I was asked by a client during the week what the “ideal” wage % was. In my opinion there is no “one size fits all” answer to this question.
When determining an acceptable wage % for your business there are a few things to take into account:
1. Trading hours
Trading hours are going to have an impact on your wage %. If you only trade Mon to Friday 7am till 5pm then you aren’t likely to be paying overtime and penalty rates.
If on the other hand you trade 7 days a week, 364 day of the year you will encounter huge penalty rates and this will affect your wages.
2. Your mix off staff
Junior, senior, part time, full time, casual
These varying wage rates will have an affect on your weekly wage bill. At the same time, you need to operate your business in a manner that meets your customer needs. It might work better for you to have mainly casual staff. This gives you the flexibility to make quick changes in a rostered week if needed.
Your mix of Junior and senior staff will also have an impact.
The cheaper wage option for your business may not necessarily be the best option. Junior staff are a very important part of any business and it’s vital that we support them with employment, however you need to look at what best fits your customer also. For example, we would continuously receive feedback from customers on how great is was to come into a store and be served by mature aged staff. During the week our main customer demographic was 30 to 80 yrs. of age and they enjoyed relating to more mature aged people behind the counter. On weekends we have a younger age demographic and this is where we utilized our Junior staff.
It’s all about getting your staff to relate to your customers……think of what this would do to your sales if you got that match right!!
3. How your business operates
My last major point to consider is regarding how you operate. Are you mainly take away, no dishes to wash? Just pop it in a bag and off you go. Or do you have a large sit-down clientele. This can create additional work in washing dishes and the need for an extra staff member. Customer orders can tend to be larger when dining in also which can slow down your service compared to walk in walk out.
THE KEY…….
The key to determining your “ideal” wages % is to know your numbers and analyse the data that is available to you.
Many people we talk to know that their POS system is an absolute WEALTH of information and data but don’t know how to use it to create targets and save money.
The key to determining your “ideal” wage % is to look at your hourly sales report from your POS system.
Look at the number of customers served and the amount of money taken each hour. This figure needs to be significantly higher than the hourly wage you’re paying all staff rostered at that time. If not then you’re losing massive amounts of money and your wage bill will be out of control.
The good news is that this can be fixed, and quiet quickly! Once you start to use this data in your weekly rostering you will see a huge improvement in your wage bill. This also flows on to savings in super, payroll tax and work cover.
I’ve attached an example of what we did with the data from our business. This simply daily task, that took no longer than 10 min and saved us over $100K in the first year of implementation. You might think that is a stretch but I guarantee you it’s not. 38 staff, 3 retail locations and a wage bill nudging $950K. It was surprising how easy it was to save that $100K. Check it out, look into your own POS system and the data available. If you have any questions on how this works please feel free to shoot me an email and we’ll step you through it.
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