Post Shift Shot #116 - 5 Things Every Owner or Manager Should Know Daily

In this crazy world that we live in right now, we should be focusing on every cent that comes into our venues and maximizing how much of that that we keep. Here are my five things that every owner or manager should know daily.

#1 – Top Line Revenue

How much money did you make yesterday? the day before?

Is your projected or budgeted revenue comparable to your breakeven point? Your breakeven point, which I spoke about a few months ago is the number where all these numbers are pulled from. If you must make $X to break even every month, then how does that break down to every week and day. Comparing your budgeted or projected sales to your actual sets the tone for your business’s overall wellness.

#2 – Cover Count and per Head Spend

Basically, how many people came into your venue last night and how much did they spend each. Covers and per head spend is also budgeted from your breakeven point. How many people must come through the door and spend how much to get you to that point? Both these figures are used to budget for the following years, giving you an insight to consumer behavior and where it would be heading including scheduling, input on ordering and menu development.

Per Head Spend = Sales / cover count

#3 – Revenue Breakdown

Accessing and knowing how your revenue breaks down into categories and subcategories, this influences your purchasing, your spending in training, marketing and more. Knowing and understanding your sales mix is imperative to continue growth, better purchasing and understanding over all costs of your business.

The primary categories are food and drink, but then you should break it down to appies, mains, desserts and so forth; the same can be done for drinks and more importantly because these can effect your bottom line even more so due to the variables between liquor and wine sale projected costs. Understanding your sales mix direct influences your purchasing behaviors, if you have limited beer sales, should you be heavily purchasing keg beer? Is there dead stock in your inventory that you can use in cocktails? This fundamental understanding can change your business dynamics.

#4 – Labour Costs

The industry standard for labour costs is 20-35%, but this changes with your business style and brand. A dive bar may have much lower labour than a fine dining restaurant but tracking your labour daily is important for both venues. Setting targets, tracking post shift and being dynamic with the following days is vitally important; a labour blowout one day can be mended over the following week. Owners should regularly question the schedule, understanding the skill level of their workers and know the peak times in their venue.

Labour should be broken down into three categories, front of house, back of house and management; each should have a daily expenditure budget percentage that can be adhered to. Back of house is typically higher than front of house due to hourly pay, salaried managers are usually a smaller percentage because their whole weekly wage gets spread over the 5-7 days.

To calculate labour, it is very simple

Labour $ = Staff Hours x Hourly Rate

Labour Cost % = (Sales / Labour $) x 100

#5 – Cost of Goods

Industry standard for cost of goods is 20-40% across everything you sell, obviously the bar makes much better profit margins than the kitchen does. This ties back to your revenue mix directly, selling higher costs items in the kitchen like steaks; while they have higher cost, they also have much higher contribution. This goes for the same in the bar with loss leader cocktails or wines, where the contribution far outweighs the cost variance.

Doing a COG% analysis every quarter will keep your venue on the edge, due to product cost changes especially in the kitchen, this along with your revenue mix is paramount to being dynamically profitable in an ever-changing market. This doesn’t need to be calculated daily, but monthly at the very least; if your costs are out at the end of the month, consider doing it weekly. Your cost of goods directly ties to your revenue mix and inventory, for every subcategory, you should have a budgeted COG% and inventory entry for.

COGS% = (Cost of item / sale price) x 100%

These are the five things that I believe that you should know as an owner or manager daily, controlling these things are the key to staying profitable during the pandemic.

Share a dram with the hospitality industry’s top global talents: bartenders, venue owners, distillers and industry aficionados. Shawn Soole has lived, breathed, and imbibed hospitality for decades. Now, he delves into the advice, opinions, and provocative stories that are helping to define the creative, culturally-necessary space of ‘modern hospitality’—covering topics from front-of-house service, to back-end business operations, and every inch between.