Labour management and the importance of forecasting for pubs

11-May-2014 - Last updated on 12-May-2014 at 15:13 GMT

Forecasting the right number of staff to be working, at the right time, can be difficult

Labour management is perhaps one of the less exciting topics in the licensed retail industry, but is vitally importantfor all publicans. In the first of a series of articles, Alastair Scott, owner of Malvern Inns and founder of S4Labour, a labour management system used by many of the trade’s leading operators, looks at the issue of forecasting.

Labour will be, for the vast majority of licensees, the biggest cost waste for their business - on average about 30% of labour cost is waste. Of course, like food or drink waste, you can’t eliminate all of it. There will be times when customers just don’t turn up as you expected, or times when you can’t get staff to work for the time you need them.

But for a cost that is normally more than 20% of total revenue, the waste is a big number. For a pub with a turnover of £500,000 per annum, that equates to waste of around £30,000 a year. Imagine if we threw that much food away, or that much drink?

Time consuming

As with all things, we grow bad habits quickly and then fail to spot them. We still rota people on at 12pm even if we don’t get busy until 1pm. We still have a potwash on a Thursday lunchtime even if the trade doesn’t warrant it. We still have four staff on both a Friday and a Saturday even though Saturday is busier.

Not me – I hear you cry. I have got it just right. I know my business better than any computer program. But the fact is that we are not talking about poor operators having this level of waste – we are talking about the best operators.

Why? Because focusing on every hour of every day is a difficult and time consuming thing to do. Labour management requires as much science as any other part of our business.

In this series of articles I intend to take you step by step through the key challenges and opportunities of labour management, from contracts to hour-by-hour scheduling, from kitchen structures to roles and responsibilities.

Forecasting

Forecasting is one of those disciplines often forgotten in our industry. But we need to forecast on a daily basis to know how much to prep, how many staff to have on and how much to cook.

At a higher level, we need to forecast cash flow and profit, and in particular how much we owe the VAT man. Squeezed into the middle are the weekly activities of how much to buy. So forecasting is an essential business process at every level.

Of course our forecasts are often wrong, but the question is by how much. If the forecast is a little bit wrong then it doesn’t matter, but a lot wrong? We all know those shifts where we were under-prepped or understaffed, and we got hit. Last week at one of our pubs we had a load of soldiers turn up unexpectedly. Sales were great but service wasn’t!

Forecasting Christmas week is also very difficult. Are sales going to be like a normal Saturday or a normal Sunday every day? Will it be busy at lunch or in the evening? This Christmas we got every day right except for Boxing Day, where we massively underestimated and ran out of food items as well as not having enough staff.

Discipline

Our statistics show that the industry forecasts well enough on about 60% of the days of the year. Actually, for some of our clients, forecasting is a new discipline that they are not used to. We of course help by showing when the sun in shining, and what the sales were for each day over the last four weeks.

For my own sites, I upload last year’s plus a percentage increase as a start point. But that means we are wrong about 40% of the time. That means 40% of the time we over and under prep, 40% of the time we over or under staff, and I hate to think of the number of customers that miss out on that Sunday lunch they wanted because we ran out!

I have seen pubs that use the budget set a year ago as the forecast; I have seen pubs that don’t forecast at all; and I have seen pubs that have the same forecast every week. Probably the most frustrating is those pubs who know they have a wedding, a funeral or some other function but don’t staff up or down, despite changing how much they cook.

Forecasting is a hard task, but we can make it easier for ourselves and we do get better. My real point is that we shouldn’t just ignore it because it is difficult.

Over time we get better and more accurate, and then we prep the right amount, cook the right amount, and have the right number of staff. And don’t forget to put the left over meat in a pie!

Alastair Scott is owner of Malvern Inns and founder of S4Labour