the segment for the second quarter, as the 1.8-percent gain in hourly compensation was less than the 3.1-percent gain in productivity. To succeed in the competitive casual-dining segment, other brands have also started turning to technology for heightened productivity. For the past few quarters, Minneapolis-based Buffalo Wild Wings has been rolling out a “Guest Experience” model, which outfits the floor with Guest Experience Captains, who take care of customer’s non-ordering needs such as finding the right game on the nearest TV screen. This approach helps free up servers to take care of servicing tables, thus turning tables and profits faster. The new service model has not reduced Buffalo Wild Wings’ headcount but rather reallocated different tasks to staff members who work more as a team. Officials said that forthcoming technology upgrades for guest, like ordering and paying off a tablet computer at the table, are not designed to reduce server hours but to drive more sales through a better guest experience. “We’re testing guest ordering through our tablets. We’re going to start test mobile paying through people’s own devices. We’re going to start testing server hand-held,” James M. Schmidt, chief operating officer at Buffalo Wild Wings, said during the brand’s second-quarter earnings call. “Do I think there is the opportunity as we implement this guest technology to find labor savings? Absolutely.”