The holiday season is upon us. Cooler weather, festive celebrations and delicious seasonal menus have traditionally solidified November and December as lucrative months for the restaurant industry. With the pandemic limiting social gatherings for the past 18 months, many consumers are especially eager to get back to “normal” this holiday season.
But for restaurant operators, this year isn’t normal at all. Just as fear around COVID-19 had begun to lift and restaurants were expecting to see healthy traffic return, operators are now faced with a slew of new issues including labor challenges, historically high inflation on commodities and supply chain concerns.
This leaves many restaurant owners and operators asking, “How are we going to navigate this holiday season?”
Answers can be found in your data. While most operators have their clearly defined set of go-to reports that they review each period, there are a few, lesser-known reports that will raise flags, sound alarms and provide the critical insight needed to help guide your team and protect your restaurant’s financial health in the coming months. Consistent, disciplined review of these revealing reports will ensure your team is operating efficiently and effectively. Most importantly, you will be able to enjoy the season knowing that there won’t be any unexpected revelations when the monthly Profit and Loss (P&L) report finally arrives.
Below are five reports you’ll want to keep a close eye on this holiday season.
You already recognize the value you get from your P&L report. This monthly report has served as the cherished overview of a restaurant’s performance for as long as one can remember. You also know the downsides of a monthly review that comes too late to take direct action — so imagine the impact of reviewing a Daily P&L. This is one of the most important shifts enabling restaurant success in the industry today. Reviewing this report daily reveals how your prime costs are affecting your bottom line in real-time, allowing you to make the adjustments required to keep your restaurant’s performance on track. A daily review of this data is paramount to ensure you remain in tune with the profitability of your operation.
Menu Item Analysis
By showing the current selling price, cost and margin for each menu item plus the quantities sold, this report lets you clearly see where menu items rank in both popularity and profitability. Whether assessing current menu items or seasonal offerings, this report can serve as your guide. It highlights star performers and calls out areas of opportunity. Understanding the impact an ingredient has on your profitability as well as how its margin can be improved is no small matter when dealing with supply chain disruptions. If the landscape requires you to rapidly pivot, a Menu Item Analysis can prove an invaluable resource.
Contract Violations Report
This report is a critical asset in holding vendors accountable. It flags items that are outside of the contracted pricing for a specific date range, allows you to spend less time reconciling and keeps the ledger clean. If you don’t already have this report on your radar, check it out. It is a game changer.
Actual Versus Theoretical Analysis
Regulating food cost is a constant challenge, and the complexity is elevated with added supply chain interruptions. This report is a great tool used to expose areas of food waste. It shows the difference between what should have been spent on food (in theory) versus what was actually paid to assemble the menu items. The difference between the two represents portioning mistakes, server errors, wasteful prep, theft, etc. The AvT report shows which items have the largest variances, so you know where to look to find the root cause of the variance and can address the issue to increase profitability.
Sales Per Labor Hour (SPLH)
Your SPLH is one of the key indicators of labor productivity. This report provides insight into operating hours that are fully optimized and those that are not. A low SPLH may indicate employee scheduling issues like overstaffed shifts. A high SPLH may hint that your shifts are understaffed, which can result in poor customer service or negative employee morale. As operators look for opportunities to gain an advantage in the hiring and retaining of qualified talent, SPLH can shed critical light on the state of your labor schedule as well as on your restaurant’s culture.
Reports are a cornerstone of any successful restaurant operation. The most successful restaurants take a disciplined approach reviewing a variety of actionable reports throughout each day and then using the data to guide almost every aspect of their operation. With the right technology, you can too. Restaurant management solutions provide a wide variety of business intelligence reports that can help you to take charge of your bottom line. This holiday season is going to have its share of challenges, but there’s no need to wait until January to learn where you could have performed better.
John Moody is the cofounder of Restaurant365, an enterprise accounting, back-office, and reporting solution specific to the restaurant industry. He has more the 20 years’ experience in helping companies leverage technology to streamline operations, improve financial management, and use actionable reporting.