KPI-Driven Business: How to Implement Key Performance Indicators for Increased Efficiency and Impact
Setting key performance indicators (KPIs) on revenue, cost of goods sold (CoGs), and sales per manhour can help food and beverage (F&B) businesses operate more efficiently. To implement this effectively, you will need to first aggregate data from sales, CoGs, and labor data. This data can be used to track the performance of your business over time and identify areas that need improvement.
Once you have this data, it's important to democratize the KPI metrics and their details to all employees who are responsible for achieving the KPIs. This way, everyone in the company can understand the goals and objectives of the business, and they can work together to achieve them.
By implementing this, the company can start to scale effectively. By tracking the performance of the business over time and identifying areas that need improvement, the company can make data-driven decisions about how to grow and improve. Additionally, by democratizing the KPI metrics and their details, the company can create a culture of accountability, which can help to drive results.
How to set up KPI tracking for your organisation?
Here are the steps for setting up KPIs on revenue, CoGs, and sales per manhour:
- Identify the key metrics: Determine which metrics are most important for your business, such as revenue, CoGs, and sales per manhour.
- Gather data: Collect data on the identified metrics from your sales, CoGs, and labor data.
- Set targets: Establish targets for each metric, such as a specific revenue goal or a target for sales per manhour.
- Create a tracking system: Use a system to track the performance of your business over time and compare it to the targets you set.
- Communicate and share the data and KPI: Share the data and KPI with all employees who are responsible for achieving the KPIs and educate them on how to understand the data, so they can see the progress and understand the goals and objectives of the business.
- Monitor and adjust: Monitor the performance of your business regularly and adjust the targets and strategies as needed based on the data collected.
Determining the right KPIs for your team to hit can be a challenging task, but it's essential to ensure that your team is focused on the right goals and objectives. Here are some steps that can help you determine the right KPIs for your team:
Identify your business goals- Start by identifying the overall goals and objectives of your business, such as increasing revenue, reducing costs, or improving customer satisfaction.
- Understand your team's role: Understand the role of your team and how it contributes to the overall goals of the business. For example, if your goal is to increase revenue, your team's role might be to increase sales or to improve customer retention.
- Identify key performance drivers: Identify the key drivers that will help you achieve your business goals. For example, if your goal is to increase revenue, key drivers might include sales volume, customer retention, or product pricing.
- Define your KPIs: Define specific, measurable, and actionable KPIs that will help you track the performance of your team against the key drivers. For example, if your goal is to increase revenue, your KPI might be to increase sales by 10% over the next quarter.
- Derive the measure number to hit: In order to derive the measure number to hit, you can use a variety of methods such as historical data, industry benchmarks, or expert opinions. Additionally, you can use tools such as trend analysis or forecasting to determine the expected performance and set realistic goals.
Here are some clear actions that can be taken by outlet managers for the following KPIs:
- Identify the key drivers of revenue, such as sales volume, customer retention, and product pricing.
- Develop and implement strategies to increase sales, such as promoting new products, offering discounts, or creating a loyalty program.
- Monitor and adjust pricing strategies to optimize revenue.
- Analyze customer data to identify patterns and trends, and use this information to target marketing efforts.
CoGs (Cost of Goods Sold):
- Identify the key drivers of CoGs, such as inventory management, purchasing, and waste reduction.
- Implement cost-saving measures, such as reducing portion sizes, using lower-cost ingredients, or negotiating better deals with suppliers.
- Monitor inventory levels and reorder supplies as needed to avoid stockouts and minimize waste.
- Review and adjust menu items that have higher CoGs and consider replacing them with items that have lower CoGs.
Sales per manhour:
- Identify the key drivers of sales per manhour, such as labor productivity, employee efficiency, and customer service.
- Develop and implement strategies to improve labor productivity, such as cross-training employees, creating standard operating procedures, or adjusting work schedules.
- Monitor and adjust staffing levels to ensure that there are enough employees to meet customer demand.
Benefits of using KPIs in F&B:
There have been several studies and real-life examples that show the effectiveness of implementing KPIs in the food and beverage (F&B) industry. Here are a few statistics and examples that demonstrate the benefits of using KPIs in F&B:
- A study by the National Restaurant Association found that restaurants that use data and analytics to drive decision making are more likely to experience sales growth and improved profitability compared to those that don't.
- A survey by the National Restaurant Association found that restaurants that use data and analytics to drive decision making have a median sales growth of 6% compared to a median decline of 1% for those that don't.
- A study by Deloitte found that food and beverage companies that use data and analytics to drive decision making are more likely to experience increased revenue, improved customer loyalty, and reduced costs.
- An example of a restaurant chain that has successfully implemented KPIs is Starbucks. The company uses a variety of KPIs to track the performance of its stores, such as customer satisfaction, sales per square foot, and employee turnover. By monitoring these KPIs, Starbucks is able to make data-driven decisions and improve the performance of its stores.
- Another example is McDonald's, they use a variety of KPIs such as sales per customer, ticket times, and employee turnover. By tracking these KPIs, McDonald's is able to make data-driven decisions and improve the performance of its stores.
These are just a few examples, but it's clear that using KPIs can have a significant impact on the performance of F&B businesses. By using data and analytics to drive decision making, F&B businesses can experience increased revenue, improved customer loyalty, and reduced costs.