KPIs
1. Staff and Employment KPI's
Wage Cost % - wage costs as a percentage of sales.
Total Labour Cost % - not just wages but also the other workcover insurance, retirement
and superannuation charges and other taxes that apply on your payroll.
Total Labour Hours - how many hours worked in each section. This is useful to compare
against sales to measure productivity.
Function Labour charge-out. Caterers usually charge-out service staff at a markup on the
cost of the wages paid. Are you achieving a consistent mark-up?
Sick days taken - sometimes a measure of morale and the management skills of your
management team.
Labour turnover (number of new staff in any one week or month) Everyone says high
staff turnover is 'part of the territory' in hospitality. It doesn't need to be like that, but one
way to measure how good (or bad) you are at controlling this is to measure labour
turnover. Count the number of positions you have (A), then count the number of people
who you have employed during a certain period (B). Divide B by A and you will get a
labour turnover figure, sometimes expressed as a percentage. For example if you have 10
staff positions and you have employed 38 people in the last year, your Staff Turnover is
38/10 or 380%!!
Average length of employment - another way to look at your success in keeping staff.
Add up the total number of weeks all your people have worked for you and divide this by
the total number of staff.
Average hourly pay - divide the total payroll by the number of hours worked by all staff.
2. Kitchen Management
Food Cost % can be measured quickly by adding up food purchases for the week and
measuring them against your food sales. This is based on the assumption that you are not
holding very much stock (as it's perishable, you need to sell it or throw it out!). You may
also do a stock-take regularly to get a more accurate food cost percentage, although the
burden of kitchen stocktaking often means it is not done very often.
Total Food Costs - how much was your total food bill? Sometimes a useful figure to
show staff who think you are made of money!
Food Costs per head. It can be useful to see every week how much it costs to feed an
average customer. If your menu and sales style is consistent, this should also remain
much the same. If it starts to go up, you will have to find out what's happening!
Kitchen Labour % - it's only fair to measure kitchen productivity by comparing kitchen
labour against food sales, not total sales (alcohol and beverage sales may be influenced
by other factors).
Kitchen Labour hours - how many hours worked in this section? Compare against sales to
measure productivity.
Stock Value - how much food stock are you holding? It should be less than a week's use,
but can slip out if you are storing frozen seafood or cryovac meat.
Best (and worst) selling items - check the weekly sales from your POS or dockets. Did
you know what the best sellers were? Map these on the Menu Profitability Analyser.
Kitchen linen costs - the cost of uniforms, aprons and tea-towels can be a shock! How
many tea-towels are you using each day? (thought about laundering them yourself?)
3. Front of House & Restaurant Management
Total Sales Per Head - your total sales divided by the number of customers. How does it
compare to last week and last month? This may vary between different times of the day .
Number of customers - simple! A good measure of popularity.
Food, Dessert, Beverage Sales per head. These are divided into key areas of choice -
main course and starters, desserts, non-alcohol beverages, alcohol and perhaps also side
orders (eg breads and salads) and other product sales. It's the perfect indicator of two
things - how much your menu appeals to your customers (do you have all the choices
they want, eg the right dessert selection?), and how well your staff are selling. This KPI
can be a good basis for a bonus system.
Seating Efficiency - how well your tables are being turned over while still offering high
quality customer service. Usually many small things combine to have a large impact -
cooking time, seating, service and clearing. The size of tables relative to the average
group size will also make a difference.
Basket Analysis - eg how many items do lunch customers buy? What else do morning
coffee drinkers order, or red-wine drinkers (mineral water if the servers are awake)? A
recent analysis with a client showed that typical diners ordered only 2 items (most
ordered nothing after the main course) and many of the lunch customers did not order a
beverage. Grab a pile of dockets from a typical day, and look for ordering patterns.
Linen costs - uniforms, aprons etc.
Front of House Labour % - how many hours worked in this section? Compare against
sales to measure productivity.
FOH Labour hours - how many hours worked in this section? Compare against sales to
measure productivity
Customer satisfaction. This is measured in different ways. Feedback forms, complaints
and other methods that are hard to quantify sometimes but worth making an attempt.
Strike Rate - if 500 people came to your club last night and only 100 ate at the bistro,
your 'strike rate' would be 1 in 5, or 20%. Good enough? Compare with similar
businesses and different times.
RevPASH - Revenue per Available Seat Hour. The same idea as hotels use to measure
Revenue per Available Room. For RevPASH take the total number of 'seat hours' and
divide total revenue for a perid by this number.
4. Bar & Cellar Management
Sales per head. Useful to have them separately for alcohol beverages and non-alcohol
(juices, mineral waters, soft-drinks and coffee etc). It's the perfect indicator of two things
- how much your beverage and wine appeals to your customers and how well your staff
are selling. This KPI can be a good basis for a sales bonus system.
Gross Profit on sales - the difference between what you sold and what it cost you. The
sales mix can influence this heavily. If you are selling two bottles for the same price, but
one costs you $5 to buy and one costs you $7 to buy, you should try to maximise the sales
of the one with the highest dollar profit.
Average Profit % on Sales - useful to see if your sales are holding steady, although
ultimately the actual Gross Profit (real money) will matter the most.
Stock Value - how much cash is locked up in the value of your cellar? Tens and even
hundreds of thousands of dollars can be tied up in cellar stockand you don't realise it! It's
worth checking with your suppliers and seeing how much you can order 'just in time'.
This is where retail business models are useful to compare, because unlike food stock,
these supplies are not perishable, which can lead to a temptation to hoard. Also, the
romance of wine lists and 'special deals' can lead to stock blow-outs! Weekly stocktakes
are essential for proper management.
Stock turnover - how fast is your cellar stock selling? If you are carrying wine stock
worth $50,000 and the value (not sales) of what you sell each week is only $10,000, it's
taking 5 weeks to turn over your stock. That's too long! An accurate figure here will be
based on regular stocktakes and accurate sales information.
Carrying cost of stock - what is the cost of financing this $50,000 of stock? Take the
current interest rate for borrowing money, apply it to your stock value, and divide by 52
to get a weekly figure. If stock is valued at $50,000 and interest rate is 8%, annual cost of
financing the stock is $4000 or $77 per week.
Sales / stocktake discrepancies. Alcohol means security problems, and keeping an eye on
'shrinkage', staff drinks and stealing is a constant problem. As an essential KPI, measure
the difference between what you used (from comparing two stocktakes) and what your
POS system says you sold. You often need to find our why they aren't the same!
5. Sales & Marketing plus Function Management
Number of customers - simple! A good measure of popularity.
Visits by your top 100 or 200 customers - they provide a huge proportion of your sales!
Track their frequency and spending - these people are gold!
Sales per Head - across all areas
Marketing and advertising costs - the total value of what you spend, always trying to
measure it against the response you get. A difficult one to measure, but worth
investigating.
Response rates - how many people responded to different campaigns and what effect did
this have on profit?
Press Mentions - keeping your eyes open for favourable mentions.
Bookings - in the current week and month and coming up. Also in peak times, eg
Christmas.
Function Inquiries - number of inquiries about large bookings and functions, especially if
you have undertaken a campaign to promote them.
Sales inquiry conversion rate - the number of inquiries that turn into actual sales. If 50
people asked for information about your function packages and this resulted in 10 firm
bookings, this would be a conversion rate of 1/5 or 20%. You would want to look at why
so few people were 'converted' - was it the quality of the promotional material, skill of the
sales staff, pricing or make-up of your function menus and facilities?
6. Management of Finance & Administration
Cash position at bank - how much do you have available after reconciling your cheque
book?
Stocktake discrepancies - a measure of the efficiency of each department, but also of the
administrative systems in place. They need to be simple and easy for line staff to fill in,
and the results should be made known quickly if they are to have an impact.
Total accounts due - how much do you owe?
Total accounts payable - not usually a problem in restaurants and pubs, but needs careful
management if you have accounts, eg large restaurants.
Return on Investment - the profit your business makes can be measured as a percentage
return on the amount you have invested in it (see the Balance Sheet). Is it sufficient?
Taxes owed - most of these taxes are not paid at the time they are collected. Hence the
need to know how much is owed at any one time so it is not 'spent'.
Sales & costs - actual figures compared to what you budgeted for the period. You will
want to see real dollar figures and percentages.
Administration labour costs. This is often begrudged in hospitality businesses and seen as
'not productive'. But strong and skilful administrative support will be essential to manage
the KPIs listed above!
Computer and technology efficiency - how much down-time for your computer system?
How accurate is the POS system? How many of your staff know how to use the
equipment they use each day, eg telephones - can everyone transfer a call properly?