How One Florida Restaurant Chain Reduced Labor Costs Even as Wages Rose

Last week’s article covered managing your labor cost to a percentage of your sales . This week I wanted to share a real-life example of that process in action and the results it achieved. 

In the restaurant industry, the road to hitting goals is littered with speed bumps, many of which are hard to see coming. For example, California fast-food restaurants are suddenly tasked with adjusting their 2024 financial projections to include the recent wage increase which goes into effect early next year. With labor costs accounting for approximately 30% of total restaurant spending, these increases can quickly eat into profits even further, but they don’t have to.

For example, Carrot Express, a high-end, fast-casual chain with a focus on healthy and fresh ingredients (and one of our customers), was able to achieve a reduction of over $1 million in annual labor costs while also expanding their business and facing wage increases. 

The trick is having a tool at your disposal that can provide you with actionable data to meet revenue goals as new challenges arise. For Carrot Express, that tool is Lineup.ai .

Carrot Express’ Journey to Using Lineup.ai to Manage Labor Targets

Carrot Express had lofty goals for expansion, looking to grow its operations to 24 locations in January of 2021. That’s a big part of why they brought in industry veteran Michael Schatten to handle operations. Michael’s career had already spanned years as the Senior General Manager at the Cheesecake Factory and Director of Operations at Anthony's Coal Fired Pizza.

Michael’s experience working for some of the most recognizable brands in the restaurant industry taught him the importance of good forecasting, which is why Lineup.ai piqued his interest. With the restaurant group’s goals in mind, Michael knew they would need an efficient tool to help them set and hit labor targets while giving them the functionality they needed in order to plan ahead. 

“Right away, I was very impressed with the forecasting capabilities and what Lineup.ai could do for restaurants. The forecasting was outstanding, just incredible.” 

After running a two-month pilot at one location, Carrot Express began using Lineup.ai at all of them. One of the main drivers behind this decision was the way Lineup.ai assisted them in hitting labor targets, “Lineup.ai significantly dropped payroll for our 17 restaurants by about 300 basis points,” Schatten explained. That represents more than $1 million annually in savings.

Setting Labor Percentages

Setting labor targets is a crucial aspect of managing labor to a percentage of sales. Hitting your labor targets requires planning ahead, but Schatten knows that you also have to make adjustments on the fly. It doesn’t matter how good your forecasting tool is, sometimes the unexpected occurs and you need to adjust your labor targets. 

“From my experience in the industry, the only word you know is labor, labor, labor,” says Schatten. “One thing I really enjoy doing is setting a targeted labor percentage. I’m always trying to find the perfect balance of hitting labor goals and ensuring we have great quality shifts.”  Once Schatten sets a target labor percentage, Lineup.ai helps GMs manage to it and gives Schatten the analytical tools to monitor it.

When you have a dependable indication of your upcoming sales, it’s far easier to build schedules that help you meet your labor goals. Customer service can make it a more complicated balance—you absolutely do not want to be understaffed during busy periods—but strong forecasts allow you to match your planned labor to the future demand. And if you do that—plan labor as a consistent percentage of sales—you establish the baseline for consistent profitability.

Applying Forecasting Data to Scheduling

Before using Lineup.ai , Carrot Express was using a scheduling tool that did not incorporate forecasting. Whether using a web-based tool or pen and paper, many restaurant managers build schedules without incorporating all of the data at their disposal. And without dynamically calculating the resulting labor cost as a percentage of sales. And who can blame them? The calculations required are numerous and time-consuming. 

Unless you have the right tools, that is. 

For the foundational first step, accurately predicting sales volume, Lineup.ai prepares forecasts as accurately as your best managers but does it automatically and instantly. That means, instead of sitting at a desk in the back office running through historical sales, upcoming events, weather forecasts, and more, your GMs can be doing the impactful work you hired them to do—assisting customers and team members and making sure everything operates smoothly. 

In the critical second step, managing labor as a percentage of sales, the GM tool automatically takes the AI-based sales forecast, applies the target labor percentages, and then displays a simple progress bar to help GMs schedule the perfect amount of labor.

An often overlooked part of the process is managing schedule changes as things happen.  These can come in two forms. Team member availability can change due to illness, etc., so an essential part of making sure that the actual labor matches the scheduled labor is automatically factoring in team member availability and facilitating shift swaps for last-minute situations. And events affecting sales can change—playoff games can be scheduled, and concerts can be canceled. So GM alerts about changes in the forecast are critical in response.

Perhaps the most important part of restaurant tools is ease of use. It is one of the key criteria Michael Schatten used in his evaluation. “It’s simple, quick, efficient,” he said. “You couldn’t ask for anything more. I would definitely recommend Lineup.ai .”

Carrot Express is an example of a restaurant group enhancing its cost-management capabilities by simultaneously incorporating more data to improve decision quality, and automating the human-intensive aspect of the process for operating executives and general managers. Using Lineup.ai , owners, operators, or executives can set labor targets in the system. Once there, they form the framework within which general managers can build schedules. The AI-generated sales forecasts provide the basis, the target labor percentage determines the appropriate staffing levels, and the system acts as a GM’s assistant, giving simple visual indicators to help the GM match labor to future sales.

Throughout these articles, I’ve focused on the pending wage increase in California and beyond, but that’s just the latest in a series of challenges that restaurant owners and managers have faced in the last year. In order to roll with the punches and remain profitable, it helps to be able to see into the future. If you’re interested in finding out if Lineup.ai is the right tool for you, we’d love to show you how it works by scheduling a demo . 

Next week, I’ll wrap up this series of articles by talking a little more about the technology that powers Lineup.ai and why it’s such a great fit for restaurant industry sales, labor, and item-level forecasting.