Day 120 - 03 May 95 - Page 54
1 have looked into, what that means for management practices,
2 you set a lower percentage of labour costs to sales in 1992
3 as a target than for 1991. Is that correct? In 1991 your
4 percentage labour costs was 15.06 as a percentage of sales
5 and your plan was to reduce that to 14.8 per cent; is that
6 correct?
7 A. Because we anticipated a much higher top line.
8
9 Q. Whatever the reason is, the reality is -----
10 A. Well, it is there, it is in figures, I mean.
11
12 Q. Yes, exactly.
13
14 MR. JUSTICE BELL: What I think he is not agreeing is that they
15 set their eyes on 14.8 per cent as opposed to planning that
16 turnover would become X millions and that they would need
17 to spend 81 million on payroll crew to service that
18 turnover ---
19
20 THE WITNESS: That is correct.
21
22 MR. JUSTICE BELL: -- which would result in 14.8 per cent.
23
24 MR. MORRIS: There is nothing about turnover there at all ---
25 A. No, that has been taken out.
26
27 Q. -- in the figures we have in front of us.
28
29 MR. JUSTICE BELL: No, I know. It is obvious -----
30
31 MR. MORRIS: In any event, if the turnover is greater then you
32 could argue (and we would certainly argue) that the
33 remuneration for the employees should be increased because
34 the profit would be greater, and that should go to the
35 employees. But you decided, as a Company, did you not,
36 that whether or not your turnover was greater, vastly or
37 whatever, you would reduce the percentage labour costs if
38 you could to 14.8 per cent from 15.06 per cent?
39 A. No. We were seeking to -- we had a planned sales
40 target and, based on that planned sales target, we were
41 increasing our labour spend from 70,000 -- 70,103,000 to
42 81,162,000. Because we thought we were going to have an
43 effective year, that made that percentage of 14.8 per cent
44 of the top line figure. We were not reducing anything.
45
46 Q. Presumably, you also opened up something like 50 stores
47 that year, yes, is that correct?
48 A. In 1991.
49
50 Q. 1992 we are talking about, really.
51 A. 1992, sorry -- yes, about 45, I think.
52
53 Q. Yes, something like 10 per cent extra stores. The point is
54 that, as far as you were concerned, if there was going to
55 be any increase in profits, it would not be going to the
56 staff because their percentage of sales -- the plan was to
57 reduce it?
58 A. No, the staff would get their normal increases during
59 the year or in their salary; it just so happened that the
60 planned crew numbers against the number of restaurants we
