How to Manage Restaurant Staff and Increase Labor Productivity

Restaurants are fast-paced environments with many moving parts that require a team effort to run smoothly. Fortunately, there are some best practices for managing a restaurant that can also increase labor productivity. 

Restaurants are fast-paced environments that require a team effort to run smoothly. There are many moving parts that need to operate effectively in order for customers to be happy, for staff to feel supported and fulfilled, and for the business to turn a profit. That can be a lot to put on the shoulders of a restaurant manager. Fortunately, there are some best practices for managing a restaurant that can also increase labor productivity. 

How to Manage Restaurant Staff Effectively

1. Be Consistent

When you work in and manage a restaurant, you never know what the day is going to bring. Managers need to be able to think on their feet and problem-solve quickly as issues arise. The biggest mistake managers can make is inconsistency in how they handle problems. Managers should be consistent in how they maintain and enforce rules, communicate with employees, and set expectations.

Displaying calm consistency during a major rush when staff can suddenly feel panicked and overwhelmed is essential to good management. If you are consistent during these chaotic times, your energy will transfer to your staff, who will in turn be able to better handle the stress.

2. Have a Hands-On Understanding of the Work

You can’t effectively manage a restaurant and earn the respect of your employees if you don’t understand the work they do and the stressors and challenges they face everyday. It is important to know every aspect of how the front-of-house and back-of-house operate and be willing to roll up your sleeves and pitch in when necessary. Also, take time to talk to your employees and learn about the techniques they use to do their job efficiently and effectively. You may find that they have some of their own creative problem-solving ideas that could be implemented on a larger scale. 

3. Take a Proactive Management Approach

When things are happening quickly, you need to be prepared. If you are only ever reacting to situations instead of anticipating and planning for them, you are already in a bad position. You should be proactive and look towards the future, especially when it comes to staffing needs, inventory, marketing campaigns, menu changes and updates, updating technology, and identifying consumer trends.

4. Focus on Staff Retention

According to a recent study, 46% of restaurant managers reported that hiring and retaining staff is their main challenge. This means that employee retention should be a top priority. The less time you have to spend recruiting and training new employees, the more you will have to focus on other management tasks. Employee retention will also reduce costs and allow customers to become familiar and comfortable with the staff, which can drive customer loyalty.

How to Lead a Restaurant Team

Foster a Team Mentality

Creating a sense of team can help the restaurant run more smoothly. Start by getting to know your team. Talk about their goals, challenges and changes they would like to see. Also, share what you would like to accomplish as part of your leadership role and be open to feedback. Incorporating meaningful face-time with individual employees will help improve job satisfaction. In fact, a study from 7shifts revealed that 44% of restaurant employees reported that more time with management would improve workplace happiness.

Pro Tip: In addition to one-on-one meetings, make time for team-building activities that can be done in groups. Provide some options so that they can choose the types of activities that appeal to them and be sure to celebrate holidays and other special events with co-workers.

Establish Goals and Boundaries

Goals provide a clear target to work towards and will help employees feel focused and accomplished. Boundaries can be just as important, especially when you have been promoted within the company. As a manager with new responsibilities, you need to make sure that old friendships don’t cloud your judgement of your direct reports’ performance or affect the execution of your own duties. 

Managing a restaurant is challenging because you have to maintain a balance between supporting employees and holding them responsible for meeting the expectations associated with their position. You can help set an example by listening to your staff, implementing good ideas and suggestions, showing enthusiasm, and following restaurant policies yourself.

Pro Tip: Put your restaurant mission and team goals and boundaries in writing and go over them with your employees so that everyone is on the same page. Also, make this information easily accessible by displaying it in a common area or making it available via your chosen restaurant communication system.

The Basics of Labor Productivity

Another area of concern for restaurant managers is labor productivity. Essentially, labor productivity refers to the number of goods and services that are produced compared to the hours of work required to produce said goods and services. Calculating labor productivity can provide some insight into the economic health of the restaurant and reveal areas for improvement.

Calculating Labor Productivity

Calculating labor productivity requires looking at multiple measurements over a certain period of time. You will need to collect data on:

  • Labor cost per cover
  • Labor cost per labor hour
  • Covers per labor hour

You should be able to ascertain this information when the payroll is processed. Management will be able to compare how many hours were actually worked to how many hours were scheduled, according to the position. If the number of hours worked exceeds the scheduled hours, you will need to find out why this discrepancy has occurred. 

Covers Per Labor Hour

Keep in mind that schedules are created around customer counts (covers) and not revenue numbers. Looking at covers per labor hour is a key indicator of productivity that isn’t influenced by inflation. Of course, customer counts may fall when prices are increased, but covers per labor hour is still one reliable and effective way of understanding labor productivity. Be sure to look at covers per labor as a whole and for each job category.

Labor Cost Per Labor Hour

To calculate this labor productivity indicator, you will need to divide the total payroll by the total labor hours. Once you are able to see the labor costs for the different roles and positions, you can better determine appropriate wage ranges for each category.

Labor Cost Per Cover

This index will show you how much labor is required to serve each individual customer. Take the total payroll amount and divide it by the number of customers. You will quickly notice that once you look at individual positions, the numbers will vary widely. For example, there may be a significant difference in labor cost per cover among cooks and hostesses. Let’s take a closer look at how this breaks down.


Total Payroll Cost = $1,600

Total Labor Hours = 200

Total Covers Served = 1,700


Covers per Labor Hour (1,700/200) = 8.5

Labor Cost per Labor Hour (1,600/200) = $8

Labor Cost per Cover (1,600/1,700) = 94 cents

How to Increase Labor Productivity 

Restaurant owners and managers shouldn’t have to settle for frequent and expensive staff turnover. Providing competitive wages, benefits, and safe and positive work environments will help keep turnover rates low. It is also important to implement scheduling best practices so that employees are kept busy and able to earn a living without feeling overworked and undervalued.

Scheduling and Staffing

It may be helpful to start thinking about scheduling as purchasing the potential for work to be performed. The usual impulse is for managers to overschedule to avoid ending up short-handed during a rush. However, if that rush never happens, labor productivity plummets.

As a manager, you need to resist the urge to overschedule or panic hire. A worker should only be scheduled if there is work to be done and not if there might be work to be done. In addition, don’t feel the pressure to hire if the applicant pool isn’t up to snuff. Hold out for the right applicant. Hiring someone without the right qualifications, just so that you can complete the schedule, will only lead to more problems. This becomes even more apparent when you consider the true costs of labor.

Costs of Employment

No matter how the employee is paid, the cost to employ someone will always far exceed their actual salary. As a general rule, you can estimate that the cost of employing a worker will be more than double what they earn – before taxes. Once you factor in other employment costs, such as vacation time, profit sharing, insurance, uniforms, training, meals, retirement plans and other add-ons, hiring an employee becomes an expensive undertaking. That is why you want to hire qualified candidates and keep them happy. Otherwise, you will be wasting money on high turnover rates and low labor productivity. 

The Bottom Line

Managing a restaurant and keeping labor productivity high are no easy tasks. As a manager, you have to approach everything with an eye towards the future and a clear strategy. That requires having a clear understanding of the work required, by every position and job category, to get the work done, and the importance of hiring and scheduling when it comes to labor productivity.   


How do you manage staff effectively? 

It is important to be consistent with how you communicate, maintain rules, and share your expectations. In addition, you should take a proactive approach to managing and try to get ahead of issues before they arise..

How do you lead a restaurant team? 

Foster a sense of teamwork among your employees and work to help everyone set goals and establish clear boundaries.

What is labor productivity? 

This measurement looks at how the amount of goods and services produced compares to the number of working hours that are required to produce the goods and services.

How do you calculate labor productivity?  

You will need to determine productivity indicators that include covers per labor hour, labor cost per cover, and labor cost per labor hour.

How do you increase labor productivity in a restaurant? 

Make sure that you are correctly scheduling according to the amount of work that needs to be completed and hiring qualified candidates.



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