When choosing an analytics system, the first step is to choose the level of ambition. Almost anything can be analysed, but depending on your business, your needs will be different. Here are some parameters and KPIs that it may be useful to analyse for businesses in the hospitality industry.

Wage costs

Most companies still see their booked payroll costs first in the profit and loss statement, which at best comes at the end of the month. It is then difficult to analyse whether the staffing levels were right against how much was sold. It is also difficult to optimise daily staffing based on monthly figures. If you want to get a handle on your staffing, you should instead do the analysis on a per-employee basis and on a daily or hourly basis. And then you also need to attribute a cost to each employee for the time worked - which means you need a system that can calculate an hourly cost even for someone on a monthly salary.

Looking only at wage costs does not provide much either - it is of utmost importance that they are put in relation to the revenues that these wage costs generate. It is therefore important to be able to see on a daily basis how much you are turning over in relation to your payroll costs.

The next step is to break down the analysis by department or cost centre, as some analysis tools can do. After all, a restaurant with an inefficient kitchen has problems even if the service is properly staffed. It is therefore of utmost importance to evaluate your kitchen, service and any other departments to ensure that each is as efficient as possible.

With these analyses done, you can schedule according to economic parameters. Then you also need a scheduling system that can take your analysis and tie in targets and sales forecasts. 

Cost of raw materials

Once you've got a good handle on your staffing and payroll costs, it's usually time to review raw material costs or pricing. This is a fairly unexplored area in the restaurant industry, but it's gaining momentum. Should the price of a dish be determined by what the neighbouring restaurant charges or should it be determined mathematically based on labour costs, raw material costs, fixed costs and profit? It is all too common for the price to be determined by the neighbouring restaurant, without taking into account the margins it actually generates.  

We can't overstate the importance of knowing your margins on every product. Keeping track of your raw material costs also allows you to quickly see how much "loss" you are incurring through wastage, overstocking, theft et cetera. So choose a system that can analyse purchases, margins and contribution margins - and can present what you should sell more of to increase profitability. 

Sales

This is an area that is strongly associated with the desire for more guests and increased sales. These are excellent objectives but hardly the only route to increased revenue - changing pricing, selling the 'right' products and changing the product mix can also increase turnover and profitability.

Finding out WHAT you want to sell and then HOW to achieve it are fundamental positions in most industries. The restaurant industry has long lagged behind in this regard, but is now beginning to embrace these principles. A well thought-out analytical tool is an important part of this development.