Tanda Blog: Industry Insights

Industry Insights

“Buddy Punching” is costing businesses millions

According to the latest research, “Buddy Punching” is costing US businesses USD373 Million (or AUD471 Million*) annually. If you don’t know what buddy punching is, it is the practice of an employee clocking in at the office’s Bundy clock on behalf of another who might be coming in late for work. The practice of buddy punching isn’t […]

Not sure how to set your restaurant’s roster? Just follow your customer.

Chart your customer journey across your restaurant, then build your weekly shift schedule accordingly.

4 Helpful Tips for Your Restaurant Interior Design This 2018

Your restaurant interior design shouldn’t be an afterthought, and should be designed in a way that will drive more profit to your business. But how? To help you get started, here are four helpful tips to remember when designing and constructing your next restaurant. Size Matters Constructing your next restaurant starts with looking at the […]

Top 5 Digital Restaurant Marketing Tools You Need (2018 Update)

In today’s restaurant marketing, digital marketing is the name of the game. If you want to succeed in the restaurant industry, billboards and newspaper ads will no longer cut it. QSR Web reported that 2017 would be the year of digital marketing for restaurants. If you weren’t able to keep up with it last year, don’t worry! 2018 […]

5 Restaurant Solutions and Technology You Need to Succeed

Restaurant solutions and technologies should be incorporated in any restaurant’s day-to-day operations in order to succeed. Whether you are an up and coming restaurateur or an industry veteran, your restaurant’s ability to constantly innovate can be the difference between success or being in shambles. With that in mind, here are five restaurant solutions restaurant owners need […]

Ensure Enough Coverage for Your Restaurant at Any Given Time

Traffic at a restaurant ebbs and flows with the times. One moment you’ll only have a handful of patrons, the next an avalanche of customers are queuing at the entrance, waiting to be served. From being overstaffed at a certain time period, suddenly your staff are juggling multiple tables while tickets are lining up like […]

Retail Evolution: Why integrating your POS software is a must

The advances in credit card technology and the creation of the of the electronic payment terminal in 1982 revolutionised payment processing for businesses around the world. It leads to better cash flow management, and an increase in sales processing efficiencies, ultimately influencing customer spending behaviour. Over the years the technology has developed, and advancements like contact-less […]

5 Employee Onboarding Tips

New employees can come in on a daily basis. That is why it can be stressful for HR managers to welcome new staff on board and get them off and running on their first day. Here are five things to remember whenever you’re onboarding a new team member. Set Everything Up for Them New employees […]

The (True) Cost of Winning

On 12 July 2017, the Queensland Maroons whopped the NSW Blues 22-6 at this year’s State Of Origin series decider. It was attended by 52,540 screaming supporters at Suncorp Stadium and watched by millions more on the TV.  It was a game for the ages, featuring rookie Valentine Homes’s hat trick and Cameron Smith’s Man […]

Do you have to pay interns?

Internships are a great way for students and individuals to get experience and an idea of what’s in store for them in a given industry or job. However, the latest investigation by Fair Work into a popular startup has uncovered serious contraventions regarding the non-payment of ‘interns’. While some businesses may act dishonestly, most businesses […]

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How this retailer increased profit by $8.9m from rostering more hours

There has been a lot of speculation on why we are losing retailers so fast. An interesting research piece from the US presented an alternative hypothesis that generalises the issue down to rostering for profit rather than rostering to control costs. For context – If you were given the choice of increasing revenue by 5% or reducing costs by 5% in order to create the most profitable outcome, what would choose? A “back of the hand” calculation would show that reducing costs increases profit more than the equivalent uptick in revenue. Accordingly, most retailers choose option two. This makes sense if you assume the two scenarios are independent of each other, but what if the cost was your employees? This is where the problems arise. For industries like retail, where staff have a direct impact on sales, it’s not as simple of a question as cutting costs to increase profit. In a study led by Professor Marshall Fisher from Wharton, he and his research team constructed a conceptual model from historical data to identify stores within a US-based retail chain that had the highest potential to benefit from increased labour spend. Importantly, the strategy was actually implemented at 168 retail sites over a 26-week period to validate the model, with the retailer electing to implement the strategy further. The result: A near $8.9 million increase in profit of the stores included. The labour cost challenge The challenge in allocating labour budgets lies in the tradeoff between the known immediate payroll cost and the less certain increase in sales that could be achieved with more staff on hand. The researchers point out that retail managers have a tendency to overweigh the decision to reduce the known payroll cost than the less certain increase in sales which could be achieved by allocating additional labour spend. The labour budget death spiral The study highlights the limitation of the most common retail strategy — setting labour budgets as a portion of sales. Fisher points out that this approach creates a circular problem by failing to take into account how store labour spend can positively impact sales, with the worst case leading to a spiraling effect of reduced sales forecasts reducing labour spend which reduces sales further and so on. Quantifying the impact of labour spend on revenue Creating labour budgets that are designed to maximise profit requires retailers to know on a store-by-store basis the correlation between labour-spend and sales. One way to do this is by looking at times when staffing levels deviate from the original schedule. If ten staff were scheduled on a particular day, but on that day only eight turned up, did sales also decrease by the same portion? If not, by how much? If the answer to the above is that sales didn’t decrease at all, the store is likely overstaffed. If there is a measurable impact, the inverse scenario is likely true and the store may be losing sales by being understaffed. This is the same approach used in the study, which found the relationship between random staffing deviations and impacts on sales was statistically significant. Results showed an increase in labour spend pointed to increased sales at varying degrees, depending on known store attributes. Implementing the strategy for profit The study identified stores in a US retail chain which had the highest market potential, making them good candidates for an increased labour spend. The market potential factored in attributes like average basket value and proximity to competitors, which would create scenarios that allow workers to have the highest impact on converting sales. In the study, 168 stores were selected this way, then allocated a 10% increased labour budget over a 26-week period, of which 75% of the increase was actually consumed in practice by the stores. The outcome was a 4.5% increase in revenue at the impacted stores and resulting in a near $8.9 million profit increase. Learning from the strategy The study shows empirically why the common practice of setting labour budgets as a fixed proportion of forecasted revenue is often self-defeating when applied in a retail setting. An opportunity exists to all retailers to leverage this same profit-centric model for defining labour budgets. The data required is available to all retailers however, it may just be a matter of leveraging that information with the right systems. An integrated forecasting strategy that integrates foot traffic, sales, and employee scheduling data is a practical opportunity afforded to retailers of any size to optimise their labour resource allocations. The interesting part is, Fisher’s research is readily available to all retailers who are looking to drift away from the traditional method of fixing labour budget rosters. The next step is to get this method of labour resource allocation battle-tested in the Australian markets. Stay tuned. Up next: What is the Contingent Workforce and how can you leverage it in your business?

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