How to use reporting to identify trends and manage your P&L

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The need for a keen eye on the balance sheet has never been more necessary for the hospitality industry than in recent times. Whilst inflation and debate over further interest rate rises continues, a clear and present understanding of expenses, revenue, cashflow and therefore profit, is vital to ensuring not only a healthy balance sheet but also identifying trends and informing effective planning for a robust future.

Where to manage all of this? For the vast majority of hospitality and other businesses the answer lies within reporting and the profit and loss (P&L) statement. Having effective reporting tools and all the key financials plotted is an important first step. Even more important is analysing that data to identify leads and inform future business plans and strategies.

How then do you build an effective and efficient framework for reporting? Each business will have different requirements and therefore different metrics are needed.

The P&L statement has two main functions. It enables operators to review their financial performance for a previous period (whether that be a day, week, month or even hour) and also signpost how and where there is the opportunity to increase profit (typically through cost reduction and / or increased revenue).

A good starting point is to review and consider the following three ways to best utilise your reporting function alongside your P&L to enable you to identify trends and boost revenues.

First and foremost, ensure you are reporting revenue and costs on a regular and consistent basis. Not just in terms of timeframes or day parts (comparing week to week in addition to certain periods YOY for example peak seasons like Christmas or bank holidays) but also by departments (also termed revenue centres) so that you can draw clear and consistent comparisons.

Secondly, taking a more micro-level approach to reporting can then offer greater visibility around where within your venue are the biggest revenue drivers. Is it Bottomless Brunch on a Saturday or a Promotional Kids Eat Free offer during midweek? Likewise, when do these revenue drivers deliver the greatest sales and potentially the greatest profits? Is it the start, middle or end of the month? Again, keep in mind the more micro0level approach – within the Kids Eat Free promotion which dishes are the most popular and consistently perform from a sales perspective or does the menu need to be reviewed? Keep a fully audited log in place to track all transactions and fulfil effective reporting and analysis.

Thirdly once you have been reporting for a certain period you are then in a position to identify, understand and analyse trends in performance, again either over time periods and/or within departments. This analysis can then be used to inform future decisions around spend and investment. Citing the Kids Eat Free promotion example again if this performs well is it worth considering extending to the last Friday of the month or introducing a loyalty programme for regular customers so that the 10th meal also includes a dessert for adults. Knowing the promotion is a strong revenue driver can give you the insight and therefore confidence to invest in and extend it further with a view to it growing in the future.

Managed correctly efficient reporting can better inform your P&L and in turn equip you with the knowledge correctly identify and capitalise on any trends both in sales and expenditure so that each time your compile your P&L statement profit is regularly seeing its own trend upwards.

To find out more about how Newbridge EPOS can support your reporting and P&L please visit here.