Business metrics for success
Tracking your KPIs is important to get a sense of where your business is, where it was a year ago, and where you want to be in a year’s time. Having real numbers in the form of business metrics gets away from measuring the business by your gut feel. Although a well-developed gut feel is important for franchisees, having concrete business metrics will help you make decisions. One of my customers calls it “‘Actionable information’ or information that inspires you to take action.”
Labor cost percentage
Tracking your labour cost percentage is vital in quick service and retail. Knowing how many staff you need to serve customer demand, and how much each one costs is a good start, but what about your managers? When you’re not in the store, how do they know when to send someone home?
Ideally, you need a system that gives you an up-to-the-minute labour cost percentage analysis and other business metrics, as well as notifications when you should send someone home. The workforce management systems out there are working towards this kind of real-time analysis business metrics, and I can’t wait to see how it helps retailers and restauranteurs!
The most helpful piece of information you can have is your hourly footfall data. installing a footfall counting device is simple and fairly inexpensive, since if gives you such a rich data set about how many people are walking through your doors every hour of every day. You can use this data to predict customer demand, and to match staff levels to that demand. It’s vital for scheduling!
One of the most helpful kpis’s alongside footfall is conversion rate. This is simply your footfall traffic divided by your transactions. It’s helpful if you can have this figure for every hour of the day. It tells you how many staff your customers can handle – ie if footfall spikes and conversion rate drops, this means some customers are walking out without being served – a lost opportunity.
I never know whether to write labor or labour! Labor efficiency is the metric you can use to compare your stores. It’s a measure of your revenue divided by your actual hours worked by staff. It gives you information on how effective your staff are at generating revenue – and is helpful because you can compare a $300k turnover store with a $700k turnover store. Comparison business metrics are useful.
They are the top 4 KPIs and business metrics that I recommend every franchisee start to track. I know there are others. What are the most important ones from your perspective? Feel free to disagree with me Franchisee Nation!