Cost Control, GST and Point of Sale - for Cafes, Restaurants and Foodservice

Even if you’re not a ‘numbers person’, this webinar is for you! In this very practical webinar, you will discover:

• 3 cost control habits that smart operators do every week 
• How to find the most useful information in your Point of Sale
• Where to find your Top 5 numbers to track every week Organising invoices, supplier bills and GST payments
• Tips and shortcuts for reducing paperwork
• Connecting devices so everything is in one place - POS, rosters, payroll, bill payments and bookkeeping
• How to keep your accounting bills to a minimum
  
  

Key Points from the Webinar: Cost Control, GST and Point of Sale - for Cafes, Restaurants and Foodservice

Most people in the hospitality sector dislike performing anything that involves numbers or mathematical calculations. They like making money and seeing it come in, but working out what the numbers mean can be arduous and difficult. Finding the time to manage bookkeeping and cost control is a big challenge.

The most useful numbers to monitor in your restaurant business
As a restaurant owner, you need to keep a close eye on these figures to improve your profitability.

• The number of customers - the number of people every day, half-day, or week. This helps you calculate per head spending and should be compulsory on the point of sale.
• Strike rate - the frequency that your customers use a component of your food services or menu. For example; if you are on average selling 30 desserts per 100 customers. Your strike rate is 3 out of 10 - for staff to understand this quickly, present it as an actual number and not a percentage
• Basket size - the money spent in a transaction rather than looking at how much money is spent per head.
• Per head spend - how much money customers are spending when they are seated at your restaurant. It shows what they like or dislike, as well as what changes you need to make eg introduce more popular desserts, or offer side dishes to encourage add-on sales.
• Most profitable items - how much money you make from food items so you can focus on the moneymakers. Make sure that your most profitable items are displayed prominently.
  
  

Components of good financial control for restaurants and cafes
If you want to keep your costs under control, you must first understand them. Operators need to look at their financial reports to know what's going on in their business. There are five key elements to effective financial management:

• Grouping - all the cost getting grouped into the right areas to determine;
• What do you want to achieve with your cost targets?
• Your target with labor costs
• Your target with the cost of goods
• Your targets with the overheads
• Relevance - the cost or expense must be relevant to the sales that are being presented.
• Comparability - everything in a department should be comparable to a previous period, whether done fortnightly or monthly.
• With fortnight reports you can compare your cost of sales and your labour cost with your sales in the right period,
• The monthly report looks more at the overheads and whether the cost is actually under control
• Timeliness - meaning you are getting your reports in real-time and while they are still relevant
• Integrity - make sure that the bookkeeping is done correctly and everything is properly allocated.
  
  

How to make your profit and loss statements more useful

Understanding your Profit & Loss statement is very important, and you can make the P&L more useful by doing the following:

• Maintaining controllable numbers for sales and operating expenses.
• Use software management systems like Deputy and Tender for payroll to simplify the labor costs.
• Use document processing software such as Hubdoc and Receipt Bank/ Dxt to convert all of your invoices, point of sale readings, and bank statements into digital form. This enables you to condense your P&L into a concise snapshot of your business performance.
  
  

How to manage your cash flow by forecasting expenses

Some costs should not be put on the back burner because they will need to be paid sooner than later, even if they are not top-of-mind like sales, wages and cost of goods. Creating separate accounts for these amounts and adding to them each week, means there is money put aside for when payments are due.

Successful operators watch:

• Employee superannuation payments - should be paid on time to avoid penalties
• PAYG (Pay-as-you-go) tax deductions from employee wages
• GST (Goods & services tax) - nearly all sales include GST, that should be put aside.
• Insurance - worker’s compensation and business insurance are big-ticket payments and you may need to save for them

How to find and track your liabilities
Xero is the most popular bookkeeping system in the hospitality industry, providing you with a year-to-date figure for your liabilities, sales and expenses. Once you set up a Xero dashboard, you will be able to track;

• Your GST, PAYG, and Superannuation
• Your sales
• Your wages and expenses
  
  

With Xero you can learn to read your balance sheet report, so when you run a balance sheet as of today's date, it shows what money you owe out under the liability column. Use Xero to run a GST reconciliation report to keep track of what your accountant or bookkeeper has submitted to the ATO and keep your records up to date. You can also run a general BAS (Business Activity Statement) report in Xero to see how much your BAS payment will be in the future quarter and what your PAYG and GST figures are right now.

Putting your Point of Sale system to work
You should focus on ways to increase sales, so that your expenses decrease over time - one important way to do this is to use all the data from your POS.

POS setup is important for you to make an impact on your day to day operation because it provides lots of data such as:

• Benchmarking between stores
• Track hourly sales
• Measure production time
• Measure sales by staff members
• Use the ‘Make’ screen to show how items are to be prepared eg drink recipes
• Forecasting sales and labor needs
• Stock management and ordering
• Waste management
• Display a weekly dashboard of results
• Integrate with loyalty schemes
  
  

You can also use dashboards for real-time accurate numbers, to have a clear picture of where you are today versus last week - all done with the touch of a button.

Useful comparisons in a dashboard include:

• Am I on track with the budget?
• Is it in line with my forecast?
• How is my business compared to last week?
• How are we performing compared to last year?
  
  

The most crucial aspect of the numbers process is developing the habit of looking at them so that you can identify trends and make changes.

Transcript of the Webinar: Cost Control, GST and Point of Sale - for Cafes, Restaurants and Foodservice

 Welcome, everyone. It's Ken Burgin here from SilverChef. A lot of people in hospitality, numbers make their head hurt. We like to see the dollars, but doing the number crunching and analysis sometimes is not our favourite thing. We're going to talk about bookkeeping and analysis and using your Point of Sale.

Introducing our experts today, Chris Green and Anja Carruthers, both bookkeepers and very experienced financial controllers, with lots of experience in our particular industry as well. So we'll be hearing from them.

Steven Yeung, who's Head of Business Systems at Chatime. Everyone knows that famous bubble tea QSR. He's the man who makes sure that the franchisees and the business owners, they are getting the information exactly how they want it.

Tyrone Ho, who's worked in hospitality, everything from owning his own cafe, but more particularly as working for Red Cat, one of the large point of sale companies now with Tabsquare. They do a combination of point of sale and artificial intelligence for ordering screens. He's got some good opinions on point of sale as well.

So today, we're going to talk about top five numbers. I'm going to tell you mine and ask the others for a couple of theirs. We're going to talk about profit and loss statements and making them more useful because oftentimes you get those things emailed to you by the accountant or the bookkeeper and you think, "What the? Is that really helpful?" Going to talk about managing cash flow and some of the expenses coming up. Putting a point of sale to work, Steven's going to talk about how they do that at Chatime, and Tyrone is going to pick up on that and develop us further. As I've said several times, ask lots of questions. We're really keen to hear those from you and give you some answers. We'll be doing that in the chat.

So this is an interesting slide to start with you. Remember when you registered, and there was a couple of questions. One was how useful was the information that you get from your point of sale? I think it was always how much useful information do you actually have? About 70% of people said, "Not very good to feel okay." 30% seemed to be quite satisfied with the information they're getting. But then I asked another open question about what was the biggest issue about managing bookkeeping and cost control. Then I took all those answers, and dropped them into a little thing called a Word Cloud. Boom. I was actually really shocked or amazed or something that that big word starting with T right there in the middle – Time! It's something we need to keep talking about, because it's all very well for experts like some of us are to say, "Do this and do that." But time to actually get this done properly and produce better results is obviously the single biggest issue.

 Costing, costs, cost control, those words came up as well. But time was far way the biggest one, so let's just keep that in mind. , I'll be interested, maybe a few people have got a bit of feedback straight away. Is there anything you've done recently is a question. It'd be great to get a few answers. Anything you've done recently to manage your time better so you can get the results you need more quickly. I mean, the issues that people were talking about around time was things like processing invoices, data entry, reliable, people who can put the figures in, those things can be coming up around time. Anyway, be interested to hear any feedback you've got about any improvements you've made and how you manage your time. Okay. So my five top numbers, first is the number of customers.

Now, it's not a point of sale figure. Well, sometimes it is, sometimes it's not. I know it sounds like a really simple one. But I'm amazed at how many people actually don't know the number of customers per day or per half day or per week. Because once you got that, you can find all sorts of interesting things out about per head spending and patents. So yes, you can make that compulsory on the point of sale. Obviously, if you're a quick service, and you're selling one order for 10 people, and there's no sit down, it's more about transaction size. But I think that's something that a lot more people could be watching a little bit more closely.

Sometimes you just do it through a quick snapshot on one day. On Tuesday, we're going to count every customer with a little clicker or something like that, and use that as the basis for some analysis. Strike rate is another one I find really useful. So strike rate meaning say we've got a cafe or a restaurant and we know that we are on average selling 30 desserts per 100 customers. So our strike rate is three out of 10. So is that good enough? It's getting there. I was always one for selling desserts and making good money that way, or side orders. When clubs and pubs I say, "How many of your bar customers ordered food?" You had 200 people in the bar last night. If only 30 people ordered at the bistro, that's not good enough. So strike rate can be useful.

 You can find your own ways, the things that you'll find most useful with that. But notice I'm saying three out of 10 or 30 out of 100 because a lot of your staff and the people you work with who you want to take, be aware of these are not often very good with percentages. They didn't love maths at school, maybe they can't even work them out themselves. So find a way. You want to be able to communicate these as well as possible to people. Number three, basket size. A typical transaction, how many items were in it? Did you sell them water as well? Did they also order fries? Did they order steamed rice with it as well? Sometimes it's just about pulling off the reports for a couple of hours of transactions and having a look at those in detail.

 The per head spend. I mentioned that before. Again more a sit down thing, but hot beverages, cold beverages, desserts. I know as a cafe owner, I used to watch these a hawk especially around desserts which we used to sell a lot of and were pretty good moneymakers. If we changed the menu and that per head on dessert went down, I knew we'd made a mistake. We had to fix up the desserts that we were selling. the last one is what the item you sell the most of that's also your most profitable. By that I mean dollar profit, like that burger there. Is that a $11 burger or a $13 burger? Are you making $8 out of it or $9 or what? How many? So , we could go into a lot of stuff on those stars and player horses and all this analysis pretty familiar to a lot of people now. But that's a good one. So just before we jump into the next section, just might ask our panel experts here, what's your one or two, your favourite numbers when you're kind of looking at a business?

Tyrone Ho:

I'll jump in there, Ken. I know, you might think that I'm sitting on the fence here, but I think it's super dependent on the business. But the operators should actually know what their two numbers are. Because I mean, generically, you could go like, "Okay, it's labour costs, right?"

But if you're a high volume theme place, maybe your labour costs are always going to be really high. So maybe you really want the average transaction value or efficiency, right? These days, with the old printer docketing, the kitchen and the bars are almost out the door these days with screen, so you can actually then time the efficiency of them. I think it depends on the business. But you should actually know what that is at this point.

Chris Green:

When I get a new client that comes to me, often it's a rescue project where things have gone diabolical and they don't know where to start. So from my viewpoint, I actually look at the health of the zero file and the integrity of the data because there's no way that anyone can start analysing numbers if the data is corrupt and isn't true. So I start looking at the P&L on the balance sheet and reconciliations of the big ticket items. If they're starting to look normal and they are in alignment with where they're supposed to sit, then I can say that you could start drilling down on some of the performance numbers of the business. But if the data is not right, the rest doesn't matter.

Ken Burgin:

Good. Good point. Anja, what do you want? Any one or two of your favourites?

Anja Carruthers:

So in hospitality, it's always the big ticket items that are usually the ones that you have to look the most that. But I totally agree. This is actually the point that we'll be making in my presentation, that you have to look at the right figures to be able then to say what is actually ... If you look at the right figures, and if you make the right results, get the right results from it. So the labour cost and food cost is the biggest, that needs to be looked at.

Ken Burgin:

There's a question dropped in from Fabio. He’s asked, how would you apply this idea of top five numbers to catering?

Ken Burgin:

One thing would be per head spend. Are you selling more of the $28 a head platters or the $38 a head package or something like that. So your average per head over a week would be something. Then if you've got add-ons as well, I'd be looking at how many of those are being sold as well. Because with catering, same as with a lot of these figures. We're looking at the strength of our sales team as well, how well are they doing these sorts of things.

Tyrone Ho:

I'm not sure specific to Fabio, but I'm assuming in this day and age, the majority of the catering orders will be coming in digitally, right. You’d make sure that your most profitable items are front and centre. So when I order my catering, I'm looking at that burger first if it’s the most profitable. One of your favourite points, Ken, good pictures. Take good pictures, but if you're selling digitally, it makes a million percent difference.

Ken Burgin:

Picking up on your point if a lot of these catering ordering is coming through online, have you got all those add-ons? That suggestive selling set up and optimised and is actually working? Because if it is, , people will add on certain things. They'll add in bottled water for everybody or those sorts of things.

Tyrone Ho:

Cutlery, napkins all that stuff.

Ken Burgin:

 Anja, tell us about what your slides. What are the components of good financial controlling? Why did we put a Red Cross beside this pointer.

Anja Carruthers:

So when we when we were talking about cost control, what I was asked to put my few ideas towards I in my eyes, it's the most important thing when you want to control your cost is that you have to know your cost. The problem, what I can see with most of clients coming to us, is that they actually don't really know what their costs are, even if they're getting reports. Because most reports look a little bit similar to what you're seeing here. So there will be a convolution of income than the cost of goods or cost of sales, when you call them. Then there is in alphabetical order all your cost areas.

Anja Carruthers:

The first thing, what we usually do is we are cleaning up the reports so that operators can really read them. Because it's not even easy to get labour cost out of this report. Because labour cost is not only the wages and salaries, labour cost includes the superannuation, what everybody knows, but labour cost in our eyes when we do cost reporting includes as well our workers' compensation, everything would you spend for your labour force. You can like that or you can don't like that. But in the end, it is labour cost should be looked at, it's the cost for labour.

Ken Burgin:

So you're saying really, the fact that it's only one line is really not nearly enough detail.

Anja Carruthers:

No. Exactly because that's what happens then. When we're talking about labour costs, you need to look at your labour costs should not be too high. They're looking at the figure. Where's my labour cost? That's wages and salaries. Okay, this is what I'm having labour costs. Okay, that's all right. But that's not what your labour cost really is. But it's only one example.

Anja Carruthers:

There's lots of other examples, because looking at the report that, even me as a professional, I would have to really read into it to find out what's going on with this business. In my eyes, it is just there are ways of presenting reports a little bit differently. So you can actually read the reports. Okay. You've got some examples, we're going to look at those. Okay, we're coming back to the points that are on the screen, we will be coming back to. Because important for good reporting, there are five very important points. You need to group your cost. The costs need to be relevant, that means the cost or the expense need to be relevant to the sales that are presented.

Anja Carruthers:

They should be comparable. So that means everything, what is in that area presented, you should be able to compare to another period. It should be timely, meaning you're not getting a report three months after your operations. So when you're putting stuff on, and three months after, you get reported that you put too much stuff on, that's most of the time to wait. Then very important, the integrity has to be right. That's exactly what Chris mentioned.

Anja Carruthers:

The bookkeeping has to be right. So you need to make sure that everything is done correctly, allocated correctly. As an example, this is a case study when a client came to us. It's a while back because it was a big project. They operated to two venues and didn't make any money. But in saying that, the venues were actually operating profitable. But the group itself didn't make money and they couldn't figure out where the problems were.

Ken Burgin:

Okay, so we're going to look at some examples about how you made improvements. Now, just with the overhead, you've got some kind of benchmark figures there. That's something that people are always very hungry for, what should my admin costs be? I mean, you've actually gotten not the usual ones of labour and cost of goods, but other smaller ones.

Anja Carruthers:

This is the problem with this report. It's about showing you the difference and what is the point of difference. So firstly, we extracted from a purely profit and loss report. We restricted only the venue and allocated all the cost to the venue that belongs to the venue. Then we allocated all the costs in the right period. That made it more relevant.

Anja Carruthers:

The other thing, what we are very keen on doing is we're actually presenting fortnightly reports, not only monthly reports, okay, because our labour costs, for example, is very hard to compare month on month, as hopefully everybody knows, because there's not always the same payroll periods per month. So a weekly report would be too complicated. But a fortnightly report makes sense. That will always tell you the exactly the sales with the labour cost that belongs to the sales. So you can see this period had this much sales and had this labour cost, and this is relevant. It's not that I had a very costly period with, let's say, Easter period, where we have high labour costs. So you're making a lot of sales in one period, and you're having the highest sales, higher labour cost in the next share.

Ken Burgin:

So there's a little bit of averaging can take place this way.

Anja Carruthers:

Not average, allocating, it's basically ... This is where when you look at the fortnightly reports, if they made $47,000 sales in that fortnight, then they had $30,000, not 30,000, sorry. $14,000 cost of good for that sales, and they had the 21 for this fortnight. So it's relevant exactly to the sales.

Ken Burgin:

As a professional, you know how to put all these figures, these reports together and make them much more understandable. I'm just thinking about that word "time" that was right in our faces right at the beginning. How do you make it easy for people to just grab all those piles of sticky invoices and all that kind of stuff and send it to you? Because that's the detail, isn't it, and the point of sale readings at all the bank statements. How do you help people save time with this whole thing?

Anja Carruthers:

Our clients are all using the document processing softwares they runs, like Hubdoc, like Receipt Bank. So in the end, what happens at the end of the day, all the paperwork that got accumulated during the day, they received an order, received the delivery. They received an invoice. All of their staff takes a photo. The moment they take the photo, the paperwork appears on our screens. So that paperwork is basically gets transformed digital to us instantly.

Ken Burgin:

Maybe a few people could drop into the chat, if you're using document scanning for your invoices, might be just photograph them or take a snap with your phone. Or you might have a scanner that you use. Chris, I know you're a big fan of scanners as well. Just what's your system that you use for ... .

Chris Green:

It's all good software, some have different strengths to others, and the different price points and the analysis process that the document reading software has varies upon the different brands that you can use. But they're all good in their own right.

Chris Green:

Receipt Banks, recently changed its name to Dxt, D-X-T, if you're looking for. They're the two most popular ones. Lightspeed does the purchasing as well. It will manage your stock and inventory count. It's really good, particularly for pubs, clubs and bigger restaurants. I've just gone blank on the name, but that's all right. It'll come back to me.

Anja Carruthers:

We're using mostly Hubdoc. Receipt Bank or Dxt, I haven't that many ... I have actually at the moment nobody on Receipt Bank. But it's basically the same. This is not only scanning. They make your photo into an app. The processes and the data entry happens already through the software. So there's nobody sitting anymore and data entry people. We're just analysing what comes in and making sure it's right. That's basically what you're doing. Okay. .

Anja Carruthers:

The fortnight is important to me that you can compare your cost of sales and your labour cost with your sales in the right period, in the right way. What is the comparability? So you always compare a few periods with each other. This is the way where you can see with one line, every operator can see how they're travelling, is it higher, is it lower?

Anja Carruthers:

The monthly report looks more at the overheads. How the overheads, how the cost is actually under control. So getting back to the topic of cost control is you need to know more or less what do you actually want to achieve ... This is now where were we ... Is it possible to flip back the slides? Ken? I'm not sure.

Ken Burgin:

The one that was categorised the wrong way and too much. Now what's the advantage with the one on the right? Because you don't seem to have as much detail there.

Anja Carruthers:

This is now where the report gets grouped. So all the cost gets grouped into the right areas, it doesn't mean that they're not separate accounts under these group listings. But then is as well, you can determine what cost you actually want to .... What do you want to achieve with your cost targets are? The cost targets? So you need to find out, "Okay, how much do I want to give myself to spend on?" Everybody knows that you say, "You should have a target with labour costs, you should have a target with cost of goods," but you can have your targets with the overheads as well.

Anja Carruthers:

You need to figure out your distribution. This would be a distribution where we're having a pretty healthy distribution of sales and operating expenses. You can see that within one picture, you don't need to be a financial expert to analyse that. This is what I meant with the other slide. The range, what we figured out, where the range should sit in operational expenses, in administration expenses, marketing, repair and maintenance rent.

Anja Carruthers:

With one report, you would see straightaway, "Okay, I'm travelling good. I'm travelling downwards." This is what in our experience, what helped our clients within a couple of months as implementing the systems.

Ken Burgin:

So really from an overwhelming amount of data, you've actually pared it back to the essential basics.

Anja Carruthers:

To the basics. Make it comparable, make it relevant because the relevance is the important part. Most of the time the data, you compare apples with pears, and that's not possible. So you need to make sure that the data what they're comparing and what we're talking about is correct.

Chris Green:

I agree with this, Ken. That's one of the first things that we do as part of a rescue and cleanup is simplify the P&L so that there's tangible tools that the business owner can start using immediately. You often find that when ... Like the one with the cross, when a P&L is too expanded, often the coding is inaccurate as well because that creates a lot of extra data entry. The data starts to get bit put here, a bit put there. It's never always consistent as to where it gets placed. So a good, strong P&L that like is way better. But I would go one step further. A lot of people using things like Deputy and Tender for payroll software management now. If they've got that set up well, you can even simplify that labour cost, those labour costs lines more so. Let your software apps such as your paws and your payroll software do the heavy lifting of splitting out those numbers for you, and keep your P&L as a simple snapshot of your business performance, not your analytics.

Ken Burgin:

Chris, well, we'll jump on to your section now. Some good comments coming through from different people here. The questionnaire about labour costs, maybe be a few people would to drop in and into that answer your experience of that as well..

You're coming from a different angle, do similar work crunching numbers for restaurants, cafes, food service. You're highlighting four figures here that are the ones we don't want to think about sometimes, aren't they?

Chris Green:

And they’re big ticket items. These are the ones that every business owner puts to the back burner. It's not in their face every day, but it creeps up on you every day. That's getting bigger and bigger every day. So you really need to know that these numbers, these amounts are going to have to be paid just around the corner. It's often why a startup will start to sweat and stress at about the four-month mark, because all of a sudden the first pass is due on the first super payment is due. Also as part of the startup costs, the workers compensation insurance and the business insurance. So these four numbers, I think are ones that need to be monitored very closely throughout the business process. It's pretty obvious why.

Chris Green:

I’m using Xero because it's the most common one in hospitality. Well, it's the strongest perform of across hospitality at the moment. If you can find out where to get this information, you'll be able to check it anytime you want day or night, provided your data is up to date. So you can set up a dashboard when you first open zero up in on the screen. You can actually set up an account watch list. So you can have GST, PAYG and super. You could also have your your sales, or you might be tracking your wages, expenses, and it'll give you a year to date figure as you're going along. As soon as you open it, that number's there. So that's the first place-

Ken Burgin:

Is that my liability or is that the amount?

Chris Green:

Anything that's on your balance sheet or P&L, you can actually set it up on your account watchlist.

You can track it every time you open Xero. The next thing you can do is you can actually learn to read your balance sheet report. So liabilities, it's what you owe. It's money that you owe to other people. So if you just run a balance sheet as of today's date, it should tell you in the liability section what money you owe out. So you've got accounts payable, that would be your suppliers. It'll just give you the total of that, goes straight to your GST, which we call the general ledger line. On this one, you can see that this person owes out $1564 in GST, the PAYG is highlighted there, and so is the superannuation payable. If you're organised, you would have another savings account somewhere with these three totals added together with the money already sitting there.

So my tip is: Don't touch it, it was never yours in the first place. Create what I call a war chest. Add a little bit extra to it and do it on a weekly basis. Do it in small chunks, even if every week that you set up a direct debit that $300 a week sweeps over to the war chest. When the BAS comes around, you're going to be a few $1,000 better off to pay that and you won't have missed it. A very simple process. I've got small cafe here in Brisbane that came to me as he was three or four months into his business. He was off the rails. I actually said to him, "If you don't touch Xero, I'll make my prices cheaper." He said, "Done." we've had a very happy relationship ever since.

Chris Green:

You can actually run a report in Xero and it's called the GST reconciliation report. If you have a Xero file that's been managed correctly, this information will be there. So the files column means what has been lodged to the ATO. It's a really good way to check if your accountant or bookkeeper is keeping your bases up to date, because we get clients come to us and say, "Oh, my accountant has missed three BAS’s. We're in a bit of a mess with the ATO."

Chris Green:

So this is accountability for your accountant or bookkeeper. Look at that filed column. That's what's been reported to the ATO. In the far right column, unfiled, that's the GST that just has not been lodged at the ATO. In this example, it's just a dollar here, a couple of dollars there. That's just rounding. So that's irrelevant.

Chris Green:

But GST collected, GST paid, you can actually see what's coming up for the next quarter BAS. They're last two lines there. You'll know how much money you've got to have put away for the next BAS. So that's a real good snapshot as to upcoming BAS’s.

We won't go into too much detail here. It gets a little bit too complex. But it's actually the journals or the movement of money that your accountant and BAS agent have actually put to the GST account. So the things are a little bit wacky, and your accountants move stuff around. Here's where you're going to be able to put a spotlight on it and see what they're up to. So we won't go into detail there. That's a topic in itself. Then you've got the account summary, which tells you if it reconciles or not.

Chris Green:

Now, this is the actual simplest one. You can actually run a generic BAS report in Xero and it will pick up, if your file is set up properly, will actually pick up the PAYG and GST amounts for you and tell you how much your BAS will be in the next quarter. So just go to reports, activity statement. It's in the account section there. Run it for the date, the expanded date range of your next BAS. It should tell you your figures for PAYG and GST as of today. I mean, as of tomorrow will be a little bit more because you would have had more sales.

Chris Green:

But as it stands today, this person's BAS is sitting at $20,844, which consists of GST and PAYG. So if you can at least do that, you'll know what's going to hit you next time the VAS comes up and the accountant says, "Hey, you better pay your BAS tomorrow." You'll already be prepared. So you can be empowered with that knowledge instead of waiting to be a victim.

Ken Burgin:

So what's your response, Chris, to the issue of time? About saving time, and I don't have time.

Chris Green:

Look, all of us get caught in that trap. We all run businesses, we all get caught in that trap, I get that. But if you can pick up just by doing this webinar, I think you're actually learning how to save time. So if you take away one thing from what's being presented from anybody here, you've probably saved yourself an hour, two hours a week. Just implement it.

Ken Burgin:

Steven, great to have your input here. Everyone knows Chatime. Hopefully you've got the app on your phone, I do. Getting offers every now and again. So we talked recently about your franchisees all have kind of standard setups on their screens. As a good franchise system has, they got the opportunity to have comparison between different stores and things that. Just picking up on a comment you made in the chat there too, when people were asking about labour costs, you said anywhere from 21 to 35%. Remember to find a balance between costs and sales growth. What do you mean the balance between costs and sales growth?

Steven Yeung:

I think sometimes we tend to dwell a lot on our costs, be it it's an expense that we pay on a weekly basis or a monthly basis. But when I say we need to find a balance, it's important that when we go into business, what are our objectives. By that I mean did you do a business plan, where do you see yourself? What is unique to you? What are you looking for?

Steven Yeung:

Are you looking to make lots of money or did you think that you were buying a business so that it's like McDonald's where it's going to print money for you? I think everyone has their own way of looking at a business. Certainly we can go in and save lots of costs. We can cut lots of labour. But at what expense? Because I've seen businesses where the owner has gone in and tried to cut as much cost as possible. As a result, service suffered. Probably the product wasn't as good as it should be. So as a result of that, you'll see over time that the business drops. I think for me, you need to find that balance.

Ken Burgin:

So how would you be measuring ... If someone's being too tight with their labour, understaffing is what you're saying, how are you going to see that showing up in sales figures? What are some things? Is there a little yellow flag goes up, when you're looking at someone's performance with that sort of thing?

Steven Yeung:

Look, of course, I think going back to your profit and loss, or your budgeting, having your budget, comparing the results to your budget weekly will give you a snapshot. There are lots of ways in doing that, right? But there's no need sometimes to focus on the full P&L. My belief is that you can only control what you can control. Now if you've committed to say $150,000 in rent for the annum, there's nothing that you got to do is going to be able to save that rent. So what you need to be focusing is how do you drive your sales so that your rent then becomes cheaper over time? Part of that is utilising the POS.

Steven Yeung:

Right? So the any POS system that I've come across has provided lots and lots and lots of data. Now, there's no need. Start learning on the basics of what suits your business and what you want to achieve. From that, then expand your knowledge. I've seen really, really detailed reports. I've seen very basic reports. But at the end of the day, I think your business setup, your POS setup is important for you to make an impact on your day to day operation.

Ken Burgin:

Tell us a bit about managing production times and the use of display system like the make screen. . How do you maximise the use? Really you work your point of sale pretty hard compared to a lot of people, I think.

Steven Yeung:

We do because we're quite hungry for data. I guess that we probably live in an era where we have a lot of opportunities to pick what kind of systems that we implement. Yes, getting the POS to work for you. But first of all, you need to understand what is it for? Now we introduced a production monitor for two main reasons. One is product consistency across the network because although we only just sell tea, you would not know that in our current menu, there are some 800,000 different combinations that you can have with those teas.

Ken Burgin: Wow!

Steven Yeung:

It's quite interesting, because when we talk about product within a cup, how do you train a staff member to make a consistent product every single time? That's only in one location. How do you standardise that across 125 locations? So that's why we introduced the production monitor, so that it gives guidance. It also is a reference point for the staff. But having that is also important. But at the same time, we want to utilise the platform to be able to give us a measurement of service. By that I mean how long does it take a staff member to make a particular product?

Now, what you'll see over time is that the production of a particular item decreases because as they get more skilled, they can make the product quicker. So the introduction of the make screens and the positioning of the make screen within your location is so important. It needs to be in a prime position. It needs to be somewhere where people can see.

Ken Burgin:

How do you locate it?

Steven Yeung:

We generally put it in the middle of the production area where the start of the production line all the way through to the production line you can see. Of course, the customers will be able to see the screen but won't be able to see the context.

Ken Burgin:

I'm thinking of the local Chatimes near me. They're very open, it's hard to hide anything.

Steven Yeung:

That's the main two reasons we use production monitors. We spoke a little bit about the time and ... I guess that there are two comments that I have to make. I think first of all, if I was a business owner, then what is my time worth? If I was able to hire and pay someone $30 an hour to do a specific role within the restaurant, is my time worth more or less than $30 per hour I guess? If I took five hours away from my business, and go through my P&L and understand it, can I add more value back to the business?

Steven Yeung:

That's the way I look at. Now, of course, there's a balance. You need to be aware of what's happening in your business on a day to day basis. Well, utilising things like dashboards can give you great insight as a snapshot as well. If you have those type of systems available to you, just picking out the key comparisons, am I on track with budget? Is it in line with my forecast? How am I comparing to last week? How am I comparing to last year? So I think these just real, simple numbers that we can look at to give us a guide.

Ken Burgin:

This comes back to that point I made earlier about a lot of hospitality people, they don't love numbers. They would have gone into banking or finance if that was their passion. Chris or Anja, dashboards. You both give you a very clear reports on a fortnightly or monthly or weekly basis, whatever customers want. What's your thoughts about ... Because a dashboard is something I'm almost able to look at anytime on my phone or just pull it up. It's available all the time.

Anja Carruthers:

I just wanted to say a dashboard is good as long as you have your data day by day. The problem with the dashboard is the problem in general or in general pulling data out of your system is the problem when you have delays in data entry. Then you're getting inconsistent data, not correct data. That's what I'm seeing a lot with creating dashboards. But if the data entry lags behind, then eventually the business owner will not trust the dashboard anymore. That's the biggest issue.

Chris Green:

Totally agree with her, is the currency of the data is going to make a big difference to trusting what the summary is of.

Ken Burgin:

The integrity theme that's come up several times already.

Chris Green:

We have pretty much all our clients on a weekly report. I've got a report pack that goes to their inbox, which includes balance sheet, P&L, accounts receivable, accounts payable. It's also the very last couple of pages is the list of all the transactions where everything's been coded. Some people do actually take the time to go through that and say, "Actually, that where you've coded to that expense, I know, it's a bit weird looking, but it's actually this. Can you change it? Can you move it?" So that just automatically my team, just emails that to the clients every Friday afternoon. The client inboxes go ping, ping, ping. We try to actually make a habit.

So part of the numbers process is having the habit to look at them because you'll actually identify trends. You'll get faster at it, and you'll just develop it as a skill. So if I can-

Ken Burgin:

It's a new muscle in a way, isn't that too?

Chris Green:

It's a new muscle. So if I can ping clients every Friday afternoon with something arriving in their inbox that reminds them to take a look at how they tracked even if it's just the top line of sales, they're starting to change the way that they lead their business.

Steven Yeung:

You're right. What we use dashboards for is generally live data. Now it's not going to be your final P&L for the month, but it will give you a clear indication to where you're at compared to last week last year without having to dig it up. So at a snapshot, at a press of a button, even in the same row, you'd be able to see your comparison. Now, that will give you the ability to make changes even on an hourly basis. Some businesses are weather bound. If it suddenly storms, then nobody comes to my restaurant anymore. So what can I do to mitigate the risks? What do I do with all the preps that I've done already as far as labour? Do casuals get shortened ships? All sorts of things. I guess the dashboard gives us live accurate data so that we can behave and react.

Ken Burgin:

I'm just going to jump on to ask Tyrone to make some comments, because he knows the Chatime business pretty well. He's likes bubble teas as well also. Tyrone, interested to get your comments on some of these issues here because, as I said before, Chatime really works their paws really hard. Any tips for people who are thinking, "Hey, I want that." How do we get more from the current point of sale? Someone mentioned Square before, which is a simple, inexpensive system? Is all of this stuff available through Square?

Tyrone Ho:

I think I actually replied to someone's question where they say is Square good or not. I said Square is a pretty good POS. In terms of real time dashboards and stuff like you can definitely get that. If you're talking about time and data integrity, if you can integrate your pause, one into your accounting system. I think, Chris, you mentioned Tanda or Deputy and stuff like that, if you can integrate all of those things, that saves heaps of time, if you're not worried about data integrity.

Tyrone Ho:

If it's a realtime solution because I mean, one of the biggest things, Ken, I don't know if ... Especially we've talked a lot about labour costs, but realistically, whether it's weekly, fortnightly or monthly, if you're looking back and you go, "My labour cost is high," you actually can't really change that. Past tense. You're going to go, Oh, it's too late.

If labour cost is something super important in my opinion, get a POS that supports real time sales transactions and has an integration to like a Tanda. So that you can actually know in real time or even send an alert and go, "Oh my god."

Ken Burgin:

Right. I can see the results. Wednesday morning seems pretty slow. I can actually see my labour cost for Wednesday morning against my sales almost.

Tyrone Ho:

I'm sure Steven set up in there a very amazing setup, but unique because they use some BI tools as well to have a look so that when it goes above X percent, there’s an alarm bell that goes off.

I think there was a good question when someone said adjusting labour isn't always an option for some businesses, right? Because if they have one barista one chef and one waiter, so all waitstaff. I actually tend to agree and go, "Well if that's the minimum, then you need to be focusing on KPIs that will help you increase that.

Let's increase average spend per head or transaction value. Because there is, it's almost a fallacy trying to focus on labour costs. If you know, you're never going to be able to decrease this.

Ken Burgin:

Interesting. Any other of these points that I've got up for Steven that Tyrone you want to pick up on?

Tyrone Ho:

The production time is, in my opinion, if you're trying to find the root cause or solution of potentially high labour or where you can pick up efficiency, actually knowing what your main times are and then even tying that back to you is there particular peoples that are better on the fry station or something than someone else.

Ken Burgin:

Steve, you do track sales by individual staff members as well?

Steven Yeung:

Yes, we do. we use it primarily as an incentive. So obviously, we can see if someone is upselling as opposed to someone that's not or if there's any trends or things that are happening, any opportunities. But we use it primarily for incentive to say, "Look, this is the general dollars per hour that we sell." If the team can get to X, then this is your reward. We tend to find that works very well, is that.

Ken Burgin:

Is this financial or time off or what works best?

Steven Yeung:

It's funny, because it's the recognition that is most important to the staff. So you could do anything simple from a $20 JB Hifi gift card for the winner of the week, so to speak. That has such a huge impact, especially if you publicly acknowledge this person for winning that. People say, "Oh." Yes, time you need to put the time in it. But imagine if every one of your staff sold an extra $10 per transaction over 1000 transactions for a week, the numbers are quite good if you look at it that way.

Chris Green:

Can I give you a tip? Actually talk to your accountant because the gift cards, if you gave someone a Coles voucher, for example, so long as it's not classed as entertainment, you can actually put it through as a deduction. So talk to your accountant.

Ken Burgin:

We’re coming up to the end of our time here. Tyrone put a whole lot of information here for us, which I think we covered some of it. I've been quizzing him about Steven's data, but I'll be sending all this out as well, the slides out to you. Because there's a lot of detail there that I know people want to look through as well. Tyrone, just quickly, any other pointers from your list there? One thing I'd like to ask you about is exceptions. You said check exception reports, things that get flagged about maybe things that are going wrong.

Tyrone Ho:

Probably the number one is probably never assume. Whoever sending up a post-it note knows best. But in relation to exceptions, , especially, I mean, if you're not working the business or if it's a restaurant business where it's orders go in and the client pays at the end, the exception reporting overviews of no sale, that's normally a pretty big red flag for me. Changing payment types and editing a finalised sale. So maybe it was paid by cash and then they went on, "No, I've got to put a discount on this now." Most POS have some some kind of exceptions in their reporting.

The old trick we used to have, you just say to a customer, "Why don't you just print off this report and accidentally just leave it in the staff room one day?" Then magically, you'll see over the next couple of weeks the exceptions decline.

Ken Burgin:

Thanks to Chris and Anja, to Steven, to Tyrone, and to Sven and Angus for helping out.