Chapter 19 — Exercises

Work these with a calculator and a blank page. Items marked † have worked solutions in the answers appendix; the rest are yours to defend. Every wage figure in this chapter and in these exercises is illustrative, constructed for a mid-size Midwestern metro. Minimum wages, tipped wages, and overtime thresholds vary by state, county, and city — verify locally before applying any of this to a real payroll.

A. Recall and definitions

19.1 List the four components of labor cost. For each, say whether it appears on a schedule.

19.2 Define labor cost percentage, and state the three different denominators the chapter used for Bellwether. Why does the chapter insist you name your denominator in writing?

19.3 † Distinguish fixed labor from variable labor. Give one example from Bellwether's roster of an hourly position that behaves as fixed labor, and explain why.

19.4 Define sales per labor hour (SPLH) and covers per labor hour (CPLH). Name one question each answers that the other cannot.

19.5 What is a staffing guide, and what does it protect a restaurant against that a well-intentioned manager cannot?

19.6 Define cutting the floor and cut order. What is the difference between a cut order and a manager's judgment, and why does the chapter prefer the former?

19.7 What is a split shift? State one operational argument for it and one retention argument against it.

19.8 † Why does the chapter say a labor percentage is "a ratio, and ratios move for two reasons"? Give a case in which labor percentage improves and nothing about the schedule changed.

B. Applied reasoning

19.9 Bellwether's fixed labor floor is \$191,895 a year. Explain in your own words why this makes a slow Tuesday more dangerous than a slow Saturday, using the daily figures in Figure 19.1.

19.10 † The chapter shows that Sunday brunch runs 48.5% labor and argues that closing it would make the restaurant's labor percentage worse. Restate that argument in a form you could deliver to a partner who wants to close Sundays, in under 150 words.

19.11 Figure 19.2's forecast missed the week by 3.4% on covers and 1.6% on sales — but one service missed by 21%. Explain why the chapter calls week-level forecast accuracy "a vanity metric."

19.12 Why does the chapter tell you to read a labor variance in the order hours → dollars → percentage, rather than starting with the percentage everyone actually cares about?

19.13 † Chapter 4 modeled labor as \$252,000 fixed plus 16.0% of sales variable, which sums to exactly \$500,000 at \$1,550,000 of sales. Both terms turned out to be wrong, in opposite directions. Explain how a model can be wrong in both directions and still produce a plausible-looking total, and say what that implies about checking a pro forma.

19.14 The chapter claims Bellwether's plan "asks the restaurant to spend the most labor when it has the fewest guests." Explain the mechanism that produces this, and why it is a structural property of percentage-of-sales labor models rather than an error someone made.

19.15 A manager tells you their restaurant runs 28% labor. What are the first four questions you ask before believing them?

C. Cost this

19.16 † Bellwether's hearth cook earns \$21.00 an hour. Compute the all-in cost of one straight hour and one overtime hour, using employer payroll taxes of 9.2% of wages and workers' compensation at 2.4% of payroll. State the premium in dollars and as a percentage.

19.17 A restaurant's hourly wages run \$346,541 a year. It leaks 2.2% of hourly wages to overtime premium. Compute the annual cost of the leak in dollars, and express it in points of labor against \$1,550,000 of sales.

19.18 Bellwether issues about 34 W-2s in year one against 24 positions, because of turnover. Federal unemployment tax is charged at 0.6% on the first \$7,000 of each employee's wages. Compute the FUTA cost at 24 W-2s and at 34 W-2s, and state the difference. Then explain why this is a turnover cost rather than a wage cost.

19.19 † Build the weekly wage cost of Bellwether's back-of-house hourly roster from the station hours in Figure 19.3 and the rates in §19.4, and verify it foots to \$3,924.75. Show every line.

19.20 A cook leaves and is not replaced; 15 hours a week are spread across three remaining cooks at an average overtime rate of \$29.25. Compute the twelve-week cost of "spreading the hours" against the twelve-week cost of hiring a replacement at \$18.00 straight time, all-in at 9.2% payroll taxes. State which is cheaper and by how much.

19.21 Bellwether's blended hourly rate is \$14.70. A manager finds 6 hours a week of unnecessary coverage. Compute the annual all-in saving, and state how many points of labor it is worth against \$1,550,000.

D. Build this schedule to a labor target

19.22 † Using the staffing guide bands in the Business Plan checkpoint, write the BOH and FOH staffing for a Thursday forecast at 104 covers. State total hourly hours, then compute the night's SPLH at a \$46 check.

19.23 The same Thursday now forecasts 114 covers. Restate the staffing, compute the hours, and compute the SPLH. Compare the two nights and explain, in dollars, why the busier night is the worse one.

19.24 † Write Bellwether's Friday schedule for a 138-cover forecast, using the 131–144 band. Assign start and end times for every position so that (a) no hourly employee exceeds 40 hours for the week given the rest of the base-week guide, (b) every position has at least 30 minutes of pre-service overlap, and (c) the three positions that own a closing task are not in the cut order. Present it as a table or a text grid.

19.25 Write the cut order for the schedule you just built. Five positions, in sequence, each with an objective condition and the hours it saves. Then state the total dollars available and explain why the document is worth writing even though the total is small.

19.26 A predictive-scheduling ordinance in your city requires schedules posted 14 days in advance and pays a premium for changes inside that window. Rewrite your Friday schedule to be robust to a no-show without relying on same-day changes. What does your version cost, and what did you give up?

19.27 † Bellwether's plan funds 344 hourly hours a week in weeks 14–52; the guide needs 453.5. Build the 344-hour schedule. Decide what to cut, list it, and then write one honest paragraph describing what a 123-cover Saturday feels like on that schedule.

E. Read this report and find the leak

19.28 Using Figure 19.9, separate the 2.4-point labor miss into the portion caused by hours and the portion caused by the sales shortfall. Show the arithmetic for each.

19.29 † A four-week trend at Bellwether:

State what is happening, distinguish the trend from the noise, and name the one number you would investigate first and why.

19.30 In week 31 the back of house ran 11.5 hours over and the front of house ran 3.0 over. List five different causes that would produce an 11.5-hour BOH overage, and state what evidence would distinguish each one. Which two would you not act on?

19.31 † A restaurant's labor percentage has improved from 34.8% to 31.2% over five months. Over the same period, average ticket time rose from 14 to 19 minutes, the comp rate rose from 0.9% to 2.1%, and two of six cooks resigned. Write the three-sentence assessment you would give the owner.

19.32 Design the daily labor detail report that would have answered the questions Figure 19.9 generated but could not. Specify its columns and say what decision each column supports.

F. Write the memo, policy, or response

19.33 Write the one-page weekend on-call policy for Bellwether: who is on call, how they are notified, what they are paid whether or not they are used, how far in advance the rotation is posted, and what happens if they do not answer. Note where you would need to check local law.

19.34 † The chef-owner reads §19.8 and wants to close the labor gap by cutting the garde manger position. Write the memo you would send in response. Use the numbers from the chapter. Do not simply say no — give them a decision to make.

19.35 Write the paragraph that goes in Bellwether's business plan under Labor Model, stating the \$70,461 gap honestly to a skeptical reader. You have 200 words. Do not hide it, and do not apologize for it.

19.36 Draft the clock-in and clock-out policy that addresses the "creep at the edges" problem in §19.7 without creating an off-the-clock-work problem in the other direction. What must the policy not say?

G. Judgment and ethics

19.37 Your best cook is at 48 hours by Saturday, again. She wants the hours; she has a car payment. Overtime premium on those eight hours is about \$94 all-in, and she is faster than anyone you could schedule instead. Lay out the case for letting it continue and the case for stopping it, and say what you would actually do and why.

19.38 † The chapter names, without recommending, the fact that many independent restaurants balance their labor line on the underpaid hours of their owners. Bellwether's two partners could close 1.7 points of the gap by dropping to \$38,000 each. Argue both sides. Then say what a lender, a prospective general manager, and a future buyer would each conclude from a plan built that way.

19.39 A manager tells you she has been cutting servers fifteen minutes early and rounding the punch, "since they're leaving anyway." Explain why this is not a labor-control technique, what it actually is, and what you do about it — as a manager, not as a lawyer.

19.40 Bellwether's servers earn a \$9.50 cash wage plus tips and, on a Friday, out-earn the hearth cook who is paid \$21.00. The chapter calls this "one of the genuinely hard problems in American restaurants." Describe the problem in operational terms — what it does to hiring, to morale, and to cross-training — and name two structural responses an operator can consider, noting that each has legal constraints Chapter 20 covers.

H. Business Plan extensions

19.41 † Extend Bellwether's staffing guide to cover brunch in cover bands the way §19.4 did for dinner: build at least three bands between 70 and 140 brunch covers, state the positions and hours in each, and compute the SPLH at a \$24 check for each band.

19.42 Bellwether's plan carries a \$70,461 labor gap. Choose one of the three structural levers in §19.8 — production model, owner compensation, or volume — commit to it, and rewrite the Business Plan checkpoint's "what this section does not settle" paragraph as though the choice has been made. State what your choice costs and what it changes about the restaurant.

19.43 Build the year-two labor model. Sales rise to \$1,720,000. Decide what changes: which positions are added, whether a fourth salaried seat appears, what happens to the hearth ceiling constraint, and what the labor percentage becomes. Show the arithmetic.

19.44 † Bellwether's patio adds 16 seats in season. Assume 18 weeks of patio, an additional 14 dinner covers a night on Thursday, Friday, and Saturday, and no change to the kitchen's four stations. Compute the additional revenue, decide what additional hours are required, and state whether the patio improves or worsens the labor percentage. Show your reasoning about the staircase.

19.45 Write the one-page labor section a landlord or a prospective operating partner would read: staffing guide summary, roster, SPLH and CPLH targets, and the labor line built bottom-up. It must foot. Then list, in three bullets, the assumptions in it that you are least confident about.