As a hospitality industry accounting and payroll specialist, percentages are a key factor when we analyse client performance, at Brisan. It is great to have a high revenue turnover, but unless the percentages are acceptable, a high revenue is not necessarily the ideal situation. How often do you walk into a busy restaurant or hotel and think to yourself “this business must be doing well!”, yet if you delve into their financial position this may not necessarily be the case.
So, what is the ideal gross profit? What should wages be against turnover? Is rent too high? These are just a couple of questions we are often asked by café owners, publicans and restaurateurs.
Through our experience in the hospitality industry, we refer to our in depth knowledge and awareness of the industry standards. The Australian Taxation Office (ATO) has also made available ‘Performance Benchmarking’ on their website, which is a very useful tool for any type of small business to compare what they are achieving against their industry.
We recently reviewed a restaurant’s financial reports where turnover was exceptional but the bottom line painted a different story. The most obvious issue we noticed were wages – almost 40% of turnover. This was a clear red flag, and something we started to address immediately.
The restaurateur was adamant that this was the best they could achieve because attentiveness to customers was paramount. We of course agreed that customer service was priority number one; however, after discussing ideal percentages as well as referring to the ATO benchmarks, we calculated a scenario where if the wage percentage were reduced by 10% this would give the restaurant a saving of more than $200,000.00 per year (based on turnover).
We looked at rostering as well as various reports from the Point-of-Sale (POS) system and found that there were many unutilised hours worked by staff. Without the detriment to customer service, Brisan provided recommendations and set a task for the restaurant to achieve at least a 5% reduction in the wages within a one-month period. The restaurateur listened to our recommendations and was in fact able to achieve a reduction of 8%, which in effect was a saving of approximately $160,000.00 over a twelve-month period. The simple changes did not affect customer service, turnover remained consistent, and the restaurateur was happy to have “more money in the bank!”
Talk to us about our analysis services. Call us today on (08) 8235 1594 or visit our website to book an appointment www.brisan.com.au