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NOW UPDATED FOR 2006!
The most recent benchmarking data for Restaurants is now available, both in print and in downloadable PDF format, with your purchase of the Restaurants Business Benchmarking Guide. (NOTE: 2006 updates not yet available in online HTML subscription version of this guide - please call MAUS Sales Centre on 1 300 300 586 for further info.)
This Small Business Profile presents the results of a survey of Restaurants for the financial years up to June 30, 2004. The survey was based on 37 businesses.
The hospitality sectors have a reputation for quickly burning out owners. Either the owner/chef gets tired of all the cooking and the late hours, they start eating and drinking the profits or they concentrate too much on the culinary and ignore the commercial!
Understanding the basics of pricing meals is an essential starting point. How much mark-up on the cost of ingredients? Then you need to have the right level of support in the kitchen. That way, the owner can spend time managing the business instead of just cooking and serving.
One of the tricks is to generate enough revenue - and gross profit - from each seat. There's always personnel productivity to consider too. It's important to juggle the number of staff so that the plates appear and disappear at the right pace and the on-sales of desserts, wines, liqueurs etc., happens to be optimum. And all that assumes that the food is good, too!
Survey Results
These are the results of a survey of restaurants. These results should not be considered to be representative of all restaurants in Australia. However, they will allow business owners to identify strengths and weaknesses in the ability of their business to generate revenue, control expenses and earn sufficient profits. This is done by identifying these elements of business performance and comparing them with benchmark performance levels currently being achieved by the sample of businesses in this survey.
Many of the restaurants participating in the survey were from the eastern states of Australia. Queensland was the most heavily represented area, while there were no firms located in Tasmania or Northern Territory in our sample.
Businesses from smaller rural centres (population under 20,000) represented around 39% of the entire group with another 30% of businesses located in large regional cities and towns (population over 20,000). The remaining businesses were city-based.
Around 87% of participating businesses rented their premises and approximately 83% of these businesses were situated in street front premises.
The following table will give you a snapshot of the variance in results found in your industry for various Key Performance Indicators (KPIs). Each KPI (shown in rows) should be considered independently of each other. For example, a business with a high percentage gross profit would not normally also have a high relative percentage of their income spent on wages.
For each KPI, the table shows the average, high and low results found in the business surveyed. The KPIs should not be 'added together' under the high and low columns as they do not necessarily relate to the same business.
The KPIs show the 5th highest and 5th lowest actual result for each performance indicator. The range of values shown therefore covers the middle 80% of reported results.
| Indicator | Average | Low | High |
|---|
| Total Income | $578,382 | $228,258 | $1.25 mil | | Gross Profit | 61.73% | 52.70% | 67.49% | | Wages & Salaries (staff only, not
owners) | 19.81% | 11.35% | 27.99% | | Rent of Premises# | 7.71% | 3.61% | 13.58% | | Interest, Bank Charges, etc | 2.18% | 0.79% | 5.60% | | Other Occupancy Costs | 4.54% | 2.45% | 6.49% | | Other Depreciation, Lease and Hire Purchase | 2.38% | 0.97% | 4.36% | | Repairs and Maintenance | 2.68% | 1.15% | 4.36% | | Net Profit (bos*) | 14.59% | 0.90% | 28.40% | | Days' Stock on Hand | 21 | 8 | 47 | | Seats per Table and Bar Staff (including Working
Owners) | 27 | 13 | 44 | | Seat Utilisation per Session | 50.34% | 22.81% | 74.07% |
# calculation is
based only on the firms which reported a rent expense
*(bos) before owners' salaries
and benefits
So, how does your firm 'stack up' against these averages? These results will give you an idea of where your business falls in relation to the sample and give you a better understanding of your relative strengths and weaknesses.
The remaining expense items each represented less than 2% of total income on average; however some businesses reported some larger results for such items as:
- Advertising, Promotion, and Franchise Fees of up to 9.28%;
- All Insurance of up to 3.11%;
- Staff On Costs of up to 5.18%;
- Vehicle Operating Costs of up to 5.42%;
- All Other Expenses of up to 5.81%.
To summarise this, larger businesses had:
- Higher net profit per owner
- Higher outlay on staff wages, but this is not a weakness in the larger restaurants
- Better productivity per person and per seat
- Lower gross profit margins, largely offset by a lower non-salary cost structure.
The more profitable businesses:
- Were larger
- Had lower total overhead costs, especially for the non-staff costs
- Had much higher productivity per person and per seat
- Had the highest seat utilisation rate per session and a more-intensive level of service per patron.
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