NEXT
Download
1 / 34

NEXT - PowerPoint PPT Presentation


  • 94 Views
  • Uploaded on

NEXT. NEXT. Front of the House Economics: Optimizing Payroll Investment. Contents. 4. 14. 24. 27. Fundamental Front of House Retail Math Formulas. Average Transaction (AT). Total Sales $ Number of Transactions. Units Per Transaction (UPT). Total Units Sold Number of Transactions.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'NEXT' - noelle


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

Next

NEXT

Front of the House Economics:

Optimizing Payroll Investment


Contents
Contents

4

14

24

27


Fundamental front of house retail math formulas
Fundamental Front of House Retail Math Formulas

Average Transaction (AT)

Total Sales $

Number of Transactions

Units Per Transaction (UPT)

Total Units Sold

Number of Transactions

Conversion %

Number of Customers

Number of Tickets


Fundamental scheduling formulas
Fundamental Scheduling Formulas

% of Sales

Total Sales $ x .15 = payroll budget

$1000 per Full Time Equivalent

Daily Sales $

$1000

x 8 hrs = scheduled hours

Gross Margin Return on Employee (GMROE)

Gross Margin $

Total Payroll $

= GMROE


Fundamental retail math formulas
Fundamental Retail Math Formulas

Calculate this month’s AT, UPT, and GMROE

Gross Sales: $65,250 Transactions: 715 Margin: 42%

Total Payroll: $9,850 Units sold: 1,240

GMROE

Average Transaction

Units Per Transaction

Total Sales $

Number of Transactions

Gross Margin $

Total Payroll $

Total Units Sold

Number of Transactions

$27,405

$9,850

1,240

715

$65,250

715

= 2.78

= 1.73

= $91.26


Mythbusters payroll edition
Mythbusters: Payroll Edition

Common “Golden Rules”

  • $3.00 GMROE

  • $1,000/FTE ($125/employee/hour)

  • 15% Revenue


Mythbusters payroll edition1
Mythbusters: Payroll Edition

Scenario 1

  • Open Sundays

  • 43% GM

  • Average Wage: $15/hr

FTEs and Payroll


Mythbusters payroll edition2
Mythbusters: Payroll Edition

Scenario 2

  • Open Sundays

  • 40% GM

  • Average Wage: $15/hr

FTEs and Payroll


Mythbusters payroll edition3
Mythbusters: Payroll Edition

For the $500,000 store, $3 GMROE is equivalent to 12-17% of Revenue


Mythbusters payroll edition4
Mythbusters: Payroll Edition

For the $2,000,000 store, $3 GMROE is again equivalent to 12-17% of Revenue


Mythbusters payroll edition5
Mythbusters: Payroll Edition

For the $500,000 store, $1,000/FTE yields a payroll of only $40,110, significantly lower than the other rules.


Mythbusters payroll edition6
Mythbusters: Payroll Edition

For the $2,000,000 store, $1,000/FTE yields a payroll of only $187,267, also significantly lower than the other rules.


Planning by service levels
Planning by Service Levels

  • How many people should we schedule today?

    • Rev/Employee?

    • GMROE?

    • % of Sales?

*Based on 43% margin and $15/hr


The incremental associate
The Incremental Associate

  • $4,000 Day

  • What if you add one more?

*Based on 43% margin, $15/hr rate and 15% payroll burden

If you added an additional associate to the floor, could they generate more than $40 an hour in incremental sales?


Planning by service levels1
Planning by Service Levels

Average Footwear Price

43% of the days with less than 20 transaction had a higher average sale than the highest day with 20 or more transactions.


Accounting for accounting
Accounting for Accounting

  • $4,000 Day

  • How many would you schedule?

  • $1000 FTE works for sales….BUT what are we forgetting?

Back of House


Exploring a combined approach
Exploring a Combined Approach

  • GMROE to establish the total payroll budget

  • $1,000/FTE to establish FOH and BOH budgets

GM $ / GMROE Target = Total Payroll Budget

1

Sales / # of Days Open/ $ per FTE = FOH FTEs

2

# of FTE’s for FOH * 2080 * Average Wage = FOH Payroll

3

Total Payroll Budget - FOH Payroll = BOH Payroll

4


Exploring a combined approach1
Exploring a Combined Approach

= $500,000/363 days /$1,000

= 1.38 FTEs * $14 * 2,080 Hours

= $71,667 – $40,110

= (43% x Sales) / 3 : $3.00 GMROE, Total Payroll Budget


Exploring a combined approach2
Exploring a Combined Approach

  • Owner role initially includes GM, Floor Manager, and buyers

  • As sales increase, responsibilities are distributed, first on a part-time basis, with associates filling both FOH and BOH roles

  • Owner may continue to fill a specific role as the business grows, but the roles must be clearly defined


Exploring a combined approach3
Exploring a Combined Approach

Quick Tips

  • 65% FOH & 35% BOH payroll allocation

  • Salary for FT Back of House only

  • Part Time rocks paid by stipend


One timers
One-Timers

  • 8 hour Saturday

  • 70% Footwear

  • Average Footwear Price: $115


One timers1
One-Timers

  • 8 hour Saturday

  • 90% Footwear

  • Average Footwear Price: $95

Mathematically, this works, but What does it not consider?


Plan by real estate 1 400 showroom
Plan by Real Estate: 1,400’ Showroom

Fit Rooms

Womens

Fitting

Footwear

Fitting

Fitting

Accs

Mens

Womens

Mens

Decompression zone

Cash wrap

Accs


Plan by real estate 3 500 showroom
Plan by Real Estate: 3,500’ Showroom

Fit Rooms

Footwear

Accs

Fitting

Fitting

Fitting

Fitting

Womens

Womens

Fitting

Mens

Womens

Mens

W

Accs

Womens

Womens

W

Accs

Mens

Mens

Decompression zone

Accs

Womens

Cash wrap


Zone offense
Zone Offense

Fit Rooms

Footwear

Accs

Zone 1

Fitting

Fitting

Fitting

Fitting

Womens

Womens

Fitting

Mens

Womens

Mens

W

Zone 2

Accs

Womens

Womens

Zone 3

W

Accs

Mens

Mens

Decompression zone

Accs

Womens

Cash wrap

  • Guarantees full service on busy days

  • Allows for ‘hand off’ so footwear customers are not abandoned

  • Success formula combines scheduling and training


Tools of the trade
Tools of the Trade

  • Scheduling tool demo:

    WhenToWork.com

  • Faculty: Skinny Raven Managers

    James Dooley & Ben Stolpman









ad