Restaurant Industry Scorecards
As a multi-unit restaurant operator, it's your job to know which locations are doing well and which locations need help. Scorecards can help gauge the health of a specific restaurants quickly and accurately. To start, you need to collect data from each restaurant location such as:
- Check details
- Inventory levels
- Ticket times
- Labor schedules
- Customer feedback
- And more
After securing and organizing the data, you can begin to compare the metrics. You may choose to compare individual stores or a group of stores. Each business is unique in how they choose to measure their company performance. One company may choose year-to-year sales or customer feedback. Another may select speed of service or the amount of LTOs sold.
A Balanced Approach
A Scorecard is a performance management tool. The idea is to track performance and draw attention to areas that need improvement. Each metric has a target value based on comparison group. Colored shading (green, yellow & red) makes it easy to see if targets are being met. Many restaurant executives choose to compare stores to the top quartile of stores instead of the company average. No one wants to just be average. Using a balanced scorecard you can weight scores for different metrics when creating an overall score. For example more points or weight is given to a specific metric that impacts your bottom line.
Problems That Arise
Collecting data from different data sources (POS, labor scheduler, inventory management, etc.) at several different locations can be tedious. If you can begin to collect data, you then have to figure out how you want to use it. Some operators use spreadsheets to organize their information. However, this can be problematic if you constantly have to deal with human error, and shareability issues. In my opinion, the biggest issue companies face is understanding what information is needed to make important business decisions. If you are making decisions based on 1 or 2 metrics, you're probably making poor decisions because you are not getting a full picture of how your restaurants are really performing.
Apples to Apples
Let's say you are the COO and you are trying to compare 2 stores against each other. You want to know which store is selling more? You come to learn that store A is out selling store B, so does that mean store A is doing a better job at running their location? Not necessarily.
Once other metrics are brought to light, it's easier to understand that store A is actually under performing and store B is doing a great job. You learn that store A is in a heavy traffic area and weather has been great in the past month. Comparable stores with similar traffic and weather do around 100K a week however this store is averaging 75K a week. Store B on the other hand is located in a rural area and only received 5K a month for marketing media. Yet this store is pumping out 50K per week which is above the 35k per week average with comparable stores.
You see, you can not compare "apples to apple" until you begin to factor all the information you have. If you made business decisions based on the sales numbers alone, you would have made wrong decisions. The manager at store B would have been devastated to hear that the executives are not pleased when he worked so hard at his location.
Here are a few examples where digging deeper and grouping like stores can help you see what is really going on:
- A Chief Marketing Officer trying to understand which stores are leveraging the most out of media budgets. Two stores get the same amount of marketing revenue but one is doing a better job at sales. Why? Turns out the under performing location has poor speed of service, resulting in poor customer service reviews.
- A Chief Financial Officer is looking to cut 600K per month from the inventory budget. He sends a message to 56 area managers to enforce a strict milk over pouring policy. For the next 6 months he watches those metrics in a scorecard and notices some units are doing a better job of not over pouring than others. He can now discuss pour techniques and strategies with those locations and reap the savings!
- A CEO wants to recognize the top 10% employees among all his locations. He begins by implementing an upselling promotion. Every employee is trained to upsell the regular sized combo to the larger size. Keeping in mind media spending and store traffic, he can use a scorecard strategy to figure out which employees are doing a great job bringing more money into the operation and which employees are struggling.
Hopefully you understand the importance of multiple metric comparisons when you scorecard your restaurant locations. The different scenarios above are just a few examples of how you can implement a scorecard solution to improve your multi-unit operations.
If you're searching for a better way to scorecard your units, make sure you check out Mirus Tier. Tier is a web-based scorecard solution designed specifically for multi-unit restaurants. The software begins by taking custom metrics you decide are important to measure and how you would like to group them for comparison. Once you have those metrics and comparison groups selected, you can visually see a status snapshot.
For instance, if you wanted to see which locations made above or below their set average sales for each week, Tier would show you each location with that specific metric and a colored dot next to the location name. If you see a green, that location is doing at or above average sales for that week. If you see a red dot, that location is doing below the average. To make the Tier scorecard more sophisticated, you can apply other metrics to monitor. The sky's the limit with a fully custom scorecard solution.
Here's a simple demonstration of Tier
See how your restaurants can improve trough scorecarding.
Have you ever used a scorecard solution?
Do you implement similar reporting strategies with spreadsheets or POS systems?
Mirus is a multi-unit restaurant reporting software used by operations, finance, IT, and marketing.
For more information, please visit: www.mirus.com
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