How do you know if your brewery is performing well, where there may be opportunities for improvement or fixes required, and whether it’s positioned to survive these financially uncertain times? Tracking the right Key Performance Indicators or KPIs can help keep growth and performance on track.
Perhaps one of the biggest challenges is deciding which KPIs will prove most valuable to your business. There are KPIs that can apply to all businesses and industries; to the food and beverage industry; to specific brewing processes like fermentation; and to breweries in general.
Selecting KPIs that give you insights into big picture performance as a business along with KPIs specific to breweries may provide you the most valuable insights to help you track progress, analyze performance, and make decisions in today’s uncertain economic environment.
Financial KPIs to consider:
- Cash flow reveals how much cash your business generates and how much money is flowing through your business. It’s calculated by subtracting cash outflow (i.e., taxes, rent, supplier payments, etc.) from cash inflow from customer payments.
- EBITDA per unit measures profitability over longer periods of time like a month, quarter, or year (rather than a day or week). EBITDA stands for earnings before interest, taxes, depreciation, and amortization. In addition to cost of goods sold (COGS), which reflects the cost of raw materials and packaging, it accounts for all operating expenses (i.e., rent, marketing, salary, benefits, etc.).
- Gross margin per unit helps measure profitability by determining the percentage margin of a single unit after subtracting total COGS.
- Break-even point gives insight to profitability, by helping you understand the minimum number of units you need to sell in a time period to be profitable.
- Days inventory reveals the number of days inventory is in stock before it is transformed and sold as a finished product, which provides insight into your working capital. A significant decrease may point to pending cash flow issues.
Production KPIs to consider:
- Utilization rate is your brewery’s total production capacity measured as a percentage. When it decreases, production system issues or low orders may be to blame. It can also inform your decisions about scaling production.
- Cycle time is the average amount of time it takes to produce your product, from start until it is shipped. This KPI gives insight into how efficiently your machines are operating by showing how many days it takes to produce your product from start to finish.
- Throughput is the average number of units produced within a defined time period (i.e., day, week, month, etc.). This KPI gives insight into your production line’s efficiency. When it decreases, evaluate why and make needed adjustments.
Sales KPIs to consider:
- Average order value reveals how much each customer typically spends per order, which helps with sales projections, production plans and run rate. If you notice this KPI decreasing, evaluate whether there are improvement opportunities within your sales process.
- Fill rate measures how quickly total orders are filled and reach a customer’s destination. It provides insight into working capital efficiency and customer satisfaction, while also helping to identify the need for improvements.
For more insights, contact RBT CPAs’ advisory services team. As always, we’re also here to partner on all your tax, audit, and accounting needs so you’re freed up to focus on your business success. Give us a call today.