Key Performance Indicators for Restaurants
KPI’s are important for restaurants because they keep objectives to the forefront in decision making. Key Performance indicators for restaurants are the most important metrics that you need to keep track of. Think of them as guide rails, and if you stay on track the results will take care of themselves. In the article below we explore the most important KPI’s for restaurants and how they can be applied to your business
Table of Contents
What are KPI’s (Key Performance Metrics)
Metrics tend to be overlooked in the restaurant and hospitality industry and this is especially true of non core business metrics. The old adage “What gets measured gets done” can be applied to any and all businesses and so also should be given greater consideration in the restaurant business. Without metrics and measurement restaurant operators have no real evidence that their strategies are working so we listed some of the main metrics to start measuring below. When compiling this list we give consideration to the advantage that technology and the internet offers when trying to get an accurate picture of your restaurants performance. You can use many tools for keeping track of these. Slack for restaurants is particularly good for team collaboration
Net Promoter Score for Restaurants
Customer Satisfaction
It can be one of the more difficult ones to collect but it is the number one requirement to keep you in business. If your customers are not satisfied they will go elsewhere. So what is it and how do you measure it? Customer satisfaction is subjective but that does not mean it cannot be measured. It is possible to develop a process with which to measure and then improve your customer service. If you can crack this metric measurement and incrementally improve over time you will have everything you need to build a lasting success. One measurement that is particularly useful is Net Promoter Score for Restaurants.
Number of Online Reviews
You really want to get as many reviews as possible. Reviews are so valuable in that they provide impartial feedback on your performance through the eyes of the customer. While bad reviews will have a initial negative impact they give you an opportunity to take corrective action so the next review will be better. Pick the top 3 or 4 review sites and measure how many reviews you get weekly – then try to increase that. If you are focused on the tourist or traveller trade you should pay special attention to Trip Advisor. Google Reviews are particularly important now also
RevPASH (Revenue per available seat hour)
RevPASH is an interetsing metric. It is perhaps the most complete and efficient metric you can apply to improve revenue and profitability in your restaurant. It incorporates sales measurement, seating efficiency, spend per head, resource allocation and operational efficiency. This is a metric explored by Cornell University which believes a restaurants unit of sale is the time it takes for the complete meal cycle, rather than just the meal itself. Best applied to your peak trading hours for the most accurate measurement of your complete performance. RevPASH offers a lazer focused metric and can be useful if you are operating at a high level of efficiency
Gross margin
The most basic and yet one of the most important metrics you can apply to your restaurant business. This can be applied to food sales and drink sales separately and combined to give one gross profit figure.Keep this number as high as possible without sacrificing quality and you have the platform you need to create a profitable restaurant. Gross margin is a foundational KPI for restaurants. It is the primary starting metric
Advertising ROI
Calculating your Return on Investment (ROI) from your promotions and advertising will save you from wasting money on ineffective advertising and promotion. How much revenue does you local city magazine ad bring in to your restaurant? Maybe lots, maybe little – either way you need to know and you need to track and measure it. With online advertising this task should be somewhat easier but make sure you have your systems set up in your restaurants so that you know where your customers are coming from. You can opt for digital ads, or you can invest in building your own audience and owning the restaurant customer relationship. Another good way to have a good advertising ROI is to capture guest email on WiFi and then do email campaigns for your restaurant
What gets measured gets done
Wages as a percentage of sales
One of the most important overheads in the restaurant industry is the cost associated with cooking and serving the food. A high wage percentage will create financial pressures that will not be sustainable. On the other hand a low wage percentage will guarantee a solid and stable financial base from which to grow your business.
Key Performance Indicators for Restaurants Summary
KPI’s are critical for the success of restaurants. To be successful over the longer term all of these restaurant key performance indicators will need to be on track. Modern POS tools will have a lot of these built in so accessing them will be easy. The most important thing is to be aware of the figures and work towards improving them
