Managing your KPIs in the hospitality industry

Did you set your business key performance indicators and then leave them to wither for months on end? It’s not enough to simply identify KPIs and come back to them in 12 weeks only to find that you haven’t made progress in certain areas of your business. Managing KPIs is of vital importance not just in the hospitality industry, but across all sectors.

So what are KPIs?

KPIs, or key performance indicators, are a set of measurables which allow you to gauge your company’s success over a period of time. They can be used at a strategic level to measure a company’s overall success as well as at staff level to encourage individual performance. All KPIs should be applicable to your business, properly defined, communicated clearly across the business and monitored regularly. Looking at the hospitality industry, specific KPIs could include:

·????? Cost of goods

·????? Profit margins on individual menu items

·????? Turnover per table/seat

·????? Labour cost per table/seat

Always bear in mind that a KPI should be related to a business objective – measuring for the sake of it is a waste of everyone’s time. It’s recommended to have between three and five KPIs per business objective in order to keep your efforts focused.

Why should I manage my KPIs?

Proper management of your KPIs allows you to increase your profits without spending additional money.?You already have the resources in place, so focus on changes you can make within your existing business model to improve performance. The exception to this is turnover – if you are looking to increase footfall in your restaurant, then you may want to up your marketing spend, or at the very least, refocus it on higher-performing areas.?

How should I manage my KPIs?

First, you need to establish exactly how you will capture the data you need, who will collect it, and how often. You’ll also need to verify your data to ensure it is accurate and meets the needs of your KPI. Proper KPI management also involves regular testing and measuring. What’s doing well, and what isn’t? If you have more than one location and some are performing better than others, share that learning between venues. You need to evaluate your KPIs and act in areas that aren’t hitting the benchmarks you’ve set for them.

How often should I review my KPIs?

A weekly review of KPIs is recommended. They should not be viewed as long-term goals; rather, they are stepping stones along a journey to help you achieve a larger business objective. By leaving a month between reviews, you allow damage to be done, whereas a weekly review means you can make changes before the month ends.

Communication is key

In order to get everyone in your business on board with KPIs, you need to communicate clearly why they have been set and what business objective they are helping to achieve. KPIs should be set by managers who can then, in turn establish smaller KPIs within their team, thereby making everyone feel involved in hitting targets. Data needs to be fed down through teams effectively so everyone is armed with the stats – after all, how can you expect a team to improve if they don’t have the right information?

Focus on the good, not just the bad

Don’t just focus on bad performance – rather, incentivise your staff so their individual performance improves, thereby helping the company in a bigger sense. For example, if you are a food and beverage establishment, run a competition to find the best upseller on a monthly basis, and the winner receives ￡xx. A small incentive could equate to more revenue if your staff are motivated to upsell, making it worth the spend.

Transactional vs transformational leadership

When managing KPIs, it is important to consider and reflect on your leadership style. Transformational leadership , whereby a manager motivates and inspires their workers, is a great way to make your team feel empowered and committed to achieving the organisation’s objectives. On the other hand, transactional leadership is much more structured and can be viewed as top-down management (often demotivating in my opinion, but necessary in certain situations).?Transformational leadership is my preferred style, and I have seen KPIs improve when this leadership is in place as employees feel engaged in the process.

Need help managing your KPIs?

At Laura Anne Hospitality Consultant Ltd I offer KPI training sessions and a full review of your KPIs and management systems.?

Get in touch to find out more, and subscribe to my mailing list for my latest blogs, tips and updates.