Labor efficiency in the restaurant industry is a necessary component of running a restaurant business. For instance, many eateries heavily rely on manual labor to get the job done. In doing so, they’re at risk of a high labor cost and work overload. Over time, this will steer you far away from restaurant success.

By implementing measures that boost operational efficiency, eateries can revolutionize their whole business model. In this blog, we're going to go over the labor efficiency meaning and how to calculate its ratio. Then, we’ll discuss several strategies that can improve restaurant operations. Read on for all the details!

Labor Efficiency Definition

Labor efficiency is a term used to describe the productivity of a team. When labor efficiency is high, it’s a green flag that workforce management strategies are working in your favor. So if it’s on the lower end, it’s probably worth investing in staff development resources. 

Unsure of how efficient your staff is when it comes to labor work? Don’t worry about it. We’ve got a straightforward formula in the section below that’ll help you out!

Labor Efficiency Ratio

Professionals across the labor force can determine the labor efficiency in their business by using a simple formula. The following equation will give you the labor efficiency ratio. With this number, you can make important adjustments and decisions:

Expected Numbers of Working Hours ÷ Actual Numbers of Working Hours x 100

Your goal should be to have a labor efficiency ratio greater than 100. This metric will indicate that your team is able to do more with the time they have. In other words, your staff optimization techniques are working! 

A ratio greater than 100 also tells you that there is greater efficiency than what you budgeted for. The cost of labor can be a small fortune. So, ensure that this ratio isn't on the lower end of the spectrum. If it does, it's time to implement labor solutions. 

The Importance of Labor Efficiency

Labor efficiency is important for the ways it can change a business for the better. It revolves around the idea that a team is so efficient, that they’re able to do more with less. And as they’re able to accomplish more during the hours they work, the business improves over time. 

After all, when there is time left over in the workday, there are more opportunities to accomplish additional tasks. Or, employees might use this time helping more pertinent tasks. It’s a known fact that efficiency, productivity, and results all go hand in hand. 

When considering a field of expertise as intricate as the food service industry, it’s no wonder that efficiency is so important. In fact, that’s why we're about to cover several ways that you can begin improving efficiency in your eatery, right now. See below:

5 Labor Efficiency Strategies to Revolutionize a Restaurant 

Revolutionizing a restaurant can seem a lot more challenging than it actually is. We’re right around the corner from explaining how to accomplish this feat. Check out the five strategies below to transform your eatery for the better. Before you know it, the business can be equally innovative as it is efficient.

1. Manage All Orders From One Platform

Using an integrated solution that syncs with the restaurant POS platform is a groundbreaking way to boost efficiency. Your hosts can completely ditch the use of multiple tablets when managing all off-premise orders. Plus, in-house sales trends can be part of the equation, too. POS hardware can be a headache. But fortunately, cloud technology can solve all its problems. 

2. Be Available Via All the Delivery Service Providers

When customers can order food via online ordering apps for delivery or curbside pickup, it can boost efficiency. This is especially true for your front of house employees. When more people opt for off-premise dining options, you’re not serving as many people at the brick and mortar location(s). At least that’s the goal. Just note that if you go this route, you might need to employ a larger kitchen staff to keep up with demand.

3. Invest In Customer-Facing Restaurant Tech Solutions

There are several labor saving devices available that can boost efficiency in a restaurant. Some of the best options include things like self ordering kiosks, voice ordering systems, and tabletop devices. These are just a few tools that let customers handle standard processes on their own. During this time, employees can be multitasking. Over time, this will result in higher productivity.

4. Cross-Train Your Whole Staff for Optimal Efficiency

A foolproof way to establish efficiency and employee engagement simultaneously is to cross-train your staff. When the wait staff can perform the same duties as the hosts, serving customers during a labor shortage is a breeze. Or, when the different types of chefs can do each other’s job, you’ll never have to question how you’ll serve certain dishes if someone isn’t around.

5. Regularly Conduct Labor Forecasting to Gauge Performance

Once you forecast how many people you can employ, as well as how much your team is costing your business, you can make more sound decisions. Always remember that this metric goes hand in hand with employee retention. This is because recruiting new talent can be a major expense. So, be sure to take this into consideration when forecasting labor-related decisions.

Frequently Asked Questions About Labor Efficiency

Employee management can be a difficult task. But once you throw productivity and efficiency into the mix, it can become quite the challenge. In the FAQ section you can find below, you’ll find a brief overview of establishing efficiency in the workplace. 

What Does Labor Efficiency Mean?

Labor efficiency is a business term referring to the productivity of a team. For instance, if a team achieves high labor efficiency, then they’re getting a lot done during each shift. If they’re not, it might be time to implement labor-centric strategies. 

What Is An Example of Labor Efficiency?

An example of labor efficiency would be if a restaurant staff was able to provide great customer service during peak season. When this happens, it’s likely that they have strategies in place to streamline their workload. In turn, they are more productive with the staff they do have. 

What Are the Four Factors of Labor Efficiency?

The four factors of labor efficiency within professional teams include:

1. Education and background
2. Skills from past roles 
3. Expertise in a particular field 
4. The quality vs. quantity of their work

How Do You Calculate Labor Efficiency?

You can calculate labor efficiency by determining its ratio. You can do so with the following formula: Expected Numbers of Working Hours ÷ Actual Numbers of Working Hours x 100

What Factors Affect Labor Efficiency?

There are many factors that can affect labor efficiency. However, some of the most common ones include:

• The goals and expectations for the brand
• Communication across the organization
• The culture within each department 
• Time management skills across the team
• Compensation, such as salaries and benefits 
• Whether the team has a sense of job security

Labor Efficiency Leads the Restaurant Revolution

Strategizing the ways in which a team performs their job is essential, especially in the restaurant industry. Luckily, there are digital solutions that can lighten the workload for you and your staff. That’s right, Revolution Ordering aims to simplify order management for efficiency and simplicity. With our tech solutions, you can completely innovate your business. Does that sound like something you may find valuable? We think you will–feel free to book a demo, so we can chat about all things revolutionary for your restaurant!