Labor Cost Considerations

Chapter 18Labor Cost ConsiderationsPrinciples of Food, Beverage, and Labor Cost Controls, Ninth EditionDirect: salaries, wages, tips, bonuses, commissionsIndirect: paid vacations, health benefits, life insurance, free meals, free living accommodations, use of employer-operated recreational facilities, discounts on accommodations at other properties within a chain Current Compensation Pension benefitsSocial Security Deferred Compensation Labor turnover rateTrainingLabor legislationLabor contractsUse of part-time staffOutsourcingSales volumeLocation EquipmentLayoutPreparationServiceMenuHours of operationWeatherCompetent management Determinants of Total Labor Cost Chapter Formulas Labor turnover rate = Number of departing employees ÷ Total number of employees on staff Break-even for staying open an additional hour = Fixed costs ÷ (1 – Variable rate) Saving Money by Using Part-Time Staff Wages:4 dishwashers × 35 hours × $7 per hour = $980Benefits:$980 × 20% = $196Total labor cost: $1,176With all full-time staff Saving Money by Using Part-Time Staff With full-time and part-time staff Wages:2 dishwashers × 35 hours × $7 per hour = $490Benefits:$490 × 20% = $98Full-time dishwashers Wages:10 shifts × 7 hours × $4.50 per hour = $315Benefits:$315 × 10% = $31.50Total labor cost: $934.50Part-time dishwashers © John Wiley & Sons, Inc. 2009