The “Overtime Rule” set to go into effect on December 1st has been pushed back for further review, but that doesn’t mean that restaurant owners don’t need to plan for the change. “It’s going to be a cost that’s added on to your business,” says Justin Pridon, Vice President of consulting services for Revenue Management Solutions, a company that helps restaurants create more profitable revenue streams.
While working with restaurant owners over the past year, he has been keeping an eye on the overtime rule, which was approved in May. “The delay means restaurant owners have a bit more time to figure things out,” he says. Below, he shares a few things that restaurant owners can do to plan for the rule.
1. Do a Time Audit for Salaried Employees.
“Having data about how employees spend their time is really one of the best things an operator can have,” says Pridon. He suggests restaurant owners have salaried employees like managers start logging how much time it takes them to do tasks. “Do a time audit of how long it takes a manager to do scheduling, for example,” he says.
Knowing how much time your managers are spending on certain tasks will allow you to make adjustments. If there is overlap in tasks, you can streamline them and assign them to one manager or restructure certain roles to distribute these tasks more effectively.
2. Look at Other Parts of the Business to Cut Costs.
“A lot of owners will hear about the new overtime rule and think, ‘I have to cut labor,’ and that’s not necessarily the case,” Pridon says. He recommends that owners look at other parts of their businesses and make adjustments to help ease the cost of the overtime rule.
“Looking at menu costs can sometimes make more sense. Are there food and beverage costs that can be lowered to accommodate the new rule?” Looking at all of your costs and making adjustments where you can will help keep you your labor costs steady and still make a profit.
3. Don’t Compromise on Your Guest Experience.
Pridon warns restaurant owners not to get too carried away with cutting costs. “The goal is to provide the same level of service and hospitality as before,” he says. “If you start cutting labor and food costs without being thoughtful, you’re going to run into trouble.”
Your guests are still going to expect the same exceptional experience as always, so you need to be sure you’re still giving them what they want. If the quality of service or food declines as a result of cuts that have been made, guests will feel that immediately.
4. Keep Track of the Changes Implemented.
“There’s no one-size-fits-all response to the overtime rule that’s going to work for every restaurant,” Pridon says. “Restaurant owners are going to have to figure out how to make it work for their business.”
Owners should be flexible and make changes when they notice something isn’t working. Also, keeping track of the changes that you’ve made and the impact on sales or feedback is a crucial component of finding a successful balance. “Data is key here,” Pridon says. Keep your notes in an excel spreadsheet or a program that will keep track of sales. “Once you have that data you can make adjustments.”