Before you can make any changes to your business- staff levels, opening times, menu and supplier updates, you need to analyse your sales data. We need to know who, what, and when:
· Who is coming into the business- what do your customers look like? How young or old are they? Do they fit a particular demographic?
· What are they buying? How much are they spending?
· When are they coming in? Do they only come in when you have offers on? Do you have operating hours that don’t generate any revenue?
There are a couple of things that you need to establish when thinking about who you want your customer to be- your ideal customer. Work through the following questions and then compare this with who your customers actually are. How far away from your ideal customer is your current customer base, and what effect do you think that this difference is having on your business?
· Who is your ideal customer?
· What do they look like?
· What age range do they fall in?
· Do they go out as a couple, or on their own, or with a group of friends or colleagues?
How you see your ideal customer might be very far removed from the customers that you have now- maybe this has always been the case and you’ve never really given much thought to this. Or maybe your customer base has changed over the course of time. Either way, you need to evaluate exactly where you are right now so that you can begin to change and head toward getting your ideal customer through the door.
Most businesses try to cater to the whole of the market, but the problem with this is that most other businesses are competing for the same market as you. However, successful hospitality businesses create their own market, and create a demand for that market like Pizza Pilgrims or Tom Kerridge. Most people believe that it’s to do with their branding. It isn’t it’s to do with their message. Your message shares your values, your ethos, and your culture, whereas your brand is how you communicate your message.
This one is fairly straightforward- what are your customers buying, and what aren’t they buying? Do you have things on the menu purely because you like them, even though they don’t sell particularly well? Does your menu cover several pages/ a small booklet, or is it laid out over a double-sided A4 or A3 sheet?
Overcomplicating your menu leads to a less enjoyable customer experience as they have to spend longer navigating what’s there, whereas with a single sheet menu, it’s easier for the customer to find what they want quickly, and because of this, they’re more likely to order more. A larger menu often leads to excess stock holding and higher levels of waste.
It’s also wise to look at what they’re spending, as well as what they’re buying. Do you have different offers on at different times of the day or week? Are these offers leading to customers coming in at busier times where offers aren’t available? Or are you finding that you’re only busy when these offers are present?
As a hospitality business owner, it’s imperative that you constantly evaluate what you’re selling and how this is conveyed to your customers. Jamming your week full of offers isn’t going to draw in your ideal customer, unless your ideal customer is only interested in two for ones.
When do your customers come in? Are you an all-day venue, a morning venue or an evening and night-time venue? Compare your peak times with your operating hours. Are you open when you don’t need to be? It’s important to establish what type of venue you are, and when your ideal customer is most likely to visit.
Most business owners try to extend their opening hours as a means to draw in a different crowd of customers, but this often sends a confused message when an evening bistro starts to open at 10am for coffee mornings, or when a day time café puts on a poorly planned night-time event with a cover act.
We recently carried out an exercise with one of our clients. They were opening between 8am and 9am in a bid to drum up business before and after the school run. This meant having staff in the business from 7.30am to 7.45am. The problem was, that next to nothing went through the till in that first hour and so there were 4 members of staff being paid to just be in the building. This means that a larger team is then required to staff the business over the course of the week, which leads to higher labour costs. It then has a knock on effect as more money is needed to pay for the extra staff hours, and so our client pushed her closing time back an hour to 5pm, despite very little happening past 4 o’clock. Obviously, this then required more staff at a greater cost.
Most businesses don’t think about reducing hours as they see this as a step back and they worry that their peers will see this as defeat. But with this client, we asked them to push their opening time back to 9am and to bring their closing time forward to 4.30pm. We then evaluated the days where the business made the least amount of money and then compared that with the staff and stock costs for those days. As it turned out, it wasn’t worth opening on a Monday and Tuesday.
The reduction in operating hours and days open did lead to a loss in revenue, but not a loss in profit. Full time staff are generally contracted for 5 days, and so if you’re open for 7 days a week, then you need to juggle additional staff to cover those days. By bringing the operating hours down to 7.5 hours per day over a 5 day period, it meant that all full time staff worked every day and every hour that the business was open.
As with most hospitality businesses, full time staff are usually the most experienced. Having experienced staff working every shift led to faster opening procedures, quicker close down procedures, and an overall increase in customer satisfaction and staff morale, and a decrease in customer complaints. This system produced higher profits, whilst reducing operating hours by 40%.
Monitoring the Who, What, and When
The best way to get a better understanding of the 3 key drivers of your sales is to implement a till system that can provide a detailed breakdown of average head spend, number of covers, revenue per hour, and revenue and profit per product. There are plenty of systems out there that can cover all of these aspects. I have a few systems that I recommend, but I base those recommendations on that specific business. Whatever system you choose, make sure that it’s able to provide a detailed product breakdown and that it links in with your Accounting Software.