HOSPITALITY CORNER Featuring topics of interest to the restaurant/hotel industry
Managing Your Payroll Costs
The largest single expense category at most restaurants and hotels is payroll and related costs. Particularly in the current economic environment and with the complete implementation of the “Affordable Health Care Act” looming in the not so distant future, effective management of these costs is more important than ever. Payroll costs at most hotels and restaurants are impacted by many different factors such as hours of operation, guest service requirements/standards and related staffing guidelines, nature of hotel facilities and services offered, competitive wage environment and even union labor agreements.
Too often it seems, we take a reactive approach to high labor costs after review of the monthly financial reports and of course at that point it’s too late. It is possible however to take a more proactive approach that manages to control such costs in advance. It all starts with a realistic budgeting process that accurately reflects your restaurant or hotel guest service philosophy, hours of operation, restaurant concept, etc. It is important to use the budgeting process to address these issues, and ask questions such as “can we afford to be open for lunch on Tuesday?”
Once the budget has been adopted, your regular employee work schedules should reflect these budgetary constraints. An effective method for ensuring that they do is to actually cost out the work schedules in advance as you prepare them by applying the employees’ hourly rates to their scheduled time using a simple excel- type spread sheet. Management employees on non-hours based salary should also be included in the calculation along with an appropriate provision for employment taxes and benefits. By performing this exercise in advance, adjustments could be made to the upcoming week’s schedule to help keep your labor costs on track. Anticipated business and income levels should also be reviewed in this light.
Laskaris & Laskaris, a Pennsylvania licensed certified public accounting firm, was organized in 1973. Their primary area of practice is the hospitality industry, offering accounting, tax and advisory services such as feasibility and operational studies to our restaurant, hotel and private club clients. Their founding principals gained their expertise beginning in 1948 with Horwath & Horwath (later known as Laventhol & Horwath), an international accounting and consulting firm to the hospitality industry. The firm has recruited its senior staff members from controllership positions in the hospitality industry in order to provide our firm with the expertise required to render effective services in this specialized field. In addition to membership in the American and Pennsylvania Institutes of Certified Public Accountants, they are also members of the National Club Association, Club Tax Network and PA Restaurant and Lodging Associations.