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When are wage costs too low?

Updated: Feb 23, 2022

Working hard to maintain wage costs at a certain percentage of turnover is often the difference between a successful business and a not-so successful one. Which is why staff wages are one of the most controlled costs in the hospitality industry.

There are several systems available to help businesses monitor these costs, from spreadsheets to custom software – like the kind goRoster builds. Of course, some businesses are more efficient than others, when it comes to managing staff wage costs.

While a very low wage cost percentage may be a welcome sight for your accountant, it can be a tell-tale sign of being understaffed. And the one thing that results from a lack of staff is bad service.

We’ve all experienced long-wait times for meals, endless queues for drinks on a night-out, and obviously over-worked staff. Many of us have told our friends about it, posted on social media about the experience, or left a bad review online. Certainly, most of us never returned to endure the experience a second time.

The backlash from just a few disgruntled customers can be far costlier than hiring one or two extra staff for that shift. You may need to appease customers with complimentary meals or drinks to apologise for long wait times. You may have potential customers leave before they have a chance to spend any money. Or you may make a reputation for the business that deters customers before they’ve even walked through the door.

Penny pinching when it comes to staff costs may help the bottom line in the short term, but could affect the viability of your business in the long-term.



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