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AreTheyHappy 101: Essential Restaurant KPIs every Business Owner should know!

Maintaining a positive profit margin on a consistent basis can be challenging. Here are some of the key performance indicators (KPI’s) restaurant managers and owners should keep an eye on. The essential restaurant KPI’s we’re going to go over in this article are:

  1. Average Customer Headcount
  2. Average Revenue Per Customer
  3. Customer Feedback
  4. Food and Labour Costs
  5. Employee Turnover
  6. Overall Profitability

The most important Restaurant KPI’s

1. Average Customer Headcount

It’s obvious that any business will be doomed to fail unless you have enough customers coming through your doors.

Keep track of your average customer headcount to measure how many people are dining at your establishment.

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.

2. Average Revenue Per Customer

Once you’ve mastered the art of attracting customers into your business, you can begin looking at how successfully you’re converting those visits into revenue. There’s no use in having a business that attracts a lot of customers if you’re not actually making a profit.

So, look at how many customers are dining at your restaurant and then look at their overall spend. In other words, you want to get to a point where you know how much overall revenue you can make per customer? Tip: Aim for a high figure if your headcount is low or you’re targeting a niche audience. Learn the average industry turnover splits in your country. For instance, in the US, the average industry turnover split is around 66 percent for meals, 27 percent for alcoholic drinks and four percent for non-alcoholic drinks.

3. Customer Feedback / Customer Satisfaction

The way your customers see you is one of the most important factors in determining how well your restaurant performs. 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, Formitable, TableBooker etc. – essentially anywhere your customers are talking about, and potential customers are reading about you. In today’s age, they’ll talk about you whether you like it or not, so it’s best to at least have an opportunity to guide or be involved in the conversation.

What you can do offline: If you’re not getting enough feedback, 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. Some restaurants ask you to fill out a little NPS tablet upon paying the bill, but that’s not always ideal. When customers ask for the bill, they mean it. They actually want to leave already and not be asked to stay back to fill out a questionnaire.

No matter how you collect it, customer satisfaction is a great KPI because it’s feedback straight from the source. Your patrons have 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 / operational goals under “Customer Satisfaction.”

4. 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 restaurant 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.

5. 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 restaurant 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.

6. 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! Let us know if you have any questions, concerns or suggestions… or if you just feel like a chat! Send an email to [email protected] or click on the little support chat box on the lower right side of your screen. 🙌 Thank you to the AreTheyHappy community. We appreciate your feedback!

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