Arby's Franchisee Cuts Costs with Above-Store Labor Reporting
When sales are flat and profits are down, many restaurant operators are faced with the dilemma of analyzing business metrics in search of areas to reduce costs. "In my opinion there is more fat in a company's payroll than in any other expense item on the income statement--and it's the easiest expense item to fix if you have the right tools," says Mark Gregory, CFO of Carisch, Inc., a 72-unit Arby's franchisee.
In the Carisch toolbox, management is using RTIconnect's back-of-house solution and XFormity
Technologies' above-store reporting solution in its battle to cut expenses through the reduction of labor costs.
A step-by-step cost-reduction process
For management, the first step in reducing labor is to determine if stores are open for the correct amount of hours. XFormity's closing report tells management what sales were for that last seven days, for the last 30/60/120 minutes. Management uses this report to both extend and cut back the hours that the store was open.
The next step is to make sure that the correct labor matrixes are built into the restaurant's scheduling program. Carisch uses RTIconnect to do its scheduling through a two-part labor matrix. One labor matrix is based on hourly sales; the other labor matrix is based on weekly sales volume. Management refers to this matrix as management organization hours, which includes things like training, banking, preparing a labor schedule, ordering inventory, and putting away a truck order. If the hourly sales matrix hours are added to the management organization hours, management can determine how many hours can be scheduled for the coming week.
Web-based reporting
All of Carisch's managers are required to complete their labor schedules by Wednesday. On Thursday regional managers review the schedules hour by hour for all the stores in their region. RTIconnect is an Internet-based back office system so it is very easy to flip from one store's schedule to the next. It also shows the difference between scheduled hours and ideal or allotted hours based on the matrix discussed above.
When the week starts, all sales and time clock punches are recorded. RTIconnect goes back and then calculates what the ideal hours should have been based on actual sales. Every day the store manager runs a labor variance report that shows what the actual hours used were, and compares that to the ideal hours. If actual sales were close to projected sales, and actual hours were greater than ideal hours, the manager will run a shift variance report out of RTIconnect. This will show the difference between scheduled hours and actual hours by employee. If the sales were down from projected sales, the manager should have cut hours from the schedule.
In the past management never knew what the labor percent for a store should have been. There were just too many variables, i.e., mall store vs. free-standing store or breakfast store vs. non-breakfast or different sales volumes. Now with the labor matrixes management knows what their labor should be in a "perfect world."
Since implementing XFormity, Carisch has been able to reduce its labor hours by an average of 150 hours per day. Carisch also developed a dashboard with XFormity the sends an email to managers containing the labor variance, food variance, beef efficiency, drive-thru times, cash over/short and void percentages for the previous day. Based on the initial savings, management has been able to see a ROI that has paid for the solution in a matter of a few months.
In the Carisch toolbox, management is using RTIconnect's back-of-house solution and XFormity
Technologies' above-store reporting solution in its battle to cut expenses through the reduction of labor costs.A step-by-step cost-reduction process
For management, the first step in reducing labor is to determine if stores are open for the correct amount of hours. XFormity's closing report tells management what sales were for that last seven days, for the last 30/60/120 minutes. Management uses this report to both extend and cut back the hours that the store was open.
The next step is to make sure that the correct labor matrixes are built into the restaurant's scheduling program. Carisch uses RTIconnect to do its scheduling through a two-part labor matrix. One labor matrix is based on hourly sales; the other labor matrix is based on weekly sales volume. Management refers to this matrix as management organization hours, which includes things like training, banking, preparing a labor schedule, ordering inventory, and putting away a truck order. If the hourly sales matrix hours are added to the management organization hours, management can determine how many hours can be scheduled for the coming week.
Web-based reporting
All of Carisch's managers are required to complete their labor schedules by Wednesday. On Thursday regional managers review the schedules hour by hour for all the stores in their region. RTIconnect is an Internet-based back office system so it is very easy to flip from one store's schedule to the next. It also shows the difference between scheduled hours and ideal or allotted hours based on the matrix discussed above.
When the week starts, all sales and time clock punches are recorded. RTIconnect goes back and then calculates what the ideal hours should have been based on actual sales. Every day the store manager runs a labor variance report that shows what the actual hours used were, and compares that to the ideal hours. If actual sales were close to projected sales, and actual hours were greater than ideal hours, the manager will run a shift variance report out of RTIconnect. This will show the difference between scheduled hours and actual hours by employee. If the sales were down from projected sales, the manager should have cut hours from the schedule.
In the past management never knew what the labor percent for a store should have been. There were just too many variables, i.e., mall store vs. free-standing store or breakfast store vs. non-breakfast or different sales volumes. Now with the labor matrixes management knows what their labor should be in a "perfect world."
Since implementing XFormity, Carisch has been able to reduce its labor hours by an average of 150 hours per day. Carisch also developed a dashboard with XFormity the sends an email to managers containing the labor variance, food variance, beef efficiency, drive-thru times, cash over/short and void percentages for the previous day. Based on the initial savings, management has been able to see a ROI that has paid for the solution in a matter of a few months.