Monthly Archives: August 2015

4 Key Metrics For Successful Hospitality Businesses – Part 2

August, 2015

Metric #2 – TurnoverMetric #2 - Turnover

Part two in our series on Key metrics for successful Hospitality business: click here if you missed Part 1: Wage Cost.

Turnover – “The total gross sales for a given period”

Experienced Hospitality operators understand that the day to day turnover figure is extremely difficult to predict.

We’ve spoken with thousands of hospitality organisations over the years and have noticed that whilst many operators simply accept the fluctuations and simply try to be reactive to them, the more successful ventures understand that there are huge benefits to developing a discipline and strategy around estimating potential turnover.

When such a strategy is implemented, practiced repeatedly and adjusted accordingly, these businesses are in a great position to make truly educated guesses surrounding their future financial performance. There’s no doubt that this is a somewhat difficult practice to master, however our experience has shown us that the rewards are truly worth it.

Here are some things to consider when your hospitality business is considering its future turnover:

  •  Past performance – what do we normally turnover this time of year?
  • Trends – are we trending consistently up or down against the same period last year?
  • Local Events – what is happening at the local stadium?  And will the local team likely win that rugby game?
  • Changes in competition – are there new operators in our area competing with us?
  • What is the weather forecast – how much do we normally drop in turnover on a wet day to a sunny day?
  • Promotions – Are we offering a two for one deal tonight?
  • General economic conditions – are people feeling confident about spending money
  • Holidays – is there a public holiday?  Is there one coming up that people may save money for?
  • Pricing – has our pricing changed?

live-costingAs you can well imagine, this list can become very extensive.  It’s vital to understand that each individual location will have its own list of influencing factors.

So why not get started building your list?  Once mastered, your hospitality business can only benefit from it!

Employee rostering plays a crucial role in the success of any hospitality business. If you’re interested in more information about how the right tools can help determine your turnover – jump on over to the technology section of the blog.

4 Key Metrics For Successful Hospitality Businesses – Part 1

August, 2015

Metric #1 - The Wage Cost Metric #1 – The Wage Cost

The scintillating radiance of one lone figure actually carries enough weight to make a judgement call on whether it’s been a successful week for a hospitality business.

The Wage Cost.

“A figure that denotes all of the wages a business pays to its employees, as well as the cost of all employee benefits and additional costs. ” (1) 

There’s a common and somewhat dated business saying “you can’t manage what you can’t measure”. Whilst undoubtedly accurate, I think it’s possible to develop this mantra into something a little more transparent. Something that really gets to the nitty gritty of great business acumen.

  • What is it that you are actually measuring?
  • And, are you measuring all the right things?

Metrics are a routine and are relative to any given business goal. For a hospitality business, the wage cost stands to be one of the most controllable costs of them all. It is a figure determined by what proportion your overall turnover and net profit will delegated to your employees.

It is not unnatural for this figure to vary significantly from business to business. From our years of experience dealing with major hospitality chains right through to the smaller outfits – a wage cost figure can commonly sit anywhere in between 20% and 40%. There is no right or wrong figure. Again, it’s relative to your overall business goals.

The wage cost is often not a simple figure to accurately calculate. Additional costs, such as superannuation, accrued leave entitlements etc, always have to be considered. But by paying attention to the detail, come the end of the financial year – your accounts team will be sitting happy. Secure in the knowledge that all employee benefits and taxes were accounted for right from the beginning.

The result? Increased validity, transparency and clarity about how you’re really tracking financially as a business.

Meticulous and effective employee scheduling plays a crucial role in the performance of any hospitality business. If you’re interested in more information about how the right tools can increase the financial transparency for your business – jump on over to our technology section of the blog.

1 Cost of Labour Definition. http://www.investopedia.com/terms/c/cost-of-labor.asp
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