The Back Story
One of my coaching members was looking to reduce payroll. He had done a lot this year to increase sales and manage costs. He knew if he could shave a couple points on payroll and more importantly get his payroll to the proper level it would make a big difference for him and the future growth of his restaurants. Evidently, after years of not monitoring it and managers giving raises out of his now established pay increase guidelines his payroll was out of whack.
Details on his reduction plan
In this case his restaurant is fast casual and does counter service at some very high volumes. He accepts tips if the guests put them on the credit card slip but he does not have a “Tip Jar” actually he has always been against it. We talked about what a reduction in payroll would look like and it was significant. Also the unsolicited credit card tips were significant, and the cashiers were taking it for themselves. He decided that changing his tip policy but in a creative way could work to bring in more for his staff, thus justifying him reducing pay by 10%.
How He Managed It
First he wrangled everyone together for a “attention to detail / State of the Restaurant Address”. He talked about successes, the great job they all do, the opportunities for improvements, the increases in sales for the year, the increases in cost for the year then he dove tailed into a Cost by Category discussion. First Food Cost, then Labor. He discussed the management of time and sales by hour was effective but payroll was the big economic hang up. He mentioned that if the store did not figure out how to creatively reduce cost and suggestions were welcome that salary reduction were an option. You can image what the reaction was. Everyone was a buzz for a day or two, but he did not immediately cut salaries. He allowed for their input and a good many suggestions came up to help the restaurant improve, but they were mostly longer range plans then he was looking for.
After a conversation with me we put our creative tip plan in place – Solicit tips but do it in a non soliciting way. Here is what we came up “Gas Money for the Crew”. We even came up with a neat way to display it. He his new tip capturing device out (before he reduced any salaries). He wanted to see if he could prove a point.
What was the Point?
He wanted to see if he could have his patrons generate the difference in his salry reduction and have a net zero effect on his staff. Do you think it could happen?
What actually happened
He found that people would throw money in his bucket. Was it enough? At this early stage it seems like it will be a straight wash, if not a win for his employees. Actually the tips have averaged over $1 per person per hour. If he reduced each member of his hourly staff by $1 it would be a wash, in reality they would win. They would make the same and have some cash in there pockets.
He did reduce salaries
This might be the toughest part of the whole thing but he handles it like a champ! After his initial findings he did reduce salaries by 10% which brought the majority of folks down about a dollar. Any new hires, hired at the proper salary guidelines, or folks close to minimum wage he did not reduce.
He sat each person down with the manager of each restaurant and had a candid conversation about what he was doing, their performance and individual expectations and improvements. He also guaranteed that for the initial 2 weeks he would monitor the tips and make sure they were at their previous pay (salary+Tips= past pay). He agreed to make up the difference during this period if there was a short fall.
What does he expect
He has already seen a HUGE boost in service and attention to the restaurant as a whole. His sincerity must have paid off and his people recognize that the service they deliver will effect the business and them directly. His people understand that they may not get a tip today from past guests not accustomed to tipping, but once they blow them away with service they will know the next time that the tip jar is there and they can reward great service.
He expects the tips to improve and create a situation that actually gives each of his people a pay raise. What a WIN WIN – Improved service and guest attention with a side of pay raise!
Please share with me your Restaurant Success Stories. I love to hear them and would love to share them with my members and the world!