Chapter 18 - Labor cost considerations. After reading this chapter, you should be able to: Define employee compensationand list the principal types of compensation common in food and beverage operations; explain the difference between direct and indirect compensation; explain why labor costs and labor cost percentages vary from one establishment to another;. | Principles of Food, Beverage, and Labor Cost Controls, Ninth Edition Direct: salaries, wages, tips, bonuses, commissions Indirect: paid vacations, health benefits, life insurance, free meals, free living accommodations, use of employer-operated recreational facilities, discounts on accommodations at other properties within a chain Pension benefits Social Security Labor turnover rate Training Labor legislation Labor contracts Use of part-time staff Outsourcing Sales volume Location Equipment Layout Preparation Service Menu Hours of operation Weather Competent management Labor turnover rate = Number of departing employees ÷ Total number of employees on staff Break-even for staying open an additional hour = Fixed costs ÷ (1 – Variable rate) Wages: 4 dishwashers × 35 hours × $7 per hour = $980 Benefits: $980 × 20% = $196 Total labor cost: $1,176 With all full-time staff With full-time and part-time staff Wages: 2 dishwashers × 35 hours × $7 per hour = $490 Benefits: $490 × 20% = $98 . | Principles of Food, Beverage, and Labor Cost Controls, Ninth Edition Direct: salaries, wages, tips, bonuses, commissions Indirect: paid vacations, health benefits, life insurance, free meals, free living accommodations, use of employer-operated recreational facilities, discounts on accommodations at other properties within a chain Pension benefits Social Security Labor turnover rate Training Labor legislation Labor contracts Use of part-time staff Outsourcing Sales volume Location Equipment Layout Preparation Service Menu Hours of operation Weather Competent management Labor turnover rate = Number of departing employees ÷ Total number of employees on staff Break-even for staying open an additional hour = Fixed costs ÷ (1 – Variable rate) Wages: 4 dishwashers × 35 hours × $7 per hour = $980 Benefits: $980 × 20% = $196 Total labor cost: $1,176 With all full-time staff With full-time and part-time staff Wages: 2 dishwashers × 35 hours × $7 per hour = $490 Benefits: $490 × 20% = $98 Full-time dishwashers Wages: 10 shifts × 7 hours × $ per hour = $315 Benefits: $315 × 10% = $ Total labor cost: $ Part-time dishwashers © John Wiley & Sons, Inc. 2009 | Principles of Food, Beverage, and Labor Cost Controls, Ninth Edition Direct: salaries, wages, tips, bonuses, commissions Indirect: paid vacations, health benefits, life insurance, free meals, free living accommodations, use of employer-operated recreational facilities, discounts on accommodations at other properties within a chain Pension benefits Social Security Labor turnover rate Training Labor legislation Labor contracts Use of part-time staff Outsourcing Sales volume Location Equipment Layout Preparation Service Menu Hours of operation Weather Competent management Labor turnover rate = Number of departing employees ÷ Total number of employees on staff Break-even for staying open an additional hour = Fixed costs ÷ (1 – Variable rate) Wages: 4 dishwashers × 35 hours × $7 per hour = $980 Benefits: $980 × 20% = $196 Total labor cost: $1,176 With all full-time staff With full-time and part-time staff Wages: 2 dishwashers × 35 hours × $7 per hour = $490 Benefits: $490 × 20% = $98 Full-time dishwashers Wages: 10 shifts × 7 hours × $ per hour = $315 Benefits: $315 × 10% = $ Total labor cost: $ Part-time dishwashers © John Wiley & Sons, Inc. 2009
