In the restaurant business, alcohol is the single best margin generator. If you are going to have a profit, this is where the money is made. As an owner, you need to understand the value of alcohol sales and the associated costs. This aspect of operations not only generates high contribution margins, it covers its share of costs and ultimately adds to the bottom line.
Controlling Labor Costs in the Restaurant Industry
There are two costs that stand out in the restaurant industry. Food and labor comprise more than 45% of the typical expenses of the restaurant. No other expense comes close to these two costs. These articles are dedicated to controlling the labor costs in your restaurant.
I laugh at the definition of labor costs because in my opinion the so called experts only have it half right. Labor costs are more than just gross wages and benefits. It should include the costs of insurance, employer taxation, human resources management and incentives. All of the costs associated with delivering the human element of service should be included. Let’s explore these costs from the most expensive to the least.