In the dynamic and competitive world of the restaurant industry, understanding and tracking Key Performance Indicators (KPIs) is not just beneficial—it’s essential. KPIs are quantifiable measures used to evaluate the success of an employee, site, or organization in meeting objectives for performance. For restaurant managers, district managers, and executives at multi-location restaurant chains, these metrics provide invaluable insights into the health and progress of their operations. This article will delve into seven broadly applicable KPIs that every restaurant business should track and how a digital site audit solution like AuditApp by MeazureUp can optimize field visits and assist multi-location restaurant companies in achieving their KPIs.
The Benefits of Monitoring KPIs
Monitoring KPIs can lead to improved performance and profitability. By understanding these metrics, you can:
- Identify strengths and weaknesses in your operations: KPIs give you a clear picture of what’s working and what’s not, allowing you to focus your efforts on areas that need improvement.
- Make data-driven decisions: With KPIs, you’re not just guessing—you’re making decisions based on hard data, leading to more effective strategies and better results.
- Set realistic and achievable goals: KPIs provide a benchmark for performance, helping you set goals that are challenging yet achievable.
- Measure the impact of changes and improvements: By tracking KPIs before and after making changes, you can measure their impact and adjust your strategies accordingly.
“If you can’t measure it, you can’t improve it”
– Peter Drucker, Business Consultant
7 Key Restaurant KPIs
The restaurant world is diverse, and so are the metrics that measure the success of those operating in it. Even within that wide-ranging industry, however, some KPIs are universally applicable. They provide valuable insights for fast food, quick-service and even fine dining restaurant operators. Here are seven KPIs that every restaurant should track:
Each of these KPIs provides a unique perspective on your company’s performance and can guide your decision-making process. They allow management to monitor different aspects of the business from operational efficiency to customer satisfaction and make data-driven, informed decisions.
Understanding and Calculating 7 Key KPIs
Sales per Square Foot
Sales per square foot is a measure of a location’s efficiency in utilizing its space. It’s calculated by dividing total sales by the square footage of the restaurant. This KPI is particularly important for restaurants operating in high-rent areas, where maximizing the use of space is crucial. A high sales per square foot indicates efficient use of space, while a low value may suggest that there’s room for improvement in layout or seating arrangement.
Table Turnover Rate
Table turnover rate is a measure of how quickly tables are being served and turned over to new customers. It’s calculated by dividing the total number of tables served by the total operating hours. This KPI is crucial for restaurants, especially during peak hours, as it directly impacts the number of customers you can serve. More customers equals more revenue! A high table turnover rate indicates efficient service and operations, while a low rate may suggest bottlenecks in your service or kitchen processes.
Average Customer Headcount
Average customer headcount gives you an idea of the average number of customers served during a specific period. It’s calculated by dividing the total number of customers by the number of days in the period. This KPI helps you understand your restaurant’s capacity and can guide decisions about staffing, inventory management, and even marketing efforts. A steady or increasing average customer headcount indicates a healthy customer base, while a decrease may signal a need to boost marketing efforts or improve the menu or customer service efforts.
Cost of Goods Sold (COGS)
COGS is a measure of the direct costs attributable to the production of the goods sold in a company. In the context of a restaurant, it includes the cost of ingredients for dishes and drinks. It’s calculated by adding the beginning inventory and purchases during a certain period, then subtracting the ending inventory. A lower COGS means higher profitability, especially in the face of supply chain-related expense increases, but it’s important to balance this with the quality and seasonality of your ingredients, as this can impact customer satisfaction and return rates.
Employee Turnover Rate
Employee turnover rate is a measure of how many employees leave your restaurant over a certain period, and it’s an important indicator of employee satisfaction. High turnover can lead to increased training costs and lower productivity, so it’s crucial to keep this KPI in check. It’s calculated by dividing the number of employees who left during a certain period by the average number of employees during that period, then multiplying the result by 100 to get a percentage. A high turnover rate may indicate issues with job satisfaction, management, or employee engagement, while a low turnover rate suggests a positive work environment.
Customer Satisfaction Score
Customer Satisfaction Score (CSAT) is a simple yet powerful KPI for any customer-facing business, including restaurants. It measures how satisfied your customers are with their experience at your restaurant. It can be calculated through customer surveys and feedback forms, with questions like “How satisfied were you with your experience?” A high CSAT score indicates happy customers who are likely to return and recommend your restaurant to others, while a low score may suggest areas for improvement in your service or menu.
Net Profit Margin
Net Profit Margin is a measure of your restaurant’s profitability. It’s calculated by subtracting all your costs (including operational costs, COGS, and overheads) from your total revenue, then dividing the result by the total revenue and multiplying by 100 to get a percentage. This KPI gives you the clearest picture of your restaurant’s financial health and can guide decisions about pricing, cost management, and growth strategies. A high net profit margin indicates a profitable restaurant, while a low margin may suggest a need to increase sales, reduce costs, or both.
The Role of Digital Audit Solutions
In today’s digital age, technology plays a crucial role in managing and improving KPIs. Digital field assessment solutions like AuditApp by MeazureUp provide a streamlined and efficient way to conduct site visits, monitor performance, and gather data. These convenient tools can help you:
- Track KPIs in real-time: With digital audit solutions, you can monitor your KPIs as they happen, allowing you to spot trends and make quick decisions.
- Identify trends and patterns: Over time, digital audit solutions can help you identify patterns in your KPIs, giving you insights into site-specific and company-wide performance and areas for improvement.
- Spot issues and areas for improvement: By tracking KPIs, digital audit solutions can help you spot issues before they become problems, allowing you to take proactive steps to improve.
Understanding and tracking KPIs is crucial for any restaurant. This data provides a clear picture of how success levels across locations and guides your decision-making process. Ready to take your performance to the next level at your restaurants? Schedule a free demo of MeazureUp at https://meazureup.com/demo/.