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Key Performance Indicators for Bars


Bars are exciting and fun work environments and a busy bar is a satisfying sight for owners and managers alike. Busyness unfortunately is no indicator of success and for a business to be truly successful in the short and long term the key business and financial metrics need to be viable. The old saying “what gets measured, gets done” is the rule in successful businesses and should be applied with equal vigour in the bar industry. It is only with knowledge that change can be applied, and we have listed some of the key performance indicators for bars in the following paragraphs.

Gross Margin

The most basic and yet probably most important metric you can apply to measure your bars performance. Measured as the difference between what you pay for a product and what you sell it for in percentage format it should be broken down into food and drink categories also. Keep this number as high as possible without sacrificing quality and you will have the platform you need to support your revenue growth.

Wages as a percentage of sales

Another very important cost for bars is the labour cost associated with serving drinks and cooking food measured against total sales. A high wage percentage will create financial pressures that will not be sustainable beyond the short term. A low wage percentage on the other hand will guarantee a solid and stable financial base from which to grow your business.

Customer Satisfaction

It may be more of a challenge to measure however it is the number one requirement to keep you in business. If your customers are not satisfied with your bars product and service they will go elsewhere. So what is it and how do you measure it? Customer satisfaction is sometimes difficult to quantify but can be measured. It is possible to develop a process with which to measure and then improve your customer service metrics.  If you can crack this metric measurement and incrementally improve over time you will have everything you need to make your bar a success.

Advertising ROI

Calculating your Return on Investment (ROI) from your advertising and promotions will save you a lot of money by cutting out ineffective advertising and drive revenue by increasing activity in areas that work. How much revenue does your local city magazine ad generate?  Advertising return on investment (ROI) needs to be measured. Activities like email marketing cost very little and generate a lot whereas expensive press ads may not yield a single customer. The results of this exercise are always interesting and can change your mind on how you spend your marketing budget very quickly.

Key Performance Indicators for bars

These are 4 of the most important measurements you should apply when assessing the performance of your bar. Keeping key performance indicators in the right zone will set your bar up for lasting success. Happy measuring.

Peadar Gormley

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