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Improving Labor Allocation: A Restaurants Case Study

The Company

A leading QSR organization with a large network

The Challenge

Management thought there was an opportunity to implement a new labor strategy to reduce costs and increase efficiency. The new strategy reallocated labor hours to lunch, while reducing hours during other dayparts, and was a net decrease to total labor hours.

Management needed a rigorous approach to evaluate the strategic change to ensure the program would reduce costs without a significant gross margin impact.

The Solution

In order to mitigate the risk of an unprofitable rollout, the client implemented a test of the labor strategy in a small group of restaurants. APT’s Test & Learn software showed that the new labor strategy improved overall guest count, but caused a small decrease in check size, due to a shift in guest traffic towards lunch. The increased guest count offset the decreased check size, resulting in no impact to overall gross margin dollars – the program was thus profitable overall, since there was a significant reduction in labor costs.

Next, APT software automatically segmented the overall results and showed that the program was most profitable in restaurants where a larger percent of total sales historically came from lunch and for restaurants in a specific price tier. Using these drivers of performance, the APT software built a predictive model to target rollout of the labor program to the restaurants that would respond profitably.

The Results

A targeted rollout generated nearly $4MM in annual incremental profits
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