Every great restaurant has many parts that contribute to its success: delicious food, excellent customer service, an inviting atmosphere, and competent staff. But restaurant management is the glue that holds it all together.
As a restaurant manager, your job is to juggle several responsibilities—from managing employees and controlling costs to creating staff schedules and boosting revenue.
With so many responsibilities, running a restaurant can be tricky. The result is that managers experience some pretty common challenges like compliance issues and high staff turnover.
Luckily, you don't have to suffer the same fate as long as you implement the right restaurant management tips and tactics. Read on to learn about almost everything you need to know about restaurant management to help you run a more profitable operation.
What is Restaurant Management?
Restaurant management covers several duties and responsibilities—from hiring team members, to dealing with customer complaints, to making on-the-fly decisions to control labor costs. Restaurant managers are the on-the-ground team members responsible for keeping the operation efficient and providing excellent service to diners.
Here's a breakdown of the major restaurant manager responsibilities.
7 Core Restaurant Management Responsibilities
- Staffing: Hire, fire, train, and manage employees.
- Accounting and finances: Manage budgets and track food and labor costs.
- Inventory management: Monitor and maintain food and beverage stock levels.
- Scheduling and payroll: Balance staff and business scheduling needs, create optimal shift schedules, and pay wages and salaries.
- Marketing and advertising: Market your restaurant to help achieve optimal restaurant capacity (social media and review management included).
- Customer service: Interact with guests, solve customer complaints, and ensure the service is on point.
- Operations: An all-encompassing word for everything else involved in managing a restaurant, such as maintaining the atmosphere and ensuring employees follow health and safety standards.
6 Responsibilities Not Found in the Job Description
These are the softer skills that restaurant managers require to perform well in their role and guide the restaurant to success.
- Employee retention: Identify when top performers are feeling stressed and boost staff morale with rewards and recognition to reduce staff turnover. Keep an eye on employee engagement statistics to provide more support to disengaged employees.
- Human resources: Manage human resource tasks done by the HR manager in larger restaurants. For example, play a crucial role in sourcing candidates.
- General maintenance: Pinpoint what needs cleaning and fixing and be willing to get your hands dirty. Monitor serious maintenance issues in the manager log book to notify other managers.
- Tech-savvy: New technology and software is part and parcel of running a restaurant. You'll need to be tech-savvy with using POS hardware, scheduling tools, and other operational software.
- Remaining educated: Managing a restaurant involves constant work. You have to educate yourself on the latest tools, systems, and processes to stay ahead of the game.
- Innovating: Identify issues in your restaurant—whether inventory or systems-related— and be willing to create solutions and processes to improve efficiency. For example, if you're using Excel to schedule employees, invest in employee scheduling software to save time and streamline your staff scheduling.
For a deep dive into all restaurant management responsibilities, read 16 Restaurant Manager Responsibilities NOT Found in the Job Description.
Common Restaurant Management Problems and Bad Habits
Problem 1: Falling Into the "If It Works, It's Good Enough" Trap
When you're juggling so many responsibilities, it's easy to settle into doing things a certain way—even if there's a better or faster way. If it gets the job done, why change it, right?
The mindset of "If it works, it's good enough" is most prevalent when it comes to scheduling employees with pen and paper or spreadsheets. The problem with this method is that:
- Creating and managing schedules is a time-suck
- Building and maintaining optimal schedules is even more challenging, which means you're often over or understaffed
- Making swift data-driven decisions is difficult because you don't have easy access to business intelligence like labor and sales reports.
Problem 2: Compliance Issues
Scheduling to balance overtime, time off, and availability is hard enough—but when you throw labor laws into the mix, many managers can fail to comply due to not fully understanding the laws or simply not having the time to figure them out. Yet, new fair workweek and predictive scheduling laws are popping up all over the United States, and many restaurants are being fined for not paying employees properly for overtime, or failing to follow predictive scheduling practices.
Just consider these examples:
With labor compliance issues like these becoming more common, it's estimated that by 2020, US restaurants will pay $30 Million in compliance fees. As a manager, you need to stay in-the-know about local labor legislation and what you need to do to stay compliant.
Problem 3: Leaving Data on the Table
Trends show that it’s likely that your competition is moving towards a fully integrated restaurant technology stack, which allows them to capture data to make better decisions. If you're not harnessing sales, scheduling, labor, and inventory data, then you're likely:
- Wasting time working on tasks that can be automated
- Working less efficiently than artificial intelligence (AI) can
- Making poor decisions like scheduling too few employees on a busy night
- Not optimizing to grow your already-thin margins
- Leaving money on the table—just think of those low-margin dishes you keep on the menu instead of swapping them out for more profitable ones
- Experiencing higher labor and food costs. Maybe you're over-scheduling employees on a quiet night, or perhaps you don't have proper systems in place to control food waste
Problem 4: High Staff Turnover
According to the United States Bureau of Labor Statistics, the annual employee turnover for restaurant staff was close to 75% in 2018. This means that for every 100 employees hired at the beginning of the year, only 25 employees remain at the year’s end.
A high turnover means you now have to recruit, select, and train new candidates, which takes time and costs money. Let's not forget that you also have to cope with a loss in productivity.
Related reading: [Study] Is Workplace Happiness All About Pay? What 1,900+ Restaurant Staff Think
In the following section, you'll learn about 8 restaurant management tactics that will not only help you solve the critical restaurant management problems discussed previously, but also assist in controlling costs, boosting revenue, and running a more profitable restaurant.
Menu engineering refers to the actions you take to create a more profitable menu. Here are three ways to engineer your menu for profits:
Arrange Your Menu According to Profitability and Profit
Start by organizing your menu items in a spreadsheet according to main categories like mains and starters. Next, assign them to one of these categories:
- Stars: High profit, high popularity
- Plow-horses: Low profit, low popularity
- Puzzles: High profit, low popularity
- Dogs: Low profit, low popularity
Your POS sales data will provide you with the information you need to classify your dishes according to these four categories.
Bear in mind that this is an internal classification only—your guests will not see this. It will help you decide what to do with certain dishes—whether to keep, optimize, or get rid of them.
For example, you can strategically place your stars in certain areas of your menu to encourage customers to buy more of them. Or, you can turn your puzzles into popular dishes by lowering the price.
Strategically Place Menu Items in the Golden Triangle
The Golden Triangle is the prime real estate area on your menu where your customers' eyes move to first: the middle, top right corner, and top left. Include the profitable dishes you want to sell more of in this area to boost sales and profits.
Tweak Your Menu for Cross-selling
Ever been to a restaurant where a waiter recommends a particular wine with your meal? Sure, you have. This is known as cross-selling—the process of selling an additional or complementary product. Use this technique on your menu by offering recommendations next to a menu item. For example, recommend a wine below a meal description.
Call Out High-Margin Items
Finally, you can highlight profitable dishes on your menu—whether in bold, italics, or a call-out box—to entice customers to purchase them.
Learn more about how to properly optimize your menu for profits with the post Menu Engineering: The Science of Optimizing Your Menu to Maximize Profit.
2. Apply the Right Food Cost Controls
Food costs are one of your largest and most important restaurant costs to track. Not only does food cost impact your prime cost—a key performance indicator that determines profitability and is the sum of direct labor and cost of goods sold—but it helps you price your menu and remain profitable.
To keep your margins healthy, you need to implement the right food cost controls. Here are six:
- Track your food cost. You can't improve what you don't track, comprising anywhere from 25-40% of your operating costs. So, regularly calculate your plate and period cost to see how they change over time. Your plate cost is the cost of one dish, and you can calculate it using this formula: Portion Cost/Sales Price *100. Your period cost is food cost over a specified period. You can calculate it using the following formula: Food Cost/Food Price *100.
- Keep an eye on the price of seasonal ingredients. The cost of ingredients changes continuously. Ensure you update menu prices to factor in these changes, so you're not losing money.
- Cultivate relationships with a handful of suppliers. Having close relationships helps you to negotiate better prices for produce.
- Use the right inventory management systems. E.g., get chefs to inspect any produce that arrives for freshness and quality.
- Reduce food waste. You can minimize waste in several ways. For example, adopt zero-waste cooking where you use every part of an ingredient.
- Control portion sizes. A telltale sign that portion sizes are too big is when guests regularly send back unfinished dishes.
For more information on food cost and how to control it, read Restaurant Food Cost: Master Operational Risk Today.
3. Implement Labor Cost Controls
Your restaurant labor cost consists of everything from wages, salaries, taxes, and health care. Like food cost, labor costs are a significant restaurant cost you need to monitor carefully. Here are six ways to control your labor costs.
- Track your labor cost percentage. Your labor cost percentage tells you what you spend on labor to make revenue. You need to continually calculate and track it to ensure it's not increasing over time. When calculating labor cost percentage, use this formula: Total Labor Cost/Total Sales, and follow these four steps:
Step 1: Calculate total sales
Step 2: Calculate labor costs
Step 3: Divide labor costs into your sales
Step 4: Multiply your answer by 100
2. Invest in the right POS that gives you access to labor and sales reports and integrates with the right employee scheduling tool.
3. Review labor and sales reports on your POS. Sales reports, for example, let you pinpoint the busier periods, which helps you assign the right number of employees for those periods.
4. Use the right employee scheduling tool. The right tool helps you create optimal shift schedules in less than 30 minutes and saves you anywhere from 1 to 3% in labor costs.
5. Cut operating hours. Because some days may be quieter than others, it may be wise to shorten the working hours
6. Reduce staff turnover rates. Higher turnover rates contribute to higher labor costs. Reduce turnover rates by rewarding employees, making them feel valued, and offering opportunities for advancement. Nothing crushes morale and encourages employees to leave faster than knowing there's a ceiling on their growth.
For more information on labor cost and how to control it, read 8 Ways to Get Control of Your Restaurant Labor Cost Today.
4. Strengthen Weak Restaurant Culture
A healthy restaurant culture makes for a happier team. Happier employees, in turn, are more productive and deliver better customer service, which boosts your bottom line. Because happier employees are also less likely to leave, you don't spend money recruiting and training new hires. Boosting restaurant culture really is a win-win.
Given the benefits of creating a strong culture, what are some ways you can strengthen yours? Let's have a look at three:
- Offer training and support so employees can do their job properly— from showing them how to use the POS system to understanding the opening and closing procedures. Don't forget to provide this training periodically to avoid bad habits creeping in.
- Focus on team building activities, which can be anything from going camping and attending sports events to trivia nights and menu tastings with the whole team.
- Maintain flexibility and predictability in work schedules. Employees have different scheduling needs. Some may prefer fixed schedules, while others prefer flexible ones. It's your job to consider these needs when creating your shift schedules—something discussed later on.
For more detail on how to boost restaurant culture, read 6 Ways to Strengthen Your Weak Restaurant Culture While Boosting Sales.
5. Improve the BOH Work Environment
Because kitchens have a reputation of being extremely grueling work environments—with stress and conflict common—it's vital to include a tactic devoted entirely to improving the BOH work environment.
Improving this environment will reduce stress, minimize staff turnover, boost teamwork, enhance productivity, and boost your bottom line. Here are six tips for creating a great kitchen environment:
- Offer monetary incentives like bonuses and non-monetary incentives like an employee of the month award where you publicly thank someone for their hard work.
- Implement the team-building exercises mentioned in the previous section.
- Hire from within instead of searching elsewhere
- Develop employees. For example, In-n-Out Burger grooms future managers by training them up from more junior positions.
- Build a culture of communication. Because many issues in the kitchen arise from poor communication, create systems that encourage it. Start by establishing clear procedures for communication when working in the kitchen. Then, develop communication guidelines for issues beyond the kitchen.
- Help employees achieve a work-life balance. For example, offer paid vacation to reduce stress and flexible schedules for those who prefer it.
For a deep dive on how to improve the BOH work environment, read 7 Kitchen Management Tips to Guarantee Back of House Serenity.
6. Optimize Your Shift Schedules
Having an optimal shift schedule means your restaurant is never over or understaffed. You have just the right amount of staff on shift to deliver superb customer service, while controlling labor costs.
But creating optimal schedules can be tricky. Not only are there many different types of shifts to choose from, but there are even more shift patterns—500 to be exact.
On top of that, you also have to choose your scheduling method, balance business and staff needs, and remain attuned to any compliance issues.
Even then, there's no guarantee your schedules will be optimized.
However, if you follow the right process and use the right scheduling method, you can achieve that ever-elusive optimal schedule.
A 9-Step Process to Build an Effective Shift Schedule
Here's a nine-step process to build an effective shift schedule (the pros and cons of the different scheduling methods are included):
Step 1: Determine Your Restaurant Work Production Standards
Firstly, ascertain what amount of work an employee with a particular job role needs to complete within a specified amount of time. One example is to examine how many covers a waiter does in a certain number of hours.
Then, describe what every single role entails. For example, servers will need to welcome guests, solve customer problems, and take food to the tables—among other things.
Step 2: Examine Existing Levels of Activity
Determine how busy you are on certain days and at specific times. You can get this data by accessing sales reports on your POS.
Step 3: Plot Future Levels of Activity
Historical patterns tend to repeat themselves. So use the data from step two to identify slow and busy periods for different days, times of the day, and even times of the year.
Step 4: Establish How Much Staff You Need
Don't rely on instinct and use actual numbers when deciding how many employees to schedule for a shift. For example, if you expect to complete 200 covers in a day and each waiter usually handles 40, schedule 5 employees for that shift.
Step 5: Factor In Employee Needs
Consider employee needs against your business requirements when building your work schedules. These needs include aspects like the desired rotation and even preferred work schedules.
Step 6: Select a Restaurant Employee Scheduling Method
There are four common restaurant scheduling methods, each with their own pros and cons:
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- The no-formal method which is inexpensive and suitable for smaller operations, but becomes costly when a restaurant grows and will not scale.
- Pen and paper where you use notice boards and whiteboards. Although also inexpensive, creating and updating schedules with pen and paper is time-consuming. It also makes it hard to optimize for efficiency because you don't have easy access to business data to make data-driven decisions.
- Spreadsheets which are a step up from pen and paper and help you create more detailed reports. The big downside of this method is that it still requires loads of manual input, which takes time and often leads to human error.
- Scheduling software which requires a larger monetary investment, but solves all of the above scheduling problems. With software, you can create schedules faster, minimize human error, and make data-driven decisions quicker because the software integrates with your POS. Plus, you're able to remain compliant with features that let you run labor exception reports, automatically detect overtime, and track timesheet data.
Step 7: Get Your Schedule Accepted
Get final approval from top management for your schedule—assuming you need it, of course.
Step 8: Send the Work Schedule to Employees
Once approved, send the shift schedules to employees, so they know what shifts they're working and on what days. If you're using scheduling software, staff will immediately receive a notification on their mobile phone when you upload the new schedule.
Step 9: Adjust Your Schedule as Needed
Your restaurant will experience busy and slow periods. Staff will call in sick. Emergencies will happen. You need to track and remain aware of these events and adjust your schedule accordingly.
For a more detailed walk-through on creating shift schedules, read 9 Steps on How to Schedule Employees Effectively.
7. Boost Your Revenue with the Right Strategies
Restaurant revenue management simply involves using the right business tools (e.g., your POS system) to review current sales and better predict future demand. You can then make informed decisions about table turnover, price, and capacity to boost sales.
Indeed, maximizing sales is one of the core goals of revenue management. But how exactly do you achieve this goal?
There are two revenue management strategies you can turn to:
Control Restaurant Capacity
As a restaurant manager, you should strive to fill 80% of your seating. This is your optimal capacity. Unfortunately, achieving this capacity is tricky because restaurants have limited space.
The results are that your restaurant is probably either over or under capacity. With over-capacity, you don't have enough seating to meet demand and customer service suffers. With under-capacity, you're not getting enough customers through the doors, and service levels fluctuate.
The solution? Maintain a flexible floor by:
- Having different-sized tables that cater to different-sized groups
- Reviewing business data on your POS to determine what the most common group sizes are at certain times of the day and optimizing your floor plan for those times.
- Using the right tools to design and optimize your floor plans, e.g., TouchBistro's Table Management Software.
Improve Table Turnover
Slower table turnover means fewer daily covers, lower sales, and less profit. The best way to boost your table turnover is to train waiters and kitchen staff well. The more efficient they are, the faster the food will leave the kitchen and the smoother the service will be.
Learn more about restaurant revenue management strategies to boost sales with our post Restaurant Revenue Management: 3 Killer Strategies to Boost Sales.
8. Enhance Your Management Skills for Better Team Performance
No matter which cost controls you use, or what revenue management strategies you implement, the success of it all depends on your employees.
Managing people, then, is probably the biggest part of your job as a restaurant manager. And it is for this reason you need to focus on developing certain management skills that will ensure staff always work efficiently. These skills are:
- Leadership: It's an all-encompassing skill that involves supporting employees and holding them accountable for their actions.
- Communication: You may recall how you can build strong communication by creating processes and guidelines for employees to follow. But there is also one other ingredient: You need to lead by example and communicate clearly at all times. If you don't, how can you expect others too?
- Planning and organization: Whether you're planning a menu, creating work schedules, managing inventory or doing payroll, planning and organization is essential.
- Multitasking and flexibility: New problems occur daily, and it's your job to effectively juggle and solve the many issues while balancing everyone’s needs.
- Interpersonal skills: You need this skill, whether you're interacting with the many different personalities on your team or conversing with guests.
Want to dive deeper into the above topic and learn more about what it takes to be a good manager? Read How to Manage Restaurant Staff without Sacrificing Your Sanity.
A Few Final Words on Restaurant Management
With restaurant management involving multiple areas of responsibility, it's unsurprising that managers experience compliance issues, have high employee turnover, and are leaving money on the table.
Luckily this doesn't have to be your scenario as long as you implement the right restaurant management tactics in your restaurant. This post shared eight, from implementing cost controls, and strengthening work culture to optimizing shift schedules and enhancing your management skills.
We certainly can't promise you that running a restaurant will become smooth sailing—the nature of the industry suggests this is entirely impossible anyways. What we can promise you, though, is that if you implement a couple of these strategies, your job will be just a little bit easier.
The only remaining question is: What restaurant management tactics will you implement?