Labor

After the last few days I've had (with my wife going into false labor), the subject of the class gave me a sore giggle. The food cost of a hamburger is pretty straight ahead: add up what the meat patty cost, what the bun cost, what the bits of topping costs, add 'em up, and you got your food cost. But adding up the labor cost isn't that easy: if a cook is earning $8 an hour and turns out one burger a minute, it's $1/burger, but what if he's cooking up 1 burger at a time when it's slow, and 20 at a time when it's slamming? And what about what it costs for the server to bring it from kitchen to table?

The rest of class was dedicated to discussing the pros and cons of fixed pay (salaries) versus variable pay (hourly wages), and a lot of different formulas to figure out ratios and percentages which which I doubt any restaurant with less than 100 seats ever really concern themselves. I'd go into it more in detail here, but to be honest, I'm suffering a bit from baby fever, and the baby that is soon to be upon us....

But one formula did catch my eye, because I wish I could plug in the numbers and show it to my current boss. Turnover rate = # employees separated / work force. If a place has 50 employees and loses 50 employees over one year, that's a turnover rate of 100 percent. Some places, particularly fast food joints, are notorious for having turnover rates of 200 to 300 percent (i.e., the whole staff turns over 2 to 3 times a year). The cost of turnover is in expending the resources to find new employees, train them, and all the mistakes they're going to make by being new. The main ways to reduce turnover rates: TREAT YOUR EMPLOYEES WELL, pay them fairly, schedule to their needs, benefits, etc. -sigh-