Sales reporting starts at a high level and drills down into detailed information. Any system reports how much you sold in a day and breaks down the sales into categories, such as food, beverages, and alcoholic beverages. Then, within those categories there are sub-categories. For example, the subcategories: Appetizers, salads, and entrees are included in the category of food. In the beverage category, the reporting would show how many iced teas, soft drinks, and waters were sold. And within the category of alcohol, the subcategories would show how much beer, liquor, and wine were sold. Finally, the subcategories can be further broken down into individual units.
What items are selling?
A good system will generate any sales reports owners and managers want to see such as overall sales, as well as sales of food, alcoholic beverages, and nonalcoholic beverages. The reports answer the question: “What products are selling?”
If you’re not reviewing detailed sales reports, you’re missing data on the items that are selling and the ones that aren’t. If you’re not analyzing your sales down to item details, you may be carrying items that aren’t selling well and stocking the ingredients for them. In other words, you’re missing opportunities to upgrade your menu by adding items that would sell and by removing items that aren’t selling.
Then, when you drill down to the profit per item, if you’re doing food costing, you can see which items are the most profitable. That’s the difference between a cash register POS and a POS solution; you’re implementing a business solution that enables you to determine your profitability on a per-item basis. You may have something on the menu that’s an old favorite—the one that helped you launch the restaurant—but over time people have grown tired of it, and they’re not buying it anymore. Nonetheless, it remains on your menu, because you don’t have access to the right sales data.
Are your servers selling?
The other aspect of a sales report is who is selling. In a restaurant, you may have twelve servers on the floor—each selling at different levels. One server approaches her customers by saying, “Hi! Can I take your order? Do you want any appetizers?” Alternatively, a different server approaches her customers by saying, “Hey, we have a great calamari dish people love. Would you like to try it?” The suggestive sales approach is more likely to entice customers to order the recommended dish.
If you analyze your sales by server, you can identify the server who produces the most revenue on any given shift. The sales report identifies the best salespeople over time. And then, based on their sales, you can cull the bottom ones. The top three servers are bringing in a high check average, and the bottom three servers are not. With the server sales report, you have the data you need to determine what the three bottom servers are doing wrong. The report indicates they have the same number of customers and tables, but they’re not selling appetizers, desserts, or alcohol—items that can increase the check average.
With data in hand, you can assess the qualities or actions that contribute to your servers’ success. Perhaps one server has a nice personality or offers enticing recommendations to customers. To improve sales among all servers, you may want to run contests in which you reward the servers for sales.
Monitor and analyze your sales.
When inexperienced owners open a restaurant, their notion is that their restaurant will offer delicious food and fabulous drinks at reasonable prices, and they’ll make good money. Some assume anybody can open a restaurant; it looks so simple. All you do is cook food and sell beer—right? Wrong. It’s actually much harder than it seems. The TV show Bar Rescue, with food and beverage industry consultant Jon Taffer, features some of these owners who are naive about running a restaurant and struggling mightily. Within two or three days, he turns the whole operation around.
Many small restauranteurs don’t know what tools are available to them to help them run a successful enterprise. Big chain restaurants, like Cheesecake Factory or Outback Steakhouse, already know how to effectively monitor and analyze sales. I could never tell a Cheesecake Factory or Outback Steakhouse manager something they don’t already know. It’s the small, independent restaurant owners who need this critical information. Some of them will figure it out on their own, but I want to shortcut that process. Instead of a reactive approach, such as, “Oh, we got screwed by our manager; we’re never going let that happen again,” I offer the prevention beforehand and give new restauranteurs pointers about the things they should be considering. Whether or not they choose to implement those considerations is up to them.
Protect your profits.
A typical restaurateur will spend more money on a tropical fish tank, a stereo system, or an LCD TV than installing the right POS system that will run his business and safeguard his profits. POS systems should be viewed like a normal operating expense. Take electricity, for example—something every restaurant requires. Let’s say a restaurant’s electricity bill is $500 a month in a restaurant with hoods and ovens. The electric company isn’t going to say to the restaurant, “You’re going to be in business for five years; that’s $6,000 each year, multiplied over five years. Give me $30,000.” The restaurant will pay monthly as it uses the electricity, which is the same thing as a POS system. A restaurant can get an operating lease and pay monthly.
Payment plans are available for any size restaurant and their unique budgetary requirements. Small restaurants don’t have to buy the system outright, but the payment plan will cost less than paying a manager to run the restaurant. Unlike employees, the system will never call in sick or steal from you.
This is an excerpt of Don’s book, “Restauranteur - Protect Your Profits: Discover Restaurant Scams and Technology Solutions” available for purchase on Amazon.
Donald Potter is President and CEO of Pinnacle Hospitality Systems. Don has more than 35 years of experience providing computer-based business solutions to the hospitality industry. Pinnacle has offices located throughout Florida, Alabama, Ohio and Pennsylvania.