Wages - get them under control

For cafe and fast food business owners, wages are one of your biggest costs. That's why it's so important to keep them under control.

The challenge is not only finding and training the right staff, but having the right level of staff on deck to give your customers the service you want.

There are two approaches you can take:

  1. The Sales Target approach
  2. The Wages Costing Formula

The Sales Target approach. Sales Target (ST) = Wages x 3

This is for businesses who struggle to reduce their wages cost. If you can't find ways to reduce your wages, then you simply must do more to increase sales revenue. Otherwise you're going backwards.

This approach assumes a wages % target around the 32 - 33 % mark.

Calculate your wages for the week. Then multiply it by 3. This is your Sales Target for the week. It will give you a wage to sales % of 33%.

All your efforts must then be focused on hitting your Sales Target. Consider the strategies you can implement, the promotions you can run, other ways to generate sales.

The Wages Costing Formula

This is the reverse of the first approach. This is for those cases where you have a good idea of what your sales revenue will be but need to control your wages cost.

In this case, divide your expected Sales Revenue for the week by 3. This sets your weekly wages budget.

Now do everything you can to bring your wages on budget, or below. Cut hours where you have to.

This option can be hard to implement, particularly if you have regular staff who are used to working regular hours.

Think carefully about whether to have them employed as casuals or part timers. Casuals give you flexibility, but the difference in cost is significant. Look at your options carefully then make a decision. 

Wages are due to increase from 1st July, so now is the time to take another look at your wages and see where you can keep them under control.