Mastering the operational disciplines (part 2) – period business reviews

Why period reviews?

Outstanding managers know they need to review all aspects of the operation on a regular and consistent basis alongside their unit manager (UM). The period review provides structure, ensuring that all aspects of a balanced operation are reviewed periodically. In practice this means the multi-unit manager and the UM looking at the operation together from four dimensions:

1. The customer’s experience: feedback, mystery customer surveys, observation of the “moments of truth” that customers have during their time with the brand.
2. The quality of operations: brand standards being met, health and food safety requirements maintained, maintenance and marketing initiatives.
3. The employee experience: recruitment, induction, recognition, and development.
4. The financial and KPI performance: compared to last year, budget and/or targets, focusing on both metrics and other subjective, yet key areas of performance.

The multi-unit manager should, over time, coach and develop their UMs to take ownership for this process and to almost see them as an external consultant; challenging current thinking and approaches, objectively observing performance, and providing broad best practices.

Multi-unit managers should develop a one-to-one business review into a process that covers operations through a formal, structured approach that develops UMs and consequently the units’ performance. On a monthly basis, each of the areas described below would be reviewed with the UM. This doesn’t have to be all on the same visit; they may be covered over several visits. The frequency of visits will be determined by an analysis of the individual unit’s performance to help identify priorities, answering the question for the UM: “Which units need me to visit most often and why? Can I quantify this? What other data do I have to support my analysis?”

Big rocks

These are either negative trends affecting profitability or positive opportunities to enhance profitability. Realistically, most operators can most influence three factors that, for the most part, determine the profitability of the unit:

1. Sales
2. Labour
3. Cost of goods and margin management

Other costs such as rents, business rates and utilities are barely influenced by the operator and so are left largely to one side. Costs relating to maintenance, and disposables are certainly influenceable by operators, but again these are issues around the periphery rather than the key factors affecting mid- to long-term profitability.

The focus should be placed on the manager’s understanding of how their business is performing against a budget, target or plan for the three big rocks (sales, labour, cost of goods) as a minimum. Managers should be able to quantify accurately their unit’s performance against the budgets for the big rocks in cash and percentage terms.

Only by quantifying the gaps against budget or the opportunities to exploit further profitability, can a manager (and by extension multi-unit managers) create a robust action plan to tackle the correct big rock.

A balanced review of the operation

This starts with an analysis of actual versus budgeted performance for the big rocks. If there are negative gaps in performance, then measures must be identified to minimise these weaknesses and ultimately help the business to start hitting and exceeding the budget.

Whether the plan needs to fix the gap or exploit an opportunity, the same discipline applies that all initiatives on the action plan should have a clear measure identified. For example, if there’s a year-to-date sales gap of £11,780 then we need to identify actions that can claw back that money – and indeed go further than the precise amount needed.

The monthly period review meeting is the key moment when the plan is formally reviewed by the multi-unit manager and their UM. The UM must take ownership for updating the plan throughout the month; adding new actions, commenting on completed tasks and tracking performance against agreed measures. Each month, where possible, they also determine how much extra the initiative has delivered in terms of extra sales or savings on labour or food costs.

The success or failure of the initiatives is then the focus of conversation between multi-unit managers and their UMs, rather than typing up the updates or amending the figures at that moment. This is important pre-work for the UM, which they must own and be held accountable for.

This is a suggested structure for the multi-unit manager and UM to review during visits. In practice, the agenda below can be broken up across several visits over a month or so.

• Unit performance over the last month, year-to-date etc
• Quality of operations
• Customer experience
• Employee experience and development
• Competitor activity
• Progress towards key goals.

Units that are performing well, with strong management in place, will need less attention than those where results are behind expectations or where the UM needs greater coaching. Strongly performing managers should not be sidelined to focus on weaker ones, but they do need less frequent visits. In the case of strongly performing sites, the multi-unit manager may elect to visit once every four to six weeks but stay for the best part of the day to cover the period review agenda in one go.

Structure for the period review

A review of the most recent profit and loss and management reports that focuses on monthly results (against budget, as well as last year) and year-to-date performance. Where relevant, individual profit and loss lines should be explored to understand variances, but the onus is on the UM to have already analysed their performance and have answers ready for the discussion.

The conversation should move back and forth between the profit and loss and the quarterly action plan to determine the success of initiatives to drive sales or minimise costs. As before, it should be stressed that the UM comes prepared, knowing the extra revenue or savings achieved by the actions agreed on the plan.

Other KPIs such as customer feedback metrics can of course be discussed here and be linked back to the quarterly action plan. One-off actions and tasks should be recorded on a rolling action point tracker, which can be reviewed quickly during visits or phone calls, as needed.

The multi-unit manager’s role should always be that of a coach, not a cop. They should be asking questions to challenge the manager’s thinking and actions; not directing what needs to be done unless the UM is incapable of resolving a specific issue. Their focus is on understanding what their manager does and does not see in the unit and using coaching techniques to explore gaps in the perceptions of the UM and multi-unit manager.

From checking that the service process is followed and sitting in on shift briefings, to noticing examples of how servers upsell and bring the brand values to life. The time spent observing the operation in swing is critical and it’s best to involve the UM in the process to once again observe what they do and don’t see.

The UM should make notes of the actions that they need to take with deadlines and accountabilities, amending their quarterly action plan as needed. Multi-unit managers should emphasise reviewing these one-off actions and quarterly action plans to see what progress is being made. 

Three key actions multi-unit managers should embrace for excellence

1. Structure and consistency – make sure that there is a structure to the period review that is used consistently. Emphasise the UM taking ownership of the agenda, ensuring they undertake all necessary preparation ahead of the meeting.
2. Focus and quantify – of course, UMs have many areas of responsibility but never lose sight of the key performance indicators (the big rocks). Train UMs to become comfortable with quantifying their results, ensuring they are fluent in the language of specifics and measurement.
3. A balanced review – as critical as the financial performance is, don’t forget to give sufficient time to review other key results areas, such as quality of operations, the employee and customer experience. Once again, get specific and require actions to be clearly written down, with an owner and a deadline for completion. Always!

Read part one about the road to operational excellence. Find out more about how we can support multi-unit managers or get in touch via contactus@masteringmultiunits.com.