transparency

4 Key Metrics For Successful Hospitality Businesses – Part 3

September, 2015

4 Key Metrics For Successful Hospitality Businesses Metric #3 – Estimates vs Actuals

You’ve got your plan in place.  You’ve checked the weather, looked at the odds of the local team smashing the visitors and even dropped into your local competitors and checked their latest offering.  In fact you’ve never been more convinced that an outstanding weekend of massive fiscal success lies ahead.

Yet come Monday the anticipation of triumph has waned.  The turnover figures bring you back to earth with a shuddering thump. What went wrong?  After all that planning effort why are we out of pocket by so much?

Estimating turnover is one of the most difficult things to master when running a Hospitality business.  In our last post we discussed some of the many things to consider when estimating your own numbers.  Experience has shown us that, even with the best possible laid plans, sometimes it just goes completely wrong.  Why?  Because many of the contributing factors are completely beyond your control.

The trick to mitigating these situations is simple; Good old fashion diligence.

As a hospitality operator you must measure and understand what caused the difference.  Knowing what went wrong and why will only serve you well for future planning.  Failure to measure and acknowledge why your plans went awry will only lay the groundwork for further future failures and financial difficulty.

Estimate. Execute. Measure. Repeat.

If you missed out on reading Metrics #1 and #2, pop on over to the business section of the blog now and take a read.

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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