Question

Find an article about Labor and Profit margins and write a summary about it. ( the article has to be no more than 6 months old)

Answer 1

How labor costs impact Organization’s profitability

As per the National Restaurant Association, a substantial (almost two-thirds) of restaurant operations costs go towards labor and food, irrespective of price or service level. With these rising labor costs, even a few hours of overtime can completely erode your profit margin day-to-day. If you’re paying more for employees to be on the clock than customers are paying you, you’re already in the red. It’s easy to dismiss once or twice, but those few instances could reflect a larger scheduling trend.

While there’s no “perfect” number when it comes to how much money businesses should be spending on labor costs, Forbes found that payroll costs can account for as much as 34% of sales to as little as 4.8 percent of sales across different industries. Depending on your business, a $15/hour employee on paper can quickly turn into a $22/hour employee after taxes, uniforms, paid time off, and benefits. Eventually, the total cost per employee can end up being 17% to 28% more than their base pay.

Cross training of employees helps in reducing the labor cost substantially as the employees can work upon multiple areas of the business. Absentees of one employee can be taken care of by another employee if they are trained in this manner. There would be no need to hire extra staff.