Maintaining a positive profit margin on a consistent basis can be challenging. Here are some of the key performance indicators (KPIs) restaurant managers and owners should keep an eye on.

The essential restaurant KPIs we’re going to discuss are:

  • Average Customer Headcount
  • Average Revenue Per Customer
  • Customer Feedback
  • Food and Labour Costs
  • Employee Turnover
  • Overall Profitability

 

Average Customer Headcount

It's obvious that any business will be doomed to fail unless you have enough customers coming through your doors. Keep a track of your average customer headcount to measure how many people are dining at your establishment.

It’s more than a good indicator of your ability to attract customers. When you combine it with your average revenue per customer (next point) and the number of covers, you can use that data to predict future targets and factor it into your cash flow projections.
 

Average Revenue Per Customer

Once you’ve mastered the art of pulling customers in, you can begin looking at how successfully you’re converting that into revenue. It’s no use having a restaurant that attracts a lot of customers if you’re not actually making a profit.

Look at how many customers are dining at your restaurant and how much overall revenue you’re making from them. Aim for a high figure if your headcount is low or you’re targeting a niche audience. The average industry turnover split is around 66 percent for meals, 27 percent for alcoholic drinks and four percent for non-alcoholic drinks.

 

Customer Feedback / Customer Satisfaction

The way your customers see you is one of the most important factors in determining how well your restaurant is performing. Monitor all your reviews on the different online sites - Facebook, TripAdvisor, Google My Business, Yelp, etc. and other relevant sites, like OpenTable, Deliveroo, Ubereats, Takeaway.com - essentially anywhere your customers are talking about, and potential customers are reading about you. 

Consider leaving feedback cards on the table - perhaps with a small incentive such as a five percent discount or a free drink on their next visit - if you're not getting enough feedback.

Customer feedback is a great KPI because it allows you to go straight to the source. Your patrons will let you know what they like and what's not up-to-scratch so you can play to your strengths and look for ways to improve.

It can take a lot of work to pull that data out and it can be difficult to quantify sometimes, but if a customer isn’t satisfied with service and they ordered, you need to know that. And, this is where AreTheyHappy can help you.

Here's a sample set of organisational goals under the "Customer Satisfaction"

Food and Labour Costs

With food, compare your food costs against your food sales. By calculating the cost of your food purchases for the week and comparing them to your actual food sales, you'll be able to get an understanding of how much produce you actually need. This KPI allows you to see if you're pouring money down the drain on unnecessary produce each week.

With labour, break down your wages into shift patterns, so you know how much each shift is costing you. Then, compare it against revenue from each of those shifts. This will allow you to analyse the effectiveness of your distribution of labour and give you a great indicator of how much turnover you need to have before considering putting on more staff for that shift or even reducing members.
 

Overall Profitability

Perhaps your restaurant is always fully booked and you’ve got glowing reviews from your customers. But your profits are being eaten away. Not exactly a good sign of success, is it? That’s why overall profitability should be a KPI. Monitor your dry and wet sales gross profitability so you can see how much of a return you’re actually generating from your food and drink in relation to your costs.

There is no set figure on what the average restaurant profit should be, but globally, the range spans from 0 to 15 percent, with three to five being the most common average. If you want to boost your profits, consider refreshing your menu, increasing prices (where and when appropriate), or ensuring your staff are trained to the point of maximum productivity. Look where you can reduce costs too by having a lower number of more efficient staff.
 

Employee Turnover 

How quickly you go through staff can be a big tell-tale sign for how well your restaurant is performing. If you have a high turnover of staff, you have to put in more time, money, and productivity for their training and onboarding. That's time and energy you could be putting into other tasks.

A great way to retain your staff is through good management and ensuring that your employees are happy and satisfied. Another thing is to consider their safety in the workplace.

Hope you found this useful! :) 

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