At Syft Analytics, we have access to the data of hundreds of businesses that use our platform to assess performance and plan for future success. While many firms use Syft primarily for reports or consolidations, the Benchmark feature is an effective tool for improving operations by comparing them to regional or industry competitors.

Benchmarking is used by top firms worldwide to improve their performance. Business owners can begin to prepare to improve their performance and achieve new heights of success by observing how other similar firms are faring.

In this post, we'll focus on an industry with a lot of Syft data - restaurants - to discover what's trending in Australia in Q2 2024. Read on for some major insights from Syft's aggregated data.

Syft's Benchmark feature collects data from organizations in various industries to examine trends across regions. The information is an aggregate of anonymized data from Syft entities.

Now that we've discussed where the data comes from, let's see what it can tell us.

The restaurant industry primarily focuses on sales and production expenses (the cost of making meals for customers). What's important to note is that, for restaurants, sales occur only after money is spent on essential materials, equipment, and employee wages. In other words, you invest a significant amount of money in working capital upfront, anticipating that customers will start coming in.

A restaurant has many moving parts and can be measured using a variety of key performance indicators. When analyzing restaurant data from Syft, we focused on the Gross Profit Margin and Current Ratio. Let's look at each of these and how they can help restaurant owners improve their performance.

Evaluating the relationship between costs and revenue is essential for restaurants, which often operate with narrow profit margins. Therefore, grasping the Gross Profit Margin is vital for assessing how effectively a restaurant manages its cost of goods sold (food and beverages) in relation to its revenue.

A higher gross profit margin signifies a more profitable and efficient restaurant. However, it is essential to note that this metric does not include many other overhead expenses that restaurants may incur, such as electricity, wages, rent, rates, insurance, and utilities. Consequently, it is advisable for hospitality businesses to aim for a minimum of 70% gross profit across their sales mix.

Our benchmarking data revealed that, overall, all regions reviewed remained relatively stable throughout the quarter. The upper quartiles generally achieved the desired 70%, except in South Africa, where it peaked at 64%.

However, the middle 50% and lower quartiles mostly fell below this benchmark, indicating a potential need to reevaluate their pricing strategies or other business aspects to enhance efficiency.

As a restaurant, you should aim for a current ratio of more than 1 because this would put you in a better liquidity position. Having short-term liquidity is essential for running a sustainable restaurant business. Illiquid restaurants may need help paying 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 Australia, only those in the top 25% can do so.

Despite having high Gross Profit Margins, these restaurants lack liquidity. This is concerning because, in the event of an emergency, unexpected expenses, or a shift in demand, these businesses may struggle to cope and could risk bankruptcy.

According to the data, although many restaurants are managing their Gross Profit Margins effectively, they are not well-positioned to cover their short-term debts. Consequently, they must prepare for potential risks. Here are a few actions they might consider taking:

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 an essential tool for leading companies, helping them pinpoint areas where they fall short and devise strategies to improve. It also helps them identify strengths to further refine their processes. Analyzing data from the past quarter on Syft shows a varied landscape: while some restaurants excel, others might benefit from reassessing their processes and pricing strategies. Utilizing these insights allows businesses to make informed decisions that drive improvement and support sustained growth.