“Earned Hours” indicates how many hours your employees should have worked based on actual sales. Why is this important? Optimizing restaurant labor schedules is critical for reducing the costs associated with over and under-staffing.
With labor accounting for up to one third or more of the average restaurant’s cost of sales, trying to get the perfect number of employee’s on-the-clock at any given moment is critical to keeping stores profitable.
Many restaurant chains only measure how well their managers are at executing schedules based on sales forecasts. But what if a restaurant’s actual sales didn’t match its forecasted expectations? If that were the case, a restaurant would either have too many employees working or potentially too few employees working… and that can spell trouble for guest experience and profitability. Nobody ever said labor management was easy!
Enter an important labor performance concept called “Earned Hours.”
Earned Hours indicates how many hours your employees should have worked during a shift based on the actual sales during that shift.
Earned Hours is a great metric to judge how well your managers are at adjusting their staffing needs in response to actual sales conditions throughout the day. What’s more, a manager’s Earned Hours can be used as a feedback device to drive better schedule planning, execution, and reaction in the future.
A managers Earned Hours performance is determined by their Actual Hours-to-Earned Hours Variance. The (+/-) variance is derived from calculating Actual Hours (how many hours the employees worked) – minus – Earned Hours (how many hours they should have worked given the actual sales performance). The resulting (+/-) variance indicates how well or poorly a manager reacted to real-time restaurant sales performance against the implemented employee schedule plan.
If their Actual-to-Earned Hours Variance is close to zero, they are doing a good job calling in extra people or sending people home during busy or slow days, respectively. If their variance is too high or too low from zero, they might be too slow to react during sales conditions that require staffing level adjustments. These managers should be coached by an experienced supervisor about how to be more responsive to current conditions.
To learn more about Earned Hours and how the CrunchTime Back Office Solution can help your restaurants can optimize your labor costs, schedule a demo.