Learn how to customize the free template for tracking benchmarking data included with this article. The financial metrics typically used for restaurants have been formatted. But, the principles apply to any business.
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Benchmarking is the process of comparing key metrics for a company with those of an industry leader. A formal process includes the following steps:
Identify the industry leader or standard.
Gather competitive information on metrics.
Gather competitive information on practices.
Establish a process to report internal metrics.
Compare internal metrics with those of the industry leader or standard.
Analyze why results may be different.
Make changes, if necessary.
Capture data and perform analysis on an ongoing basis.
The restaurant business is highly competitive and every penny counts when it comes to operations. As a result, benchmarking standards are well-established. Organizations, such as the National Restaurant Association, gather and publish data to assist any size business in making comparisons. Food service businesses can begin using the Free Template for Tracking Benchmarking Data as follows:
Obtain industry metrics applicable to your size (i.e., small, medium, large) and type (i.e., limited or full service) of restaurant. The metrics on page one of the template are a percentage with the numerator and denominator noted in the description. For example, food cost percentage is food costs divided by food sales.
Enter the competitive percentages in the "Industry Standard" column of page one. Once this information has been entered, it will not need to be entered again, until new industry data is obtained.
Change the business name and year in rows one and two on page one.
The monthly columns on page one of the spreadsheet will automatically calculate the percentages each month when sales and cost data is entered on page two of the spreadsheet.
Enter the monthly sales and cost data on the second page of the spreadsheet from monthly financial records.
Compare percentages for a given month to the industry standard.
Review trends for percentages over the course of the year.
Analyze why significant differences exist.
Make changes to operations, as appropriate.
The tracking and comparison process is ongoing and takes into consideration new information as it is received.
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Customize the Template
Rather than prepare a generic, one-size-fits all template that would be of little use to anyone, a template for tracking benchmarking data for a restaurant was developed. However, most businesses can perform a similar financial analysis. Once the process is understood, take the steps below to adapt the template to meet your specific needs:
Review your income statement.
Identify significant segments of gross sales and rename rows on page two with appropriate terms.
Identify significant costs and rename rows on page two with appropriate terms.
Review calculations on page one. Most calculations compare a cost to a revenue expressed as a percentage, except as follows:
Prime cost combines total cost of sales and payroll cost in the numerator. The divisor is total sales.
Sales per square foot is expressed in dollars by dividing total sales by total square footage of rented space.