Stories / Hospitality
Multi-Site Operator: Net margin 4% to 12.5% on flat revenue
Turnover growing across three sites while net margin fell from 11% to 4% in two years.
- Client
- Multi-Site Operator
- Industry
- Hospitality
- Size
- 3 sites, 62 staff
- Timeframe
- 9 months
Anonymised at the client's request · figures verified · published with written permission
The situation
Three sites, one menu, and no idea which dishes made money once labour was counted properly.
Food cost was tracked monthly and in aggregate, which is roughly as useful as tracking nothing.
Site managers were measured on turnover, so they optimised for turnover, exactly as designed.
What we did
- STEP 01
Costed every dish including kitchen minutes
Nine of the 34 dishes had negative contribution once prep labour was counted. Two of them were the loudest items on the menu.
- STEP 02
Cut the menu by a third
From 34 dishes to 22. Waste dropped, ticket times dropped, and customer satisfaction scores went up — which surprised everyone except the chefs.
- STEP 03
Changed what site managers were measured on
Weekly gross profit percentage against a site-specific target, with a bonus attached. Behaviour changed inside three weeks.
- STEP 04
Put stock counts on Sunday night, every week
Weekly instead of monthly. Variance became something you could act on rather than something you discovered in arrears.
The numbers
| Measure | Before | After |
|---|---|---|
| Net margin | 4.0% | 12.5% |
| Food cost % | 38% | 29% |
| Menu items | 34 | 22 |
| Avg. ticket time | 24 min | 16 min |
Measured over 9 months
What didn't go to plan
Removing a signature dish cost some genuine regular custom at one site, and takings there were down for six weeks before they recovered above the previous level.
In their words
“We'd added two sites and lost the plot on the one thing that mattered. Turnover was a vanity number and we'd been celebrating it.”
Owner · Hospitality
The lesson
Growth hides waste. Only margin exposes it.