PPA and How Restaurants Can Best Calculate It

Posted by CuriousRubik on 15 Mar, 2019

In our industry, we focus a lot on metrics involving time: time per table turn, table turnover rates, speed of service and more. But, often, we fail in delighting and enthralling our guests -- whether first time visitors or regulars -- because we don’t give too much thought into how to spend and focus our time.

There’s a hugely overlooked metric that goes underutilized in our industry – even though most of us have access to the data to calculate it at our fingertips – that gives us insight into how to focus our time: per person average (PPA).

UK-based accounting firm Chapman Robinson & Moore calls the metric an essential method to understand business performance, as well as more effectively forecast revenue.

We can calculate PPA by taking the “Total Sales Value” of a given period of time and dividing it by the “Guest Head Count” for that same period. Depending upon how much data we have access to, we can look at PPA by any number of parameters – weekdays, weekends, lunch, dinner and more, to gain deep insight that helps us optimize everything from menus to staffing.

According to Chapman Robinson & Moore, the metric “is particularly useful when broken down by the area of the business, time of day, day of the week.” For example, a new client was only measuring its ‘Average Spend per Head’ on a weekly basis and was missing insight into how different days or different times of the day impacted the mean value.

With access to data broken down day by day, the restaurant could, for instance, optimize promotions and specials on the day of the week or times of the day when those offers would have the most impact, according to the firm.

In such a way, a robust look at PPA has benefits that extend across the front and back of the house.

For instance, management can map PPA to shifts, and recognize servers who are driving higher guest check averages. Alternatively, restaurants can look at PPA by shift to recognize patterns by managers who lead during times when PPA is highest (and, perhaps more importantly, lowest). This information is invaluable for two reasons. First, the servers and managers who are performing well can relay what’s working during their shifts in training sessions with new and younger staff. It also enables leaders to recognize the contributions of outstanding servers and managers. This can foster a strong culture within the business that can help to overcome a restaurant’s biggest issue – staff turnover. Data-driven strategies also help leaders develop clear paths for additional compensation and advancement within the restaurant to once again keep the best servers and managers engaged.

To make the youngest and newest staff more mindful of PPA, the restaurant can hold contests and recognize outstanding contributions. Just be careful that such a strategy is carried out with the guests’ (and your staffs’) best interests in mind, and staff understands how to balance upsell with tact.

PPA can also help the restaurant determine what menu selections are working, including which ones people are paying more for and when they’re most likely to do it. For instance, the lobster mac and cheese may be selling wonderfully on Friday evenings, but not so much on Mondays. By having information on when to order and stock more of the most expensive foods and ingredients, restaurants can optimize food costs, and find the right targets to hit in terms of food cost percentage. The same information can be used to optimize seasonal specials for the times of the week and year when they will be the most profitable.

Adding PPA as a central metric in your data-driven restaurant management strategy is a simple yet innovate way to create experiences that will keep guests coming back, and spending more.

Source of the blog: Netsuite blog

Topics: General Business, NetSuite

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