5 KPI’s succesfull chains use
First of all, what are KPI's
KPI’s (Key Performance Indicators) are metrics that organizations use when they monitor the performance of a company, a team or an individual. Basically, when you have a specific goal, you monitor certain results, to make sure you’ll reach that final goal. KPI’s help you understand how far you are from being succesfull in what you are trying to do.
Each department has it’s own metrics. Customer fulfillment will focus on customer satisfaction and retention, where the finance department finds monitoring turnover and margins more important.
Should I use KPI's?
Nobody is forcing you to use KPI’s. We live in a free world and if you feel like working hard, without knowing whether your actions will result in what you hoped for, than that’s just fine!
However, if you’re serious in your mission and your goals are ambitious, KPI’s will help you get there!
Succesfull chains in the hospitality and retail industry use KPI’s all the time. Without them, they could never be the best in their niche.
Pitfall's when working with KPI's
Using KPI’s the right way, helps the team communicating and collaboration more efficiently. Using using KPI’s the wrong way however, will only distract you from reaching your goal and will cost you a lot of time, money and energy.
We wrote an article on the biggest pitfalls, when working with KPI’s.
5 KPI's succesfull chains use
Succesfull chains use the NDUX 360 platform to analyse and monitor their KPI’s. When developing the 360 data platform, we asked multi-unit groups (from 5 up to +2000 locations) what they needed on a daily basis, to make their business thrive. Here are the 5 KPI’s that were always mentioned:
1. Productivity
Productivity (€/h)
The productivity metric is the turnover per worked hour (€/h). This value, calculated by dividing your total turnover, by the total number of worked hours, helps you understand how productive your team was, when selling your products and services.
With a total turnover of € 20.000 and 160 hours of work registered by the team, your productivity = 125 €/h (20.000/160)
Depending on your business and organisation, your productivity should be between 75€/h and 275€/h.
Productivity (tickets/h)
Productivity can also be measured as the number of tickets processed, per worked hours (tickets/h). A lot of companies use this KPI to evaluate whether there are enough resources to handle all the sales your customer do.
Remember:
Sales per hour help you track and improve your sales performances.
Tickets per hour help you improve your staffing.
2. Labour cost %
Labour cost percentage in multi-unit businesses shows how much of your revenue goes to employee wages. For example, if your business makes €10.000 a week and pays €3.000 in wages, your labour cost percentage is 30%. It’s a key metric to manage for maximizing profitability. Keep it balanced!
Labour costs take a huge chunk of your margins. In general, the percentage lies between 30% and 40%. Multi-unit businesses that track their labour on a daily basis, improve their cost % easily with 3%-4%
3. Speed of Service
Would you return to a restaurant or bar, if you have to wait too long for your drink or meal?
The Speed of service in QSR’s (Quick Service Restaurants) measures how quickly customers are served. For example, in a drive-thru, it tracks the time from order to delivery. At kiosks, it’s the time from order placement to pickup. Quick service keeps customers happy and boosts efficiency. Some concepts really rely on their speed (especially QSR’s).
4. Online customer satisfaction
Online customer satisfaction indicate how happy customers are with your service. It’s important to track ratings on platforms like Google, Facebook or Zenchef, but also read the reviews. Having too many bad reviews result in customers cancelling reservations or choosing immediately for another place. Looking at rating trends is vital for attracting new customers and keeping current ones!
5. Foodcost %
Food cost percentage in hospitality shows how much of your revenue goes to buying ingredients. For example, if you spend €2.000 on food and make €10.000 in sales, your food cost percentage is 20%. Track what’s ordered and delivered versus what’s sold to control costs and maximize profit.
Without tracking your foodcost on a weekly basis, chances are likely you’ll loose an additional 7% extra on (not needed) foodcosts. For 1 location with a yearly revenue of 1 million, that’s a profit lost of €70.000!
Imagine having 5 or 100 locations… what would you do with the money?
Which KPIs will you use?
We see customers thrive when they monitor KPIs on a daily basis. And by doing so, mistakes and errors never get the chance to escalate. What are the 2 most important KPIs your business need right now?
