By Michael P. LaMarca
One of the most important lessons I have learned over time has been that if you are not tracking it, you cannot improve it. This does not just mean that you need to pay attention to your pizza restaurant’s numbers—you need to pay attention to the most crucial numbers!
I was sitting in a meeting many years ago with several very experienced and successful restaurant owners, and they were discussing the information they were deriving from their KPIs. I sat there listening and nodding my head, all the while trying to figure out what they were talking about.
Eventually I started to put together that these KPIs, whatever they were, must be pretty important to the operation of their individual companies. I continued sitting there, quietly lost, and trying to piece together all the information being discussed. Finally, under the table I surreptitiously Googled the letters “KPI” on my phone, and the words “Key Performance Indicators” popped up. At last, it all came together!
Key performance indicators are quantifiable measurements used to evaluate how effectively a business or individual achieves strategic and operational goals. In simpler terms, KPIs are measurable guardrails that show how your current performance—or the team’s performance—compares to their past performances.
KPIs are typically used to evaluate a person’s or the business’s financial, operational, customer-related and team/staff/employee performances.
Businesses can use KPIs to measure and evaluate revenue growth, profit margins and/or net profit. Some of them can be used by the company’s leadership to make sure the company is operating at a healthy level. These KPIs can also be translated to the rest of the company to give the entire team directions regarding what to focus on in the future.
Some other important categories that KPIs can measure include customer retention, customer satisfaction and customer acquisition costs. These KPIs can focus on the financial aspect of acquiring and retaining customers, but for me the most important aspect is the company’s customer satisfaction rating. Now more than ever, customers have the ability to let you and everyone else know what they think about your product and service, for better or worse. This can be a very unifying goal for the entire team to work on together.
Operational KPIs are great for measuring efficiency and productivity, which tie directly into customer service and can massively improve a restaurant’s profitability. Your operations are the lifeblood of your business. Solid operations will cascade into great customer satisfaction and help increase overall profitability.
None of this matters, however, unless you can make it practical to your pizza business. Some of the KPIs aren’t particularly relevant if you own a small business. In that case, you are often just looking to survive and build your business. So I would recommend starting off with some simple things to track—KPIs that you and your team can work towards improving on and/or building.
These would include
* Sales
* Labor percentage
* COGS (cost of goods sold)
* Customer count
* Prime
Focusing on these five KPIs a a great way to get your team all rowing in the same direction. Each one will have a direct impact on your profitability, so what could be more important to get you started?
The other side of this equation—and it’s just as important as tracking your KPIs—is communicating the results to your team. Numbers are just numbers on a page unless you and everyone else knows how to use them. You must commit to holding regular meetings at which you go over the numbers and hold everyone accountable. I recommend getting your team together weekly or biweekly to look over your KPI results and make sure your team stays on track.
On the other hand, over-analysis can lead to paralysis. So start with a few KPIs and add new ones slowly over time. Always choose new KPIs that reflect pressing issues in your restaurant’s business. Over time you will see your business tighten up and become more streamlined and profitable. You cannot improve what you don’t know!
Michael LaMarca is owner/CEO of Master Pizza Franchise Group in Cleveland. To engage with him directly, follow him at @michaelplamarca on Instagram and Facebook.
