In this blog, I talk about what I refer to as the Critical Impact Activities (CIAs) that multi-unit managers must learn to execute consistently to be effective in their role. Here I dig a little deeper into each and give some examples of how I’ve helped multi-unit managers master these.
As a reminder, the six CIAs are – analyse, plan, communicate, observe, develop and review. In this blog, I’ll unpick analyse, but ultimately none of these activities should be carried out in isolation from the others. It’s important to remember that the CIAs are not a buffet; picking and choosing which ones to adopt will not make a multi-unit manager a world-class operator.
Analyse – this refers to all the tasks the multi-unit manager undertakes to review core business performance indicators (includes financial and other relevant KPIs). Most multi-unit managers are not starved of data; indeed they are often served huge portions of reports and information which they are expected to read, digest and respond to. The effective multi-unit manager goes beyond the top-line sales, labour and profitability numbers for their area and works to see individual gaps and opportunities.
For example, I worked with one multi-unit manager who, after seven periods of the year, was beating his sales budget by £278,000. Through the tight control of labour and cost of goods, they were able to deliver earnings before interest, taxes and amortisation (EBITDA) more than the budget by £140,000. This multi-unit manager’s performance compared very favourably to his peers and it would have been quite easy to stop there and be very content with the overall results achieved to date.
However, together we looked at each of his 18 units and identified who were the best and worst-performing units against controllable EBITDA. By controllable EBITDA I mean we looked purely at sales, labour and cost of goods sold as these are the primary drivers of profitability for the operator. Yes, they need to be aware of rents and rates, but these are set elsewhere and normally the multi-unit manager (let alone the unit manager) has no influence on budgets or actual costs for these. The same applies to a degree with the cost of utilities for the unit. Yes, they can influence these costs by a small amount but fundamentally it’s only going to have a marginal impact on profitability. What really matters is how effectively sales are driven, labour is deployed and inventory is managed (and in the case of food and beverage units, how effectively they manage their margin by focusing on waste, portion control etc).
Using a simple Excel tool we ranked the 18 units from the worst performance to the best (against EBITDA budget). This quickly ordered the units to show that six units were dramatically exceeding EBITDA budgets while five others were way off track. In fact, the five units that were missing their EBITDA number would, if addressed, add a further £128,000 of additional profit.
The tool then helped us to delve deeper to pinpoint if the make up of the profitability gap was sales, labour or cost of goods sold. Labour control is an interesting one to explore with multi-unit managers as too often operators fixate on either just their labour % or their overall labour spend (in £s or hours). I believe both must be analysed to see if there is a genuine case for investing more labour to drive sales or if labour can be reduced or redeployed.
I must recognise two individuals especially who have fundamentally shaped my views on the effective use of labour – Darrin Taylor and Bob Hetherington. “Labour leadership” is how they defined it and they extolled the virtues of being able to both increase labour when it could be shown to drive profitable sales and reduce labour in line with declining sales and customer numbers.
Ultimately, only by truly analysing the business performance can the multi-unit manager hope to quantify their gaps and opportunities to then prioritise their time and energy. While I’ve referred to key financial KPIs in this example, the same depth of analysis needs to be applied to the development of people as well.
Some multi-unit managers have access to some fantastic online performance management systems and tools. However, in my experience, the majority don’t have these resources to draw on but this shouldn’t prevent them from being proactive in this area. Indeed I think it is the hallmark of a great multi-unit manager to spend time analysing the strengths and opportunities that exist within their own team.
Professor Chris Muller refers to the simple process of keeping a “people inventory”. How often, he argues, do we count the stock in our units? Daily, weekly, monthly? How often do we take stock of the capabilities of our people? Rarely is it as often as the counting of our stock!
Keeping it simple is one way to help make sure people will do these things. My approach is to help multi-unit managers conduct that people inventory by considering what technical skills, knowledge and behaviours are required of the people in their roles or those they aspire to do in the future. What strengths exist in one individual that might be shared with another with a compatible development need?
Considering the strengths and development needs of the team should not of course be a solitary pastime. While the multi-unit manager should do some thinking of their own, they should also ensure their team member is ready and able to conduct the same reflection. Then they should meet to talk about their findings and agree a plan of action.
Getting to the heart of the business and people performance is not an easy or quick activity, despite the plethora of reports and systems that are often made available to multi-unit managers. It is however essential for the multi-unit manager to focus time on getting under the skin of their performance to help them quantify and prioritise what to do next. This goes to the heart of Stephen Covey’s time management matrix and the emphasis on activities that are important but not urgent. Spending that time to analyse the performance takes time but it is an investment that will pay dividends later as the multi-unit manager focuses on making a difference, where it makes a difference.