There is always a sense of anticipation in the mind of every restaurant and franchise owner, when looking forward to the next phase of growth. Stalling and complacency may not necessarily be the end of your restaurant, but it will limit your ambitions.
Restaurants and Restaurant Franchises are ever-evolving and demanding businesses. Every day, restaurant and franchise owners strive to stay on top of the latest trends while running a profitable business. The restaurant business has its own metrics that help it stay ahead of the competition. With these parameters in mind, you can set both short- and long-term goals that will take you to the next level of success. Your short- and long-term goals must increase daily sales, reduce loss, and improve productivity.
There is a fierce competitive nature to the restaurant business, and not every new location survives. According to the Bureau of Labor Statistics, the median lifespan of restaurants in the western US is only 4.5 years. It is necessary for restaurant and franchise owners to regularly evaluate their business against industry benchmarks and establish internal goals to make it beyond the five-year mark. The best way to do this is through an analysis of KPIs (Key Performance Metrics) of the restaurant.
With the right restaurant analytics platform, you can determine exactly which parts of your business are boosting your profits and which need improvement instead of spending hours grappling with charts and pivot tables to get the same answer.
Increasing Daily Sales
Restaurants rely on their financial infrastructure to stay afloat, but calculating your net income on the fly is not only difficult, it will distract your business from setting and achieving sales goals. A restaurant's Net Sales appears easy enough to calculate. Net Sales = gross sales - discounts. However, it can be tedious to calculate these numbers every day. A restaurant analytics platform allows you to easily access financial information from anywhere, at any time. Allowing you to focus less on finding and calculating sales numbers and more on increasing them.
You can see what promotions are or aren't working by taking a close look at the daily net restaurant sales. If a promotion increases your daily sales by 10% or more, consider adding it to your monthly marketing plan. For Franchises this is an essential strategy successful promotions can be applied throughout the brand.
If you're looking to grow your business, consider setting daily, weekly, and monthly revenue goals. Setting sales goals can motivate you to achieve them. Long-term goals can be created to set sales targets on a quarterly and yearly basis. Setting long term sales goals creates standards for sales, and sets financial targets to achieve. When setting long-term goals keep in mind that your goals should be attainable and measurable. For example, setting a sales goal that spans several years is unrealistic, as they can be hard to track with too many variables to make them achievable.
Reducing Loss
Working with trusted vendors is a way to prevent loss. Beware of vendor fraud, which occurs when a member of your supply chain overcharges you. This type of scam is particularly effective in restaurants because they deal with multiple vendors often at the same time. If you don’t regularly check your inventory, untrusted vendors can overcharge or underdeliver supplies.
While it may be hard to acknowledge, losses due to employee theft and general non-compliance are real. According to the National Restaurant Association, employees cause about 4% of sales discrepancies and 75% of inventory shortages. This can happen by employees short ringing, applying false comps, register skimming, voiding valid checks, and theft of inventory.
Improving Productivity and Efficiency
Consider ways to reduce the cost of goods sold without sacrificing quality, such as taking daily inventory on key items and having a plan to make sure purchased items are used efficiently.
Cost of Goods Sold = Opening Inventory + Purchased Inventory — Closing Inventory
To control food costs, you need to track your food cost percentage. A restaurant's profitability depends on keeping food costs under control. A food cost percentage is the difference between how much it costs to make your items and what customers pay for them. Typically, successful restaurants have a food cost percentage ranging from 25-35%.
Food Cost Percentage = Food Cost / Total Sales
Reduce labor percentages by using a labor scheduling tool. You will be able to track time and attendance systems at the highest levels and identify which employees might be heading into overtime before it is too late. Track wage percentages, to see how much your labor costs are compared to your sales in real time. Use these percentages to determine when to cut employees.