F&B Business Management

Counter the Rise of Labor Costs Through Operational Digitalization

With efficient digitization and automation, you can effectively cut down on labor costs and let technology do the dirty work! I’m sure we’ve all heard this saying of how hard the pandemic has affected our daily lives, and caused businesses to close or be at the brink of bankruptcy. However, this is the unfortunate reality that the whole world is facing. There's no doubt that businesses are retrenching and people are resigning due to low wages.

53% of people are considering leaving their jobs in this pandemic, and 76% are leaving due to low wages and tips. We can’t blame them, as businesses are struggling to even get a breakeven. Hence, cutting of wages, or late payroll payment is now the norm in these trying times, leaving employees to flee their current job for a better offer elsewhere, or to free up some time to take care of their children who’s not in school anymore. The cost of hiring competent employees is at an all time high, so are we going to allocate more budget in hiring or are we going to find a better way? 

If we echoed your struggles as a restaurant owner, cut down your margins by digitizing your business. Get an edge of food costs by taking control of your recipe and inventory management. How? 

Digitize your operations, Get your precious time and resources back! 

Manual processes like procurement, accounting management are non-value adding activities that costs restaurants a bomb to manage. After digitizing these back end operations, you can eliminate and reassign admin staff, ones constantly matching sales orders and invoices, especially during these labor cost spiking periods. Allocate these extra cash in hiring front-of-house and service team.

You can also simply use it to provide training to your current staff on how to serve your customers better, or even spend it on social media and marketing, the possibilities are endless! Here's some ideas for marketing you can put your money to! 5 unconventional ways to boost sales and Social media marketing ideas

Besides, we’re humans, we aren’t perfect. Digitizing your operations will almost entirely eliminate all human errors when processing your inventory counts and recipe costs. Data-driven insights can also improve your business, exponentially! and of course eventually be used to counter the rise of labor costs!

Through digitalization, comes the power of data, unraveling where your money should and should not be. 

Digitalizing operations will allow accurate data from daily operations and daily transactions, and is crucial for businesses to achieve growth, and navigate day-today decision making, accurately. Churning data accurately can help us answer questions on whether we should reduce labor costs or not. Some examples are: 

  1. How are food costs changing overtime? 
  2. Should we continue “free-flow-fries” since the potato price has been skyrocketing?
  3. Do we need to operate with 50% less inventory?

These are money-saving questions that data can justify. Having accurate tracking of food costs, and inventory using recipe tools, is the way to go. 

Managing Food Costs

Excel, Excel, Excel. All these Microsoft Excel Sheets but I still cannot excel in my business! If you’re using excel to manage your food cost, your job is super tricky especially with the endless fluctuations of food cost (it never comes down right?), it is incredibly difficult to know how much exactly one plate of pasta costs you. And due to the ever-spiking prices of spices, you’re forced to raise your price too. Which is a total turn off to customers, by the way. 

A tool that can track food cost over time and locations will help you understand whether you can afford high labor costs. Food cost tracking and management software allows you to grasp on price fluctuations and respond accordingly within your fingertips. Every dollar saved in food cost, is a dollar spent on countering the rise in labor costs (More value add to your business!). 

Your cost - down to every. Single. Ingredient. 

Tracking and reducing costs of your menu is an outstanding way to cover rising labor costs. Simple adjustments such as the best mayonnaise can be replaced with the second-best mayonnaise that's slightly cheaper. If the difference of quality and taste is negligible for customers, you are not obliged to get the best simply because you (& 0.00001% population on earth) can tell the difference.

Use recipe management tools to track your recipe costs and see how switching up (and down on the cost) ingredients can affect your margins, significantly!

Know what you have at the back 

Lean inventory is used by fast-paced, low cost, high margin, successful and productive restaurants. It is an increasingly popular data-driven optimization practice that drives ultimate efficiency in hospitals, factories and even in your restaurant! What is in your inventory that is not sold, is a liability to your business. So how can we SAVE these costs, and invest more in labor costs, in this service industry? 

If you need 5 packs of mayonnaise a week, don’t keep 20 Jars in stock. That’s simply because saving that 15 jars of mayonnaise isn’t going to save you enough to get a new employee. However, you might even be overordering and letting surplus ingredients (and your money) go to absolute waste. And overtime, across all your outlets, you’ll be able to save on food waste (& food cost) and place emphasis on your ever rising labor cost, and also whatever related to customer satisfaction!

An inventory management solution can help you know what you have, when to reorder and how much exactly you should order based on Machine learning and data analytics. Never waste a single clove of garlic and remember, every cent counts! ;) 

Stay strong even during labor shortage periods, get your growth momentum going! 

Despite rising labor costs, visionaries can foresee that it’s shaping up to be a lovely and profitable season for restaurants. Restrictions will ease soon and cities will open once again. Consumers are already planning which cafes to visit and what to order. There’s a real momentum that you can tap into for reopening and growing your operations. 

Even though this is not happening right now, let's perceive it as a prepping period for your business, because once your restaurant is back in business, do expect it to be hectic as hell.

Yes labor costs are increasing, but let’s adapt to change, digitizing operations across your business are more important than ever. Pair these tools with your new found talent and the summer’s momentum, and that may be exactly what you need to slingshot your operation into the fall, 2022, and beyond.

Food Market Hub, Procurement Solution for F&B Businesses

Food Market Hub is a procurement and inventory management system that centralizes and digitizes your back end operations. We are the ultimate solution for your restaurant, from single outlet restaurants to central kitchens! 

Moreover, Grants for Malaysian citizens are up for grabs when you digitalize your business! Claim up to 50% of your digitalizing invoice when you sign up for a Food Market Hub subscription! And if you own a merchant account at Food Market Hub, claim your voucher for 100 transactions up to RM3,000 ringgit when you shop for food supplies! Click here to learn more!

Save time in data entry, unravel hidden food costs and eliminate food wastage just by using our app today! Register your FMH account to start streamlining your F&B business!