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If you own or operate restaurants, you already have a secret weapon that can unlock a treasure trove of information that will help increase revenue: your customers.
Every time someone orders a meal, they also provide a wealth of extremely useful sales data that can be analyzed and converted into more revenue. Your POS system is likely already primed to deliver important insights to help tweak your menu, staffing and marketing. But analyzing that data can be tricky.
Here’s where to start when you’re ready to take a deep dive into your sales data.
This may be the biggest mistake when it comes to analyzing sales data. It’s tempting to scrutinize your own numbers. After all, no one understands your business like you. And you may be reticent to permit an outsider to view your highly sensitive finances. Your intimate knowledge of your restaurant’s P&L will enable you to quickly parse sales information into actionable intelligence, right?
Not necessarily. Analyzing restaurant sales data is not a job for generalists. You go to a board-certified physician when you’re sick. And you only trust your car to skilled mechanics. Your business is your livelihood, so lean on restaurant experts who have a proven track record of analyzing restaurant sales data.
The cliché about not seeing the forest for the trees is true here. An outside party can provide an unbiased report, and can bring knowledge about the local economy and seasonal information that will help create measurable recommendations.
Also, when you rely on experts to help analyze your sales data, give them complete access to everything. Don’t hold back. Unless your agency has a complete picture of your business—including all sales and promotion outcomes—their recommendations will be based on incomplete information and, as a result, may be faulty.
Too much analysis can be paralyzing. That’s why you’d be smart to focus on your core menu items and a select few KPIs (key performance indicators). Is it critical to dissect sales data related to side orders of baked potatoes? Probably not. Work closely with your analyst to choose the most important menu items to watch.
The National Restaurant Association suggests that guest-check analytics can help uncover valuable information from “total sales, total covers, average check, food and beverage costs, labor costs by department, sales and covers by server, and the cost of voids and promotions.”
KPIs worth following include gross margin per product sold, gross profit, data and ratios related to cash flow, and costs of goods sold (COGS). Your agency and/or analysist will assist with creating views into this data by promotion and overall menu.
We live in a society that emphasizes instant gratification. We’re so impatient that, according to a survey by Fifth Third Bancorp, “96% of Americans knowingly consume extremely hot food or drink that burns their mouths, and 63% do so frequently.”
Patience is definitely a virtue when it comes to analyzing sales data. There’s little value in scrutinizing overnight sales receipts. A meaningful analysis utilizes data covering several weeks of sales. In most cases, a quarterly study should be sufficient, followed by an in-depth annual review.
Finally, be sure that any financial examination pays particular attention to traffic and sales generated from marketing activities, including advertising, coupons and special promotions.
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