Better indicators for your establishment
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The indicators are valuable measurement tools in management control. As thermometers of the activity of an establishment, they allow for real-time monitoring of performance and can signal the need for a strategic change. However, implementing an effective indicator system is not obvious and requires methodical approaches.
This approach is all the more important in the case of a multi-site group, where a precise overall vision is necessary. Indicators indeed allow these large groups to compare their establishments not by revenue but by performance. This precision offered by indicators is valuable for improving the relevance of decisions.
Essential Indicators
In hospitality and restaurant management, some indicators are essential.
Among them, the revenue per available room (RevPAR) has become the classic measure in hospitality, having dethroned occupancy rates. Indeed, by providing the average revenue, it better accounts for the (frequent) variations in room prices. To this indicator, it is possible to add the net revenue per available room, which deducts booking fees. By adding the operating profit per available room, which subtracts average operating expenses per room from RevPAR, the establishment obtains an initial view of the margins achieved.
In restaurants, the number of covers and the average ticket, calculated by dividing the turnover by the number of covers, are the basic indicators. Establishments also frequently monitor their margins (on solids and liquids). Finally, by dividing personnel costs by turnover, a restaurant obtains its cost ratio.
A precise method for choosing indicators
However, these classic indicators of hotel or restaurant management are not sufficient to have a truly exhaustive view of the activity. Indeed, it may be that managers wish to monitor other parameters in order to meet specific objectives. For selecting new indicators, it is advisable to follow a precise procedure. Among all possible methods, the OVAR method (Objective - Action Variable - Responsibility) is particularly interesting. In this method, the company adopts a top-down approach to move from its general objectives to its specific indicators.
More precisely, management must identify its objective, then the "key success factor" associated with that objective. In the case of a multi-site group, the factor can indeed vary depending on the establishment considered. For example, if the financial result is the objective, its success factor may be the generation of margins in its activities. This factor will then lead to an "action variable," a parameter on which employees can have an effect. Finally, this variable leads to the indicator itself. In our case, serving high-margin dishes is a relevant variable. From there, it is possible to choose an indicator that measures the average margin of ordered dishes or the share of high-margin dishes in total orders.
Implementing an effective indicator policy
To ensure the relevance of the indicators once implemented, the establishment can follow some principles. First, regularly questioning their relevance allows the elimination of unnecessary or obsolete indicators in light of the current objectives of the hotel or restaurant. Next, frequently checking their reliability through consistency tests can help the company improve its management control.
It is also important to highlight the necessary commitment of many employees to obtain effective indicators. Despite the top-down approach to implementing indicators, raising awareness and fostering buy-in from those who will take charge of these measures is crucial. A usable measure being a precise measure, therefore collected with care, the employee's understanding of the utility of the indicator is essential. Once this is ensured, the indicator becomes a good means of mobilization, fostering accountability and quick consultability.
Moreover, the establishment can inaugurate and maintain an index of indicators. This index lists each known indicator along with some key characteristics. Among these characteristics, the final objective, the level to be achieved, as well as the source of information or unit of decision are the most common. Some establishments may add a note concerning their potential negative effects to complete the analysis.
From indicator to dashboard
The dashboard of an establishment provides its reader with an overall view of the activity through several indicators. You can find the golden rules for a good dashboard in this other article.
