Well this blog can give you some comfort by showing you how to count and analyse your sales & financial performance with some KPIs and Sales Stats.
Measuring your results and KPIs is a key to running a successful hospitality business.
“What you can’t measure you can’t manage” is a popular phrase with both accountants and consultants.
Just Start Measuring – What you don’t measure you can’t manage
Start by measuring and finding out what’s really going on.
So what can you measure easily?
A good point of sale system can measure and monitor your sales in detail and give you break down by time, type of products – meals, drinks, salesperson, covers/checks. You can use this information to increase sales, margins and profits with better staff rostering, menu design, stock control, advertising allocation, marketing programs, improving staff sales performance and even implementing a rewards and recognition program.
Add in a doorway Traffic Counter to find out how many people came in and you can calculate your sales conversion rates. You can find out if your patrons buying less than last year? Are sales down because of fewer people or are they buying less?
Finding out source of existing customer enquiries and where they live can focus your advertising spend. Even a simple “Business Card prize draw” can help you find out where your customers work and get more corporate clients.
Comparisons are useful – compare to last week, last month or last year.
Watch the overall trend – are we up, down or sideways?
KPIs are Key Performance Indicators – the numbers you can use to measure performance.
To get a handle on your Function & Event sales and marketing performance you can count these sales statistics to calculate conversion rates
A typical events website converts around 2% of function webpage traffic to an enquiry.
You can boost this number to 10-20% by using landing pages offering something useful like a great e-book.
Different Venues get different types of enquiries and each converts differently depending on source of enquiry – whether they have been before and already trust you.
Depending on venue location (City, suburban or regional), marketing funnel and type/source of enquiries, you may convert about 15% to 30% of your enquiries into a venue tour (or inspection)
About 20 to 50% of tours might convert into a booking.
Each venue is different so it’s hard to benchmark.
Conversion of 1 to 2 bookings out of 10 enquiries is reasonable.
But that means 8 or 9 out of 10 enquiries don’t book
Given that EACH event enquiry can cost a lot ($50-$250 each) in terms of marketing spend and time spent – making a good sales effort is critical.
A supply & demand pricing system (classify your year of dates s into A,B,C,D demand level) is suggested so high value dates (Peak season Saturdays) reflected new higher minimum spend pricing.
Basically put up prices on busy nights (Sat) and busy periods (Summer/Spring) and reduce quieter nights (Fri/Sun) by $10-20
Each Venue has a Range of Functions from Smallest to largest event sizes
The goal is to fill the most popular days of the year with events with a high minimum spend – High numbers of guests and high spend per guest.
Average Function Price Per Head
The Venue offers range of price per head from $X1 to $Y1
To help the kitchen and wait staff improve your profit you’ll need to know your
High Margin & Low Margin items – Measuring Total Food cost % or Gross Profit $ per item. Even a special project of weighing the rubbish or counting the bins can help reduce wastage.
Profit made on Food can be improved by the menu placement of low and high margin items, analysis of which items are selling. You can improve your food sales by focusing on
Counting the total number of customers on your database or email club can give you a measure of the effectiveness of your marketing efforts.
There are ways to make financials fun for the numerically-handicapped. Use visual feedback, charts & graphs around the office. Get your team involved in simple competitions based on sales results. Get your accountant to provide your numbers as a “Financial Dashboard” or organize a monthly meeting to verbally discuss the trends and suggested actions.
If your chef doesn’t like measuring numbers – at least calculate your Weekly Food Cost %. You can avoid the hassle of a weekly food stocktake by writing a list of all the delivery invoices for the week and totaling it up.
Measure your food sales and divide by the weekly food cost. Average the last four weekly results to get a “running average Food cost %” each week. This should trend down over time as your chef realises the cost of food, the effect of pricing on margins and the results of selling low margin food. Better yet use a program like “Cooking the Books” to manage the food numbers
You can improve your KPIs and results focus by putting up Visual Charts and Dashboards to show the KPIs and changes over time. Combine that with an incentive program to really see change.
Every Hospitality business needs a numbers person – beyond basic bookkeeping – a financial analyst.
Make sure you have Monthly Management Meetings with your accountant or advisor.
Setting any targets or goal is very useful. What you focus on expands.
As an old proverb goes “Man who aim at nothing hit it with amazing accuracy”
Remember- What you focus on expands and where your attention goes – money flows!
This article is a work in progress – If you have any suggestions or comments please contact us.
Big Hat Professional Services provides Hospitality Workshops, Webinars and Training on Sales, Service & Strategy using Certified Speakers and Trainers like David & Kevin.
Kevin Kosky is a skilled business communications trainer. He is a specialist on inbound phone skills, presentation skills and delivering sales presentations. Kevin is an expert teacher of face to face communication skills like sales, supervision and presentation skills.
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