14 essential restaurant KPIs to monitor

14 Essential Restaurant KPIs to Monitor

For a successful full-service restaurant, understanding data and performance is crucial. Without this insight, you risk operating in the dark. To stay competitive, restaurant operators must track specific performance metrics that highlight areas for improvement and revenue opportunities. Here are 14 key performance indicators (KPIs) you should monitor.

The Importance of KPIs in the Restaurant Industry

Key performance indicators (KPIs) are essential metrics that reflect a restaurant's health, providing measurable insights based on strategic goals. They guide operators in assessing progress and making informed decisions, measuring everything from cost management to customer satisfaction. Effective KPIs help optimize profitability and guest experience, critical for sustained growth.

Revenue-Related KPIs

1. Average Check Size (Cover)

   Increasing the average check size through strategic pricing and upselling can significantly boost sales. Technologies like voice AI from Workforce.ai can enhance this by suggesting additional items.

2. Table Turnover Rate

   This KPI measures how efficiently a restaurant serves customers.

   Table Turnover Rate = Total Parties Served / Number of Tables

   Improving this metric boosts revenue and enhances the dining experience.

3. Revenue Per Available Seat Hour (RevPASH)

   This metric reflects revenue generated per seat per hour.

   RevPASH = Total Revenue / (Number of Seats × Hours Open)

Cost-Related KPIs

4. Food Cost Percentage

   This metric tracks the cost of producing each menu item against its selling price.

   Food Cost Percentage = (Food Cost / Sales Revenue) × 100%

   Inventory management software can help monitor food costs.

5. Labor Cost Percentage

   This KPI represents the ratio of labor costs to total revenue.

   Labor Cost % = (Total Labor Costs / Total Sales) × 100%

   Tools like employee scheduling software can optimize staffing.

6. Prime Cost

   Prime cost includes food, beverage, and labor costs, forming the foundation of expenses.

   Prime Cost = Direct Material Cost + Direct Labor Cost

Guest Satisfaction KPIs

7. Net Promoter Score (NPS)

   NPS measures customer loyalty by asking, "How likely are you to recommend us to a friend?"

8. Customer Feedback and Reviews

   Actively managing online reviews on platforms like Yelp and Google Maps shapes public perception and demonstrates commitment to customer satisfaction.

9. Repeat Customer Rate

   This rate indicates customer loyalty and satisfaction.

   Repeat Customer Rate = (Number of Repeat Customers / Total Customers) × 100%

Operational Efficiency KPIs

10. Inventory Turnover Ratio

    A high ratio indicates effective inventory management.

    Inventory Turnover Ratio = Cost of Goods Sold (COGS) / Average Inventory

11. Employee Turnover Rate

    This KPI is crucial in an industry with high turnover.

    Employee Turnover Rate = (Number of Employees Separated / Average Number of Employees) × 100%

12. Table Utilization Rate

    This metric ensures the restaurant serves the maximum number of guests.

    Table Utilization Rate = (Total Customers Served / Number of Tables) / Average Seating Time per Table

Financial KPIs

13. Gross Profit

    This KPI reflects total revenue after deducting the Cost of Goods Sold (COGS).

    Gross Profit = Total Revenue - Cost of Goods Sold (COGS)

14. Net Profit Margin

    This metric shows the percentage of revenue remaining as profit after all expenses.

    Net Profit Margin = (Net Profit / Total Revenue) × 100%

Shaping Your Restaurant's Future

The restaurant industry is constantly evolving. Staying ahead of trends and adapting operations is vital for long-term growth. The KPIs and strategies outlined here provide a solid foundation for transforming your restaurant into a thriving business. Focus on systematic growth, innovative technologies, and enhancing customer service for success.

Interested in learning how AI phone answering can improve staff efficiency? Sign up for a free 10-minute demo to see how Workforce.ai can help.