Thousands of organizations use Syft Analytics to measure their performance and plan for future success. Our Benchmark feature empowers these businesses to improve operations by comparing them to regional or industry competitors. By observing how other comparable firms are performing, business leaders can start formulating plans to boost productivity and achieve new heights of success.

To examine the trends throughout the UK in Q2 2024, we will concentrate our emphasis in this post on restaurants, an industry with a wealth of data on Syft. Continue reading to learn our main conclusions from compiled Syft data.

Syft’s Benchmark feature gathers data from businesses across various sectors to compare trends across regions. The data is an aggregation of anonymized data from Syft entities.

Now that we've considered where the data comes from, let's examine it and see what it can tell us about how restaurants are performing in the UK.

Sales and production costs (in the form of meals) are the primary emphasis of the restaurant sector. Notably, sales only happen after you've paid for the necessary supplies, machinery, and employees' wages. Put another way, you invest a significant amount of working capital upfront and must then wait for sales to start rolling in.

A restaurant has a lot of moving components, and you might think about a variety of KPIs. For this article, we will focus on two crucial KPIs:

Let's consider these, in turn, and investigate how they can help restaurant owners improve their performance.

As restaurants typically have slim profit margins, comparing costs to revenue is crucial. Thus, understanding the Gross Profit Margin helps us know how efficiently a restaurant manages its cost of goods sold (food and beverages) relative to its revenue.

A higher gross profit margin indicates a more profitable and efficient restaurant. However, it's worth noting that this metric doesn't include many expenses restaurants may have, such as electricity, wages, rent, rates, insurance, and utilities. As such, in a hospitality business, it's recommended that you aim to achieve a minimum of 70% gross profit across your sales mix.

Our benchmarking data found that, across the board, all regions reviewed stayed relatively consistent over the quarter, with the upper quartiles mostly achieving that desired 70%, except in South Africa, where it peaked at 64%. However, the middle 50% and lower quartiles mostly dropped below the mark, suggesting that they may need to reconsider their pricing or other business aspects that could be made more efficient.

As a restaurant, you should aim for a current ratio of more than 1, which would put you in a better liquidity position. Having short-term liquidity is essential for running a sustainable restaurant business. Illiquid restaurants may struggle to pay their suppliers or staff.

Syft’s data shows that the US is the only region with restaurants in both the top 25% and middle 50% that can cover their short-term debts with short-term assets if needed. In the UK, only those in the top 25% are able to do so.

Thus, although their Gross Profit Margins may be high, the UK restaurants reviewed here are not very liquid. This is a point of concern because if there is an emergency, a surprise expense, or a change in demand, these businesses may not be able to handle these new expenses and could face bankruptcy.

Judging by the data, while many restaurants may be managing their gross profit margins well, they are not in a good position to cover their short-term debts. So, there are potential risks they must prepare for.

As Chay says, "There's a lot of optimization you can do to optimize your working capital." The first step is to analyze the data you already have.

Benchmarking is a crucial tool for top companies, enabling them to identify areas where they lag behind and develop strategies to catch up or recognize areas of strength and enhance their processes further. Analyzing the past quarter's data on Syft reveals a diverse landscape: while some restaurants are thriving, many others could benefit from reevaluating their processes and pricing strategies. Businesses can make informed decisions to drive improvement and sustain growth by leveraging these insights.