Many restaurants use SPLH - Sales per Labor Hour - or something similar to measure productivity. SPLH measures how many sales dollars are generated for each hour an employee is clocked in. It's a quick and easy tool to help managers see how productive their staff is, but it varies by location, chain, daypart, and so on.
While I am a proponent of using SPLH as one of the measurement terms, perhaps a wider net must be cast. Other businesses commonly measure sales per employee - how much money is generated in sales per employee on an annual basis. In its simplest form, if a restaurant does $1 million dollars in sales and has 20 employees, the sales per employee is $50,000 per year. Sounds pretty impressive, doesn’t it?
Research has shown a restaurant will be in the $40,000-$60,000 range. Other industries, however, are far higher - often five to ten times higher! That means the industry is labor intensive, and it must continue to generate more sales and profits to remain competitive as an industry.
To that end, what are you doing to improve your sales per employee? Here are a few suggestions:
- Work on building the check average through a variety of means: price increases where warranted, bundling, eliminating low-cost items, building catering and togo/ off-premise sales, suggestive selling, training, and so on.
- Use technology to improve labor productivity and sales-building opportunities. Evaluate everything: POS software, kitchen productivity/analysis, self-service kiosks, online ordering, and so on.
- Eliminate menu items that are very labor intensive or low-sales items.
- Outsource some preparation or production steps to minimize the need for prep labor.
- Minimize the need for labor during non-peak times or build business during slower periods.
Keep in mind that, when employees are paid hourly, they would prefer lower sales per hour, because it's less work for them. Turn your employees into salespeople by developing an incentive-laden pay system where they want it to be busy. After all, if it's busy and they have an opportunity to earn more, that's a much better alternative than them wanting it to be slow and get paid the same amount.
Sales per employee. . . What’s yours today? Where should it be? Get productive now!
T. J. Schier is service professional, consultant and speaker with over 20 years experience in operations and training. Founder and president of Incentivize Solutions and podTraining, T. J. has helped numerous clients enhance their service and training programs and spoken to tens of thousands of managers, franchisees and operators in various fields. Visit http://IncentivizeSolutions.com/ for more info motivating today's employees, training today's generation and delivering outstanding guest service; or http://podTraining.us/ , a unique new system and the foundation of ‘i-learning’ - using the device of today's generation, the iPod - to train your workforce.