Updated on: February 2, 2025
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. Sales per labor hour 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 time frame.
This sales per labor hour information can be used to inform labor budgets, adjust labor requirements, and otherwise manage money on labor by managing key performance indicators. Use your labor hour formula in the following ways:
· Identify busy and slow times of the day, week, month, or year in order to make an effective forecast. Consider how customer experiences vary according to slow and peak times to make proper staffing adjustments. These factors impact money per labor hour more than you might think.
· Compare employee productivity across different shifts to make scheduling adjustments and keep costs down.
· Track and compare employee upsells through an analytical approach. Determine target sales by comparing historical sales with anticipated sales and customer demand.
· Determine business sales based on the number of employees working at a given time and determine scheduling accordingly. Take note of dramatic shifts and shift swaps, especially during peak business times, to make informed decisions aided by your labor hour formula.
· Compare your sales or productivity against industry benchmarks. Customer demand and sales revenue may vary in the restaurant industry, for example, between coffee shops and fine dining establishments. Determine normal levels and plan for a fair workweek for employee and customer satisfaction.
· Set goals for increased productivity. Sales per hour helps managers for many types of businesses plan for future sales based on historical sales and staff availability. A technical approach to business management includes making informed decisions with last-minute changes. Customize your goals to your history to make your workers and your customers happy.
At SynergySuite, we can help you prepare for effective forecasting using machine learning to properly schedule staff at each of your locations.
How to Calculate Your Sales Per Man Hour:
Sales per man hour (SPMH) can be calculated in four steps with a few key metrics:
- Select a time period.
- Determine the amount of revenue generated during that time period.
- Determine the number of staff working during that time period.
- 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, and then you can compare that to how much it’s costing you in labor to do so. You can use the information to adjust labor scheduling. You can 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.
A labor hour formula empowers you to maximize specific talent within harder times while reducing unnecessary labor costs and setting your employees on a path for success. Customer behavior may even improve accordingly as you do.
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. Evaluate these dips in sales to determine an appropriate benchmark for sales and to strike a balance between labor efficiency and normal changes in sales revenue.
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, reach target sales, or generally become more productive and efficient.
What is the best way to track sales and cases per man hour?
Cloud-based, back-office labor management 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. Incorporate your sales revenue numbers, including goals and actual sales figures, for accurate assessments and projections. Smart labor scheduling will help you reduce unnecessary labor costs, consider a daily labor report for the best approach to predictive scheduling. Reach out to us to see how we can help your restaurants improve your sales per man hour ratio.
