Managing Labor Costs

Read this chapter. Pay particular attention to the areas of labor cost and labor productivity. How can the service industry maintain or reduce labor costs while simultaneously boosting performance?


Chapter Outline:

  • Introduction to Labor Costs
  • Identifying Labor Costs
  • Defining and Measuring Productivity
  • Factors Affecting Workplace Performance
  • Improving Productivity
  • Productivity Standards
  • Staffing Guide
  • Fixed Labor Costs
  • Variable Labor Costs
  • Scheduling Staff
  • Staying within Budgeted Labor Cost
  • Position Performance Analysis

Learning Objectives:

  • Identify the costs included in total labor cost
  • Define labor cost terminology
  • Describe factors that affect productivity and ways of increasing productivity
  • Identify several different productivity measures
  • Use labor productivity measures to determine foodservice operation staffing.
  • Recognize the link between accurate forecasting and labor scheduling (and labor cost)
  • Identify best practices for controlling and reducing labor costs

Key Terms:

  • Fringe benefits
  • Overtime
  • Minimum staff
  • Variable labor/payroll cost
  • Fixed labor/payroll cost
  • Productivity
  • Employee turnover

Source: Beth Egan,
Creative Commons License This work is licensed under a Creative Commons Attribution 4.0 License.