Productivity is a measure of how efficiently your staff are serving your customers. In real terms it is how fast your staff are running between customers. There is some confusion about what productivity means for fast casual restaurants. Productivity as a key performance indicator (KPI) can apply to two different metrics. Here’s two definitions that I have come across in my work with 2000+ fast casual operators over the last 7 years:
- sales divided by labor hours
- units of output divided by labor hours.
The first, sales divided by labor hours, is also known as the ‘sales per labor hour’ (SPLH) KPI. I have another whole article about sales per labor hour (coming soon!).
In this article I will focus on the units of output per labor hour as productivity.
What is a unit of output?
There is a measure in every fast casual restaurant that indicates the number of customers making orders. For example:
- in a burger restaurant, it is a burger
- at SUBWAY®, it’s a sandwich
- at a full-service restaurant, it’s a ‘cover’.
SUBWAY® set their productivity target at 10. That a benchmark that says a shop should produce 10 sandwiches per staff labor hour on the floor. If we have a busy hour where we have 5 staff on the line, output for that hour should be 50 units.
What does it mean if output is above the productivity benchmark of 10 units per labor hour? Staff may not be giving each customer the attention they deserve – or they may not be asking for upsell.
In fact, once you know your baseline for productivity and your baseline for SPLH, you can know if your staff taking upsell opportunities. Higher SPLH with the same productivity means an higher average transaction value!
If output is below the productivity benchmark, staff are not putting through enough customers and thus wait times will be longer.
How do I work out my productivity?
It’s important to know what your productivity is on a day-to-day basis. To track it simply pull a report from your POS that shows you your ‘units’ for each day of last week. Then use your workforce management software (my favorite) to pull a report of total hours worked – actual hours worked – for last week.
Divide units by total hours worked and voila! There is your productivity for last week. Here’s a spreadsheet with the formulas already set up for you.
Tracking your productivity
Track it week-to-week for a few weeks using this spreadsheet and you’ll soon see what affects your productivity KPI!
Man, I could geek out on the stats for fast casual restaurants for hours! A conversation this week with The Franchise King®, Joel Libava, inspired me to write this post!
I’m curious, let’s start a discussion. How does productivity affect your profitability? Does a high productivity mean higher profitability for your fast casual restaurant?