Restaurant KPIs: 17 Restaurant Metrics to Monitor in 2024
Are you a restaurant owner passionate about success?
Then you need to understand the importance of monitoring key performance indicators (KPIs).
According to CNBC report, almost 60% of new restaurants fail within the first year, often due to poor record-keeping and an inability to gauge profitability. If a restaurant can't keep good records, the rate of business failure is quite high, as it's not possible to determine whether they are making a profit or experiencing a loss.That is why tracking restaurant KPIs is crucial. These metrics provide valuable insights into your business's health, helping you make informed decisions and drive growth.
In this article, we'll delve into what restaurant KPIs are and explore the essential Key Performance Indicators you should monitor to ensure your restaurant thrives.
What Are Restaurant KPIs?
Key Performance Indicators (KPIs) in restaurant are measurable values that demonstrate how effectively a restaurant is achieving key business objectives. They help managers and owners track progress towards goals, identify areas for improvement, and make data-driven decisions. In the context of a restaurant, KPIs can cover various aspects, such as financial performance, customer satisfaction, operational efficiency, and employee productivity.
What Are Restaurant Metrics?
Restaurant metrics are specific data points used to measure and evaluate the performance of various aspects of the restaurant. While KPIs are often tied to strategic objectives and long-term goals, metrics provide the detailed quantitative data needed to assess day-to-day operations and identify trends. Metrics are the building blocks of KPIs, offering a granular view of performance in specific areas.
Why Are Restaurant KPIs and Metrics Important?
Restaurant KPIs and metrics are essential for several reasons:
1. Informed Decision-Making:
By providing concrete data on various aspects of the business, KPIs and metrics enable restaurant managers to make informed decisions that drive improvement and growth.
2. Performance Monitoring:
Regularly tracking KPIs and metrics helps restaurants monitor their performance against set goals and benchmarks, allowing for timely interventions when performance deviates from expectations.
3. Operational Efficiency:
Identifying inefficiencies and bottlenecks through metrics can help streamline operations, reduce waste, and improve overall restaurant efficiency.
4. Customer Satisfaction:
Understanding customer behaviour and satisfaction levels through relevant metrics can help enhance the dining experience, leading to increased loyalty and positive word-of-mouth.
5. Financial Health:
Financial KPIs and metrics provide insights into revenue, costs, and profitability, helping to ensure the restaurant remains financially healthy and sustainable.
6. Employee Management:
Tracking employee-related metrics helps in managing labour costs, improving staff productivity, and reducing turnover rates.
17 Restaurant KPIs to Monitor in 2024
1. Cost of Goods Sold (COGS)
COGS represents the direct costs attributable to the production of the food served in your restaurant, including the cost of ingredients and other direct expenses. It is a crucial metric for understanding the direct costs involved in your restaurant's food production and managing your profit margins.
How to Calculate Cost of Goods Sold (COGS):
To calculate COGS, add your beginning inventory to purchases made during the period and subtract your ending inventory.
Usual Rate: COGS typically constitutes around 25% to 35% of total revenue for a restaurant.
2. Revenue per Available Seat Hour (RevPASH)
RevPASH is a critical metric that measures the revenue generated per seat per hour. It helps you understand how effectively you're utilising your seating capacity. To calculate RevPASH, divide your total revenue by the number of seats and the number of hours the restaurant is open.
How to Calculate Revenue per Available Seat Hour (RevPASH)
To calculate RevPASH, divide your total revenue by the number of seats and the number of hours the restaurant is open.
Usual Rate: A good RevPASH is typically between $5 and $10 per seat per hour, depending on the type of restaurant.
3. Average Check Size
Another restaurant KPI is Average check size that indicates the average amount spent by each customer during a visit. It's essential for understanding customer spending patterns and identifying opportunities to upsell or cross-sell.
How to Calculate Average Check Size
To calculate the average check size, divide your total revenue by the number of checks.
Usual Rate: The average check size varies by restaurant type, but generally, higher values are better as they indicate higher customer spending.
4. Customer Acquisition Cost (CAC)
CAC restaurant KPI measures the cost of acquiring a new customer, including marketing and promotional expenses. Lowering your CAC while maintaining or increasing customer quality can significantly boost profitability.
How to Calculate Customer Acquisition Cost (CAC)
To calculate CAC, divide your total marketing costs by the number of new customers acquired.
Usual Rate: The ideal CAC should be less than a third of the customer's lifetime value (CLV).
5. Customer Lifetime Value (CLV)
CLV measures the total revenue a business can expect from a single customer over the entire duration of their relationship. Understanding CLV helps restaurants evaluate the long-term value of acquiring and retaining customers, guiding marketing and customer service strategies.
How to Calculate Customer Lifetime Value (CLV)
To calculate CLV, multiply the average purchase value by the average purchase frequency and then by the average customer lifespan.
Usual Rate: CLV can vary greatly depending on the type of restaurant and customer behaviour. For many restaurants, a typical CLV might range from $500 to $1,500, but this can be higher for establishments with frequent, high-value transactions.
6. Customer Retention Rate
Retaining existing customers is more cost-effective than acquiring new ones. This metric shows the percentage of customers who return to your restaurant over a specific period.
How to Calculate Customer Retention Rate
To calculate the customer retention rate, subtract the number of new customers acquired from the number of customers at the end of the period. Then, divide by the number of customers at the start of the period and multiply by 100.
Usual Rate: A good retention rate is above 85%, depending on the industry.
7. Food Cost Percentage
Food cost percentage KPI measures the cost of ingredients used to prepare dishes relative to the revenue those dishes generate. Keeping this percentage in check is vital for maintaining profitability.
How to Calculate Food Cost Percentage
To calculate the food cost percentage, divide the cost of goods sold by the total revenue and multiply by 100.
Usual Rate: A good food cost percentage is typically between 25% and 35%.
8. Labour Cost Percentage
Labour cost percentage helps you understand the portion of revenue spent on employee wages. Balancing labour costs without compromising service quality is key to profitability.
How to Calculate Labor Cost Percentage
To calculate the labour cost percentage, divide the total labour costs by the total revenue and multiply by 100.
Usual Rate: A good labour cost percentage is typically between 20% and 30%.
9. Table Turnover Rate
This restaurant KPI measures how often a table is occupied and vacated during a specific period. Higher turnover rates generally indicate better efficiency and higher revenue potential.
How to Calculate Table Turnover Rate
To calculate the table turnover rate, divide the number of parties served by the number of tables.
Usual Rate: A good table turnover rate is generally between 3 and 4 turns per table per service period.
10. Gross Profit Margin
Gross profit margin is the difference between total revenue and the cost of goods sold (COGS), expressed as a percentage. It reflects the efficiency of your operations and pricing strategies.
How to Calculate Gross Profit Margin
To calculate the gross profit margin, subtract the cost of goods sold (COGS) from the total revenue, then divide by the total revenue and multiply by 100.
Usual Rate: A good gross profit margin varies by industry but generally ranges between 30% and 50%
11. Net Profit Margin
Net profit margin indicates the overall profitability of your restaurant after accounting for all expenses, including operating costs, taxes, and interest.
How to Calculate Net Profit Margin
To calculate the net profit margin, divide the net profit by the total revenue and multiply by 100.
Usual Rate: A good net profit margin varies by industry but is generally between 5% and 10%.
12. Employee Turnover Rate
High employee turnover can be costly and disruptive. Monitoring this rate helps you identify retention issues and develop strategies to improve employee satisfaction.
How to Calculate Employee Turnover Rate
To calculate the employee turnover rate, divide the number of employees who left by the average number of employees and multiply by 100.
Usual Rate: A good employee turnover rate is generally below 20% annually.
13. Customer Satisfaction Score (CSAT)
CSAT measures customer satisfaction through surveys or feedback forms. High CSAT scores indicate positive customer experiences and can lead to increased loyalty and positive word-of-mouth.
How to Calculate Customer Satisfaction Score (CSAT)
To calculate CSAT, divide the number of satisfied customers by the total number of responses and multiply by 100.
Usual Rate: A good CSAT score is typically 80% or higher.
14. Net Promoter Score (NPS)
NPS gauges customer loyalty by asking how likely they are to recommend your restaurant to others. A high NPS signifies strong customer loyalty and satisfaction.
How to Calculate Net Promoter Score (NPS)
To calculate NPS, subtract the percentage of detractors from the percentage of promoters.
Usual Rate: A good NPS score is above 50.
15. Reservation No-Show Rate
No-shows can lead to lost revenue and wasted resources. Monitoring this rate helps you implement strategies to reduce no-shows, such as confirmation calls or deposit requirements.
How to Calculate Reservation No-Show Rate
To calculate the no-show rate, divide the number of no-shows by the total number of reservations and multiply by 100.
Usual Rate: A good no-show rate is below 10%.
16. Online Review Ratings
Online reviews significantly impact your restaurant's reputation. Tracking your average rating and the number of reviews on platforms like Yelp, Google, and TripAdvisor helps you manage your online presence.
How to Calculate Online Review Ratings
To calculate the average review rating, divide the sum of all ratings by the total number of reviews.
Usual Rate: A good average rating is generally above 4 stars.
17. Social Media Engagement
Engagement on social media platforms can drive traffic to your restaurant and increase brand awareness. Track metrics such as likes, comments, shares, and followers to gauge your social media performance.
How to Calculate Social Media Engagement
To calculate the engagement rate, divide the total engagements by the total number of followers and multiply by 100.
Usual Rate: A good engagement rate varies by platform but generally ranges between 1% and 5%.
How POS Systems Can Help Track Restaurant KPIs
Modern POS systems are invaluable tools for tracking and managing these KPIs and metrics. They provide real-time data and comprehensive reports, making it easier to monitor performance and make informed decisions. Here are some ways a restaurant POS system can assist:
1. Automated Data Collection:
POS systems automatically collect sales data, reducing the need for manual entry and minimising errors.
2. Real-Time Reporting:
Access up-to-date reports on revenue, sales trends, and employee performance, helping you make timely adjustments.
3. Inventory Management:
Track inventory levels and food costs, ensuring you maintain optimal stock levels and reduce waste.
4. Customer Insights:
Analyse customer behaviour and preferences, allowing for personalised marketing and improved customer retention.
Putting it All Together
Monitoring these 17 KPIs for restaurants will provide you with a comprehensive understanding of your restaurant's performance. By keeping a close eye on these metrics and leveraging the capabilities of a robust POS system like POSApt, you can make informed decisions, optimise operations, and drive growth. Remember, the key to success lies not only in collecting data but also in analysing it and taking actionable steps to improve your restaurant's performance.
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