Key Performance indicators help pubs and restaurants monitor key business objectives. The three key business objectives for any pub or restaurant are revenue, cost of goods sold and wages. Revenue is obviously a key in any business and cost of goods sold and wages are the 2 largest expenses for any pub or restaurant.
When looking at any KPI, you need to use the SMART criteria. The Smart criteria is that a KPI must be Specific, Measurable, Attainable, Relevant and Time-Bound. You can see that the three key business objectives I have mentioned above are already specific and relevant. You can make the measurable by putting them into ratios such as wages as a percentage of sales or gross profit percentage. Being attainable is all about setting a target, which I’ll discuss in another post. The main item that I will discuss in this post is the importance of being time-bound, what an appropriate time frame is and what processes need to be in place to achieve the time-bound objective.
Appropriate time frame
Generally, I have found that if a pub or restaurant cares about monitoring its Gross Profit, the look at it weekly. Monitoring KPI’s weekly means that appropriate action can be taken if the KPI is not reaching its target. For example, if revenue is down you may decide to put in more entertainment. If Gross Profit is low, you may investigate wastage or check whether prices promised by suppliers are correct. If wages are too high you may be able to change rostering the following week.
Systems needed
If you are going to make decisions based on the KPI’s, then they KPI’s need to be accurate. When I put KPI’s together, I want them to be based on real data, this means that invoices from suppliers need to be in the system, stocktakes need to be performed weekly and all sales closed off with bank reconciliations done. Most pubs and restaurants that I deal with also pay wages weekly, so a weekly timeframe to monitor KPI’s fits usually fits in with how the pub or restaurant already runs.
The simple answer to the question of how often a pub or restaurant should monitor KPI’s is weekly. This is often enough so that you can make changes if needed that will improve profit, however not so often so that it is a burden on the organisation.