The Most Valuable Asset Restaurateurs Ignore: Part 1
You know how to train your staff. You know how you want your restaurant to look. You know what kind of food you want to serve. But there’s one detail that you might be overlooking: your POS data. While it might not be on the top of your priority list, organizing and learning from your POS data can take your restaurant’s success to new levels. In the first part of our two-part series on POS data, we’ll discuss how to get your data into shape and ready to work for you.
Clean Your Data
Taking advantage of your SKU data on your Point of Sale starts with naming your items properly. While you might know what STKNCHZ6IN means right now, it’s possible that you’ll forget or confuse it with something else down the line.
You may run into some restrictions on your POS around length, but do the best you can with what you have. Don’t forget about your description fields: they can be used when you don’t have space in the name. While you’re at it, take a look at your modifiers and make sure they’re legible as well. Not only will it help in analytics, any new BOH staff you hire will thank you.
While you’re going through your items, go ahead and add any UPC barcodes to your CPG (consumer packaged goods) items like chips, bottled and canned drinks, etc. It’ll make it easier to track sales of those goods and you can even use your barcode scanner to enter the UPCs so you don’t have to type them in manually. Even if it means you have to split out items (“12 oz orange spritzer” instead of “soda”), you’ll have a better handle on your data and will allow you to track and sell those with increased confidence and precision.
Warning on Renaming Items: Renaming items to make them easier to read is great but renaming one item to a completely different item is a disaster for your item data! When you rename items to different items, your system will think they are the same (since they have the same SKU) and your reporting will be significantly impacted. Never change one item into another by changing the name. ALWAYS create a new item!
It’s never too late to fix your item data! Start today and knock out a category at a time until your item data is sparkling and ready for analysis and marketing.
Categorize Your Items
There are four main categories of items: the star, workhorse, challenge and dog.
Star: Popular and profitable
Workhorse: Popular but unprofitable
Challenge: Unpopular but profitable
Dog: Unpopular and unprofitable
Your goal is to categorize each menu item into one of the four categories above. You’ll need to look at your contribution margin for each item (menu price minus food cost) to determine how profitable it is and the percent it contributes to your sales to see how popular it is. Typically an item is “popular” if it’s more than 80% of the average contribution percent (taken by dividing the number of that item sold by the total number of items sold) and it’s “profitable” if it’s greater than the average contribution margin.
Categorizing your items in this way will allow you to focus on the items that are helping your bottom line and eliminating or reworking the items that are costing you money and time. It will also allow you to properly evaluate items you’re considering adding and enforce benchmarks for menu performance.
Here’s a basic example of menu items broken down into their classifications:
When you take these steps, you’ll be in a great position to make your POS data work with you. In the second part of this series, we’ll discuss how you can take action and put your effort to good use. Make sure you don’t miss it! Subscribe below to stay in the loop: