By Philipp Laqué
Managing Director, Europe
The United Kingdom’s planned national minimum wage increase, set to take effect in April 2025, is expected to affect restaurant locations across the country. For operators already grappling with high operating costs, supply chain disruptions and inflation, this presents another significant challenge. While reducing staff or raising menu prices may seem logical, these more traditional strategies carry their own risks, such as damaging customer satisfaction or deterring price-sensitive diners.
Revenue Management Solutions (RMS) is committed to helping restaurants across the globe navigate complex pricing landscapes. To address the labor cost challenges, RMS has partnered with Nesto, a German-based leader in AI-driven staffing solutions. This partnership underscores the importance of leveraging innovative restaurant tools to optimize operations while maintaining both customer and employee satisfaction.
The Rising Labor Cost Dilemma
When faced with rising labor costs, some restaurant operators instinctively turn to staff hour reductions or across-the-board menu price increases. These strategies, while beneficial, can backfire. Reduced staff hours often lead to slower service or shortened hours of operations, frustrating customers or tarnishing a restaurant’s reputation.
Blanket price hikes can alienate diners already struggling with financial pressures. This was evident in California’s 2023 minimum wage increase which led to a notable -1.4% YOY drop in quick-service restaurant (QSR) traffic in 2024, while the national average grew by +1.3% YOY (as of November 2024).
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How Automation and AI Can Help
Automation offers a compelling alternative, but the upfront costs can be prohibitive, particularly for smaller, independent restaurants. Enter Nesto, which relies on the newest restaurant technology – an AI-powered scheduling solution – to address labor optimization challenges.
Nesto’s labor optimization solution forecasts sales and staffing needs, using data on weather, traffic, local events and historical brand trends to recommend precise shift schedules. By aligning staff hours with peak demand, Nesto reduces overstaffing during slower periods while ensuring adequate coverage during peak times.
A key innovation is Nesto’s ability to think beyond traditional shift patterns. For example, instead of scheduling three employees for a 6 a.m. to 2 p.m. breakfast shift, the system might propose staggered shifts that better align with demand fluctuations. This approach minimizes labor costs and improves productivity. Nesto clients report a 50% reduction in over-and understaffing, a 6% decrease in labor costs, and an average 3% boost in sales.
Data-Driven Decision Making
Why is RMS partnering with Nesto? Because linking your pricing strategy with a labor scheduling tool maximizes the impact of both initiatives, driving revenue growth while controlling costs for improved overall efficiency and profitability.
Data is at the core of the RMS-Nesto partnership. As RMS analyzes market insights, demographics and location-specific factors to inform restaurant profitability strategies, Nesto benchmarks staffing performance within a company, trade area or similar market to identify productivity gaps.
Employee-Centric Scheduling: A Win-Win Solution
fWe’ve seen a growing trend towards employee-focused practices. Nesto’s restaurant solution embraces this philosophy, allowing team members to input their preferred hours and vacation requests via an employee app. This data is seamlessly integrated into scheduling, ensuring that staff are scheduled during their most productive times.
The result for employees? Smoother lunch rushes, less stressful shifts, and fewer unproductive periods. Operators experience a more reliable and loyal team, and customers benefit through great customer service.
This approach is particularly relevant in the UK, where equalizing pay rates for younger workers may incentivize restaurants to hire more young employees. By creating a positive work environment with tailored scheduling, restaurants can improve job satisfaction, foster team loyalty, and ultimately enhance operational efficiency.
Time Savings and Operational Efficiency
Beyond labor cost optimization, Nesto’s solution significantly reduces administrative workload. A full month’s schedule can be generated in under 40 seconds, allowing managers to focus on strategic priorities rather than routine tasks. These efficiencies translate into tangible financial benefits, as illustrated by the following example:
A Holistic Approach to Cost Management
While pricing is at the core of RMS’s expertise, the company recognizes the value of exploring broader operational adjustments to counter rising costs. By partnering with Nesto, RMS empowers operators to adopt a holistic approach that incorporates price optimization, cost control through refining staff scheduling and evaluating other expenses, and leveraging marketing initiatives to drive restaurant sales.
The RMS-Nesto partnership is more than just a response to economic pressures. It’s a forward-thinking initiative that leverages technology and data to redefine restaurant operations. As the industry faces mounting challenges, this collaboration offers a blueprint for sustainable growth, operational excellence, and enhanced customer and employee satisfaction.
Want to learn how RMS and Nesto can support your business? Contact us today to explore tailored solutions for your restaurant.
