Sales per labour hour vs covers per labour hour.

Sales per labour hour (SPLH)

SPLH hour is calculated by dividing the total sales revenue by the total labour hours worked. A higher sales per labour hour number indicates that the business is more efficient in using its labour resources, which can lead to higher profits.

Total sales revenue / Total labor hours = SPLH

Let’s say we run a coffee shop and we have 3 staff who sell £1500 worth of coffee and cakes on a 4 hour morning shift. The SPLH hour calculation will look like this.

£1500 in sales / 12 labour hours (3 people x4 hours each) = £125 SPLH

Let's say that we run the same calculation with the same 3 staff who are now working a 4 hour afternoon shift, this time the revenue is £750.

£750 in sales / 12 labour hours (3 people x4 hours each) = £62.50 SPLH

The results tell us that we're more productive in the morning because our sales per labour hour is higher. It's always the case in every business that SPLH will go up and down depending on your busy periods. So what you should do, is make this calculation for various periods to find out your daily or weekly SPLH.

Forecasting sales per labour hour

You can also work the other around and instead of calculating SPLH after a shift period has been worked, you can forecast in advance to help you schedule shifts more accurately. Of course you'll need some projected sales data in order to do this.

Let’s say I wanted to increase my SPLH from £40 to £62.5 and I know that my weekly revenue (sales) are £2500. I would divide the £2500 by the £62.50 which would give me 40.

So 40 is the maximum amount of hours I can schedule to meet my target SPLH. My next move would be to plan my scheduled shifts around the busiest periods. I don't want too many scheduled shifts for quiet periods, I want to have my staff in for the morning coffee rush or whenever is my busiest periods.

This is why you need to start recording daily sales trends so you can work out anticipated demand with accurate sales for a given period.

Improving sales per labour or covers per labour hour.

There are a number of factors that can affect sales per labour hour, including:

The type of business. Some businesses, such as restaurants, have a higher sales per labor hour than coffee shops. This is because restaurants typically have higher average order values.

The time of day. Sales per labour hour is typically higher during peak hours, when there are more customers.

The level of customer service. Businesses that provide excellent customer service often have higher sales per labour hour. This is because customers are more likely to return to businesses that provide a positive experience and will likely spend more as well.

There are a number of things that you can do to improve their sales per labour hour:

Optimise staffing levels. Make sure that you're staffing the businesses at the right levels to meet demand. Too few employees can lead to long customer wait times and lost sales, while too many employees can lead to unnecessarily high labour costs.

Train employees on sales techniques. Employees who are trained on sales techniques are more likely to upsell and cross-sell products and services to customers.

Focus on high-margin products and services. Selling products and services with higher margins will help to increase sales per labor hour.

Use technology to improve efficiency. There are a number of technology solutions that can help businesses improve their efficiency, such as point of sale tech for increasing revenue or work management tech like Pilla for increased productivity per employee.

Using covers per labour hour for hospitality businesses

SPLH can be problematic for hospitality businesses because the total can fluctuate a lot. Some businesses instead choose to measure covers per labour hour as a more accurate measurement of productivity.

It is very similar to sales per labour hour but instead of using sales (revenue), we swap that out for the number of covers. (A cover equals one person served).

So the formula is Covers / Total labor hours = CPLH

It is calculated by dividing the total number of covers by the total labour hours worked. A higher covers per labour hour number indicates that the business is more efficient in using its labour resources, which can lead to higher profits.