Top Ten KPI’s for Hospitality

Risk Analysis

1. Check/Transaction Average (Volume/Customer Count)- This statistic,

tracked over time without sales tax, represents the value of new and
existing coming in the door. An increase or decrease in this number is
extremely important in judging the “health” of the menu mix and
profitability potential of an operation. Drops in transaction average can
also be a sign of “sweethearting” or under-ringing.

2. Non Resetable GT- This is a number still stored in most systems as a

single total or, in some cases, individual terminals that is like a POS
“odometer”. It continues to add up total volume, not adjusted by negative
transactions, and is an auditor’s tool that helps insure that reports
represent the complete picture. Like an odometer, it can never been
changed. This tool is still used by Marriott to audit its restaurant
operations. Most systems will also have Reset Number or date that
shows the last time a particular the daily report was reset to zero.

3. No Sale Counter- Like the name implies, this statistic counts how many
times the drawer is opened WITHOUT ringing a sale. It can be a sign of a
cashier or owner avoiding the normal process of ringing items, collecting
money, and recording sales.

4. Coupon Total- This total indicates the number, by count and dollars, of
coupons redeemed by the restaurant. It is important to analyze the
proportion of coupons to total number of transactions and dollar volume to
determine how sales are driven by this marketing method. High coupon
volumes may be a sign of a high food cost.

5. Transaction Cancel- This total monitors how often a sale is “cancelled”

before it is completed. While some of this activity is normal, excessive
use of this feature may also indicate fraudulent activity.
 6. Training Total- Many systems offer a training mode for new servers and
cashiers. While training is typical, high activity in training mode may be a
sign of problems.

7. Discounts- Similar to coupons, this type of exception transaction does

not require a “paper promotion” but is discretionary. Properly used it is
typically employed for senior citizens, employee meals, etc. Improperly
used it can be a another problem area also affecting food cost.

8. Void/Refunds- Same concern as #7, this total should be closely

monitored to make sure it is not falling “out of range”.

9. Transferred Checks/Open Checks- Sometimes checks are transferred

from one operator to another and then reduced to “$0”. It can represent
another way of reducing sales. It is often used in drive thru, take out,
phone in and table service scenarios.

10. Labor Reporting- Most POS users, also utilize their system as a “time
clock”. By doing a quick comparison of labor to sales, an audit can quickly
find out if a restaurant’s labor costs are in a healthy range. In addition,
overtime is reported which will also shows the ability of the operator to
manage costs.

A combination of these items, plus several others, should be used to create a

“report card” that would be extremely useful in analyzing risk, the health of a
restaurant, on-going trends. Variations of this analysis could be created for QSR
vs TSR. There are also a different set of metrics that could be used to analyze
retail or hotel operations…the concept is the same.