Measuring success or failure of a system that improves decision making is challenging in many respects. But, the Same Store Sales (SSS) metric can be useful, especially when applied to a long period of time, and across thousands of restaurants. SSS is caluclated as a percentage change from last year to this year, and only uses locations that are open for both years.
As a restaurant CMO the areas of social media, guest feedback and planning the next profitable promotion probably take up most of your time. But what about labor? Wait, Operations is supposed to take care of labor scheduling and staffing not marketing. Before you pass this very important function off to the next guy you may want to see how labor affects the marketing department's efforts.
For the purpose of this article, let's make the assumption that the multiple restaurants you oversee have, in some form or another, a POS system, an established holiday calendar, weather data, customer satisfaction surveys, kitchen timers, and a labor management system.
If you only have a few of these systems in place, that's okay. I just wanted to name the data source systems that could be leveraged for this reporting overview.
It seems like an eternal question for many restaurant companies; should I dump the POS we use today in favor of a 'better' one? In our business, the POS is a fundamental system. Without a POS it is vitually impossible to run a multi-unit company. From out vantange point, it is also one of the most disliked systems. The churn in POS is not well documented but I think it is easy to say over 50% of companies choose a different vendor when their current POS reaches end of life. Shooting the POS vendor seems to be a popular sport among restaurant companies.
Topics: Restaurant Operations
Successful restaurateurs need to have extensive KPIs and they must be able to quantify everything. Data scrutiny and analysis is an ongoing process. Restaurant CEO's need to have their restaurant information distributed and analyzed by different personnel that will empower their businesses to increase revenue and improve customer service. However, operators can be misled by information received solely from their POS systems (sales, reservations) or BOH systems (inventory, food costing, labor scheduling). They need to be able to get a look at the bigger picture.
Labor is on the minds of many restaurant executive's these days and for good reason. The news of the Department of Labor's new overtime rules along with minimum wage increases has operators scrambling to keep labor costs down. Technology can play a big role in helping track labor and prevent overtime.
With all the bad news in the restaurant industry lately about negative same store sales and traffic declines it may be hard as a restaurant operations executive to motivate your team and stay motivated yourself. Throughout history the one thing that has helped people persevere through tough times: Hope. One way operations executives can find hope in these hard times is knowing when profits are highest throughout the year and taking advantage of that knowledge.
Restaurant scorecards have long been used to monitor the success or struggles franchise locations may be going through at any given point in time. Similar to a grade school report card, operators can get a glimpse of unit sales, costs, execution, media spending, revenue bands, area demographics, and more.
Now days, there are systems that can take operating data and use that information to compare unit to unit or geographical area to area. It can be a quick and effective way to reward and offer assistance to franchisees.
So why is it important to scorecard each location to it's granular level? Below are 3 examples!
Are your promos being used to commit fraud?
The majority of restaurants have utilized some type of promotion in order to build revenue, introduce a new product, drive traffic or reward loyal customers. In short, your restaurant business is providing a coupon offer in return for more / specific customer interaction. This give and take process generally works well. However, while it may be increasing traffic and driving sales, your business may be losing hundreds, heck even thousands of dollars due to fraud and you may not even know it.
The Data Is In
The word on restaurant sales has been out in the public for a while now. Same store sales are down for many segments. And for some of the most recent months, the industry overall is down.
Two factors lead to negative same store sales: declining customer traffic, or customers spending less on each visit. It has been well documented that restaurants have been increasing their prices over the past few years. The National Restaurant Association measured price inflation at 2.7% in July 2016, while the average cost of ingredients fell -3.5%. The increased margin dollars have helped some restaurants cover the increases in labor.