2024's Key Hospitality Benchmarks - How Do You Compare?

Today I’m sharing a set of performance benchmarks across hospitality venue types that represent what GREAT looks like. But before I do, a caveat: 

I’m not the biggest fan of benchmarks and averages. That’s due, in large part, to lessons I learned through two of our Velvet Burger outlets. Over the years these seemingly identical venues, just 500m apart and catering to very similar markets, produced wildly different metrics. Despite our best efforts to align them, the variations in kitchen layouts and customer purchasing patterns made that not only impossible but, when we reflected, just a waste of our time and energy. These two venues were inherently different. Their results were always going to be different. And that’s ok. 

As our headspace shifted away from obsessing over ‘benchmarks’, we turned our focus at each venue inward.  We evaluated each store’s unique position, identified strengths and weaknesses, and devised weekly plans aimed at lifting profitability. Rather than fretting over whether one store was ahead or behind the other’s metrics, we concentrated on actions likely to drive success for each individual location. Success that was unique to each.

Now, with all that said, I have also learned that benchmarks can be eye-opening for operators who are doing it tough. Understanding what’s possible once you get to peak performance can help direct energy to where you’ll get the most bang for your buck. For example, you might be sweating (and probably spending the bulk of your time) on trying to generate more revenue, when the gains you can probably get in this area are minimal compared to the labour or stock costs that are costing your business far more than they should be. That perspective is often enough to kickstart new thinking, and get energy going in more balanced and productive directions.

The key with benchmarks in hospitality is that you should mainly obsess over the combined total of your labour cost and cost of goods, rather than one or the other. When our burger shops were operating well, we had an 18% labour cost and a 35% cost of goods. That’s a really low labour cost (being a production style kitchen with an order-at-the-counter model), and a pretty high COGS (takeaway prices have a ceiling), landing us with a combined total of 53%. Compare that to a fine dining restaurant, where the highly attentive, highly trained labour costs might sit at 32%, but the COGS coming from the high-ticket menu are more like 24%. On the surface, compared, our burger shops had an awful COGS figure. But overall, that fine dining restaurant is trading at 56% labour + COGS. Overall, that’s 3% less gross profit than we were producing. Regardless of the type of hospitality business you’re running, it’s this combined number that you should always be totally aware of (and have a plan for improving).

So let’s get to the pointy end - if you’re finding that most of your venues are nowhere near achieving the individual metrics below, it’s likely that you’ve got some blockers in your current processes or team that need resolving. And hopefully, the perspective helps direct some of your profitability thinking to useful places (just…don’t forget my caveat).

The benchmarks below are what we’d define as great performance, and are based on NZ data:
‍

‍

So how do these numbers compare with where you're at? If you want to make your combined number better, our smart inventory management is designed and tested to deliver a 6-8% reduction in cost of goods. We've been doing this a long time - drop us a line and we'll show you how to make it happen!