This is the first part in a five-part series about understanding the ROI of ops excellence.
Operational (ops) excellence is what separates great restaurant brands from average ones. It's what helps them grow and succeed.
How do you achieve ops excellence? It's pretty simple. It's driven directly by the degree to which your team is able to:
Accomplishing these two all-important operational imperatives might seem straightforward enough–increase the volume of sales, decrease overhead expenses, and delight customers.
But between operating on slim profit margins (~10%), dealing with unpredictable external cost factors, and grappling with higher-than-ever customer expectations, achieving ops excellence across stores has always been difficult and is even more challenging now given the speed of change in this increasingly complex industry.
To help restaurant leaders in their pursuit of ops excellence, we first introduced a framework with strategies and best practices and then also demonstrated what ops excellence in action looks like with real examples from top operators.
Now, as your organization begins to plan for 2024, we'll explain the value of ops excellence, show you where to measure specific outcomes, and how you'll drive significant value back into the business.
Making the case for ops excellence
Why Now? If you haven't already done so, you're probably about to participate in 2024 strategy and budgeting discussions with your leadership team.
It's time to make decisions about where investments will be made to help the organization grow and succeed next year, and beyond.
As you compete for limited resources, money, and time, you've got to ensure that the main drivers of ops excellence get priority in the coming year.
We're here to help you build your business case and arm you with clear information and insight to drive those discussions.
How do you make the case to get approval for investment in initiatives that enable ops excellence? You've got to demonstrate the value that you can drive by setting yourself up for ops excellence.
Operators like you are focusing on their two biggest growth levers by placing their bets on initiatives that deliver better profitability and customer experiences in every location, specifically in these four areas:
Controlling food costs and optimizing inventory processes
Staffing stores to ensure optimal coverage and compliance
Completing work correctly and on time, efficiently
Getting employees shift-ready faster and developing skills
Now that we've identified the four areas your organization should be thinking about and investing in, let's justify the investment.
Measuring the return of investing in ops excellence
Let's look at the ways that the value of ops excellence can be proven and where outcomes can be measured in each focus area.
The ROI of controlling food costs and optimizing inventory processes
Start tracking these key areas to see how better inventory management impacts profitability:
|
Focus Area |
Metrics to Track |
|
Food Costs |
Actual vs. Theoretical variance (AvT) Food cost percentage |
|
Inventory Counts |
Real-time stock levels, including depleted items from sales throughout the day Amount of employee time spent on inventory by store employees and above-store teams each month |
|
Smart Ordering |
Waste Sales forecast Amount of employee time spent on ordering and purchasing |
|
Identifying Waste |
Waste from:
|
|
Reconciling Invoices |
The cost of goods ordered vs. the amount invoiced Employee time spent on invoicing and reconciliation |
The ROI of staffing stores to ensure optimal coverage and compliance
Start tracking these key areas to see how better scheduling and labor management impact profitability, improve employee engagement and retention, and grow the business:
|
Focus Area |
Metrics to Track |
|
Schedule Creation |
Time spent:
|
|
Optimal Staffing |
Guest satisfaction scores Amount of:
|
|
Empowering Employees Requesting time off, picking up or swapping shifts |
Employee satisfaction around scheduling flexibility Effort and time spent communicating over schedule changes and requests |
|
Ensuring Compliance |
Unintended overtime occurrences Frequency/cost of payroll violations |
The ROI of completing work correctly and on time, efficiently
Start tracking these key areas to see how improving operations execution can positively impact customer experiences and your bottom line:
|
Focus Area |
Metrics to Track |
|
Productivity |
Time spent on manual processes Time and cost of paperwork Time to perform audits and to follow up and complete corrective actions Recurrence of corrective actions |
|
Quality of Execution |
Audit scores and brand standards Health inspection scores Foodborne illness outbreak costs Online reputation scores Customer satisfaction survey scores |
|
Visibility |
Frequency and cost of repeat maintenance issues How often equipment temperatures in every location go out of range Regional/store-level performance of critical procedures and initiatives |
The ROI of getting employees shift-ready faster and developing skills
Start tracking these key areas to see how better training and development impact customer and employee experiences while reducing churn and costs:
|
Focus Area |
Metrics to Track |
|
Staff Competence and Readiness |
Time needed for employees to be shift-ready, and to be cross-trained Retention rate and cost of churn Time to grade exams and quizzes Guest satisfaction scores Training assignment completion rate |
|
Cost, Compliance, and Liability |
Cost of travel and paper-based training and testing programs Time spent tracking compliance training Cost of OSHA fines Lawsuit costs per incident Worker's comp insurance rates |
Understanding the value of ops excellence
As we continue this five-part series, we'll go deeper into each of the four focus areas.
We'll help you understand and confidently demonstrate why operations initiatives are worthwhile investments that pay for themselves in the value of the benefits for your business – reduced costs, improved efficiency/reduced errors, increased profit margins, and higher customer satisfaction – and ultimately secure investment to help your business scale to the next level of success.
Since you'll likely be measured on your ability to succeed in these projects–potentially leading to promotion and career opportunities–you'll also see how advances in technology have allowed much quicker ROI (months, not years).
Stay tuned for the next part.
Can't wait for part 2? Check out The Restaurant Operator's Guide to Ops Excellence now.
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