December 1, 2016 |

Key Indicators

By David La Martina


The Most Important Performance Metrics for Your Pizzeria

pizzaiolo making pizzaWhat gets measured gets managed. If you don’t keep a solid handle on your sales, revenue, food costs and waste, improving your profits will always be a shot in the dark. Likewise, keeping a close eye on a few specific data points can uncover opportunities you never would have otherwise found.

That said, there’s far too much information to focus on everything. From inventory to order size to

employee productivity, almost everything is trackable nowadays — and a lot of that data is just noise. Following are four of the top performance metrics that really deserve your attention, as well as a few tips on turning that data into profitable policies.

 

  1. Food Costs

Your inventory is the lifeblood of your business, and you’ve got to keep tight control of your costs. “If you don’t know your food costs, you can’t accurately price your menu or maintain good profit margins,” says Chris Barr, a 10-year pizza industry marketing veteran.

In particular, adjusting prices (or at least shuffling around your costs) is paramount to a consistent profit margin. That requires constantly monitoring your major expenses. “Cheese is always a hot topic,” says Barr. “The price can double within six months, and if you don’t adjust menu prices accordingly, you could go from a good margin to no margin at all.”

Fortunately, many distributors are willing to negotiate, and with months of data on costs and sales, you’ll have the upper hand. A little give-and-take between you and your suppliers may allow you to keep your prices and profits level, but that’s only possible if you know how much you can really afford to spend on each item.

 

  1. Marketing Conversions

Consistent marketing is a must for any pizzeria, but many operators don’t track their print ads, email blasts or social media posts. How many leads does each campaign drive through your door? What are your e-mail open rates? How many people try a new product following its announcement? These are the marketing metrics you need to track.

Collecting this data requires tailor-made ads, as well. “Every order should have multiple calls-to-action, and you need to include several different offers in any type of marketing you do so you can split-test their performance,” says Barr. “Eventually you develop a baseline response rate, which you try to improve moving forward.” A few months of split-testing targeted ads can significantly streamline your marketing efforts, allowing you to generate more leads with the same budget.

 

  1. Customer Loyalty

Loyalty is everything … but how do you measure it? For Dave Wood, CEO and co-founder of Firenza Pizza in Fairfax, Virginia, the answer is customer frequency. “Our goal is to have everyone come at least once every two weeks,” he says. Customers’ orders are tracked through Firenza’s incentive program, which features weekly offers with customer-specific codes that tie into the company’s POS system.

Wood uses that frequency data to time advertisements to different groups of customers. “We’re more aggressive with customers that have further to move to get to the biweekly goal,” Wood says. A once-per-month customer receives weekly ads, while higher frequency customers might get two per month.

Anne Pritz, Chief Marketing Officer for Sbarro, uses the same type of data to tailor and market new products. In most cases, they’ll push new products on their most consistent customers, “since they’re more likely to try new products when advertised,” says Pritz. “Whenever we do have a new product, it will also be on the front cover of our monthly insert.”

 

  1. Your Top Line

Almost everyone tracks revenue and sales, but you need more specific data to make informed decisions about your menu, inventory and

labor allocation. “The constant balance of an operator is protecting their service while also protecting themselves from waste,” says Brian Mangerchine, Sbarro Director of

Operations. “Everything that gets rung up into our computer system is going to account for a theoretical food item, and our recipes will say how much ingredient you should be missing based on those details.”

Ultimately, if you know what amounts of each item are selling – and when – you’ll be able to streamline your purchasing and pinpoint areas where you need to reduce waste.

 

Making it Count

Collecting raw data is one thing. Making use of it is another matter entirely. You’ll need to organize a variety of data points to produce a few key metrics. And, in general, groupings are better than averages. For instance, it’s far more useful to divide customers into two or three categories based on loyalty than to generate a single average ordering frequency. Both are great indicators, but only the former allows you to follow up with targeted marketing.

Finally, even the best tracking system won’t produce results if you don’t combine it with great follow-up and communication. “The most critical step in the whole process is having the conversation after the analysis is complete and following up on behavioral change,” says Mangerchine. Whether you’re trying to reduce waste, complete orders faster or push a particular menu time, the change will come from your employees.


Greater Leverage

4 tips to make better use of your data

1. Build a database. Customers’ names, phone numbers and e-mail
addresses should all be compiled in a single database. “When you go to sell the place, this is the first thing a buyer will want to see,” says Barr.

2. Reboot your menu. Send out updated menus with new prices and offers once every six months (or more). You’ll be able to better control fluctuating food costs, and your customers will always be in the loop.

3. Don’t sweat the small stuff. Operational details such as employee turnover are important, but don’t require close tracking and trend analysis. Save the number-crunching for your inventory, sales figures and marketing data.

4. Divide and conquer. Group your customers based on frequency and order size, and organize menu items according to top performers, underperformers and new products. Information related to specific groups offers more insight than aggregated data.

David LaMartina  is a Kansas City-based freelance copywriter who specializes in the finance, food and health industries.

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