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Top Key Performance Indicators for Restaurants

Key Performance Indicators for Restaurants

Metrics tend to be overlooked in the restaurant 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.

Customer Satisfaction

It may present more of a challenge to measure 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.

Number of reviews online

It is very much in your interest to get as many online reviews as possible – good and bad. 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.

RevPASH (Revenue Per Available Seat Hour)

This 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.

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.

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 restaurant so that you know where your customers are coming from.

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

These are only a few metrics out of many that can be applied to your business but we feel they are the most relevant in the current age of connected customers. Measuring your performance is only the first and easiest part of the continual improvement process but without knowledge there can be no purposeful action.

Peadar Gormley

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