How to Calculate Sales Per Man Hour (SPMH)

How to Calculate Sales Per Man Hour, info shared by top restaurant accounting software, SynergySuite

What is sales per man hour? Sales per man hour (or SPMH or sales per labor hour) is a useful data point that can tell a manager how productive employees are during a given shift. SPMH is most simply determined by dividing the amount of gross sales in a set time period by the number of employees working during that same time period. If you made $500 in one hour and had five employees working, the sales per man hour (SPMH) is $100. Depending on how you track sales, you may be able to dig down deeper into the data to determine how much each individual employee was responsible for bringing in during a given period of time.

This SPMH information can be used to:

·       Identify busy and slow times of the day, week, month, or year in order to make an effective forecast.

·       Compare employee productivity across different shifts to make scheduling adjustments and keep costs down.

·       Track and compare employee upsells through an analytical approach.

·       Determine business sales based on the number of employees working at a given time and determine scheduling accordingly.

·       Compare your sales or productivity against industry benchmarks.

·       Set goals for increased productivity.

How to Calculate Your Sales Per Man Hour:

Sales per man hour (SPMH) can be calculated in four steps:

  1. Select a time period.
  2. Determine the amount of revenue generated during that time period.
  3. Determine the number of staff working during that time period.
  4. Divide sales (#2) by staff (#3).

The answer is your sales per man hour for that specific period of time. Keep in mind that your number will change throughout the day as your restaurant experiences peaks and lulls in business. 

Why Sales Per Man Hour Matters

1.     Gain Insight into Employee Productivity.

Sales per man hour is an important metric because it can help identify the most effective way to manage labor costs and tell you which of your employees are the most productive or when they are most productive. Using the data, you can gain insight into sales efficiency and determine how many staff you need during a given time of day to meet customer orders. 

2.     Compare Sales with Labor Costs.

Examining your sales per man hour allows you to see how many orders you’re completing during one hour, then you can compare that to how much it’s costing you in labor to do so. You can use the information to decide when to staff your lower and higher paid employees based on revenues that are generated during a given period of time. Or maybe you have an employee who is great at upselling; you can decide if you want to schedule him or her during your busy times of day to reach out to more customers or to schedule that person during the slower times of day to boost sales during that time.

3.     Evaluate Staffing Levels.

Sales per man hour can help show you when you are over or understaffed too. When your sales per man hour number decreases, you’ll know you’ve either hit a lull or have less productive employees working at that time and can make adjustments accordingly.

4.     Track New Staff Performance.

Sales per man hour is a popular way for managers to see how new staff are faring compared to experienced staff. By tracking it over time, you should be able to see an improvement as each new employee begins to work more quickly, generate more upsells, or generally become more productive and efficient.

What is the best way to track sales and cases per man hour?

Cloud-based, back-office software is the simplest way to obtain and track these metrics. Data pulled from POS systems provides accurate and timely sales reporting that feeds into your back office so managers can use it to identify sales per man hour and make staffing adjustments as needed.

Leveraging Technology to Manage Restaurant Labor Costs Whitepaper cover image

Leverage Technology to Manage Restaurant Labor Costs

Between increased costs, labor shortages, and socio-economic complexities - staying on top of labor costs is more important than ever for franchise owners.

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