Tracking Key Performance Indicators (KPIs) is absolutely essential for any restaurant business to understand its health, identify areas for improvement, and make data-driven decisions. KPIs provide a clear, quantifiable measure of performance across various aspects of your operation.
Here are the key KPIs to track in a restaurant business, categorized for clarity:
These KPIs are directly related to your restaurant’s revenue and expenses, painting a clear picture of its financial health.
1.Total Sales/Revenue:
What it measures: The total amount of money generated from food, beverage, and other sales.
Why it’s important: The most fundamental measure of your business’s top-line performance. Track daily, weekly, monthly, and yearly to identify trends.
How to calculate: Sum of all sales for a given period.
2.Cost of Goods Sold (COGS) / Food Cost Percentage & Beverage Cost Percentage:
What it measures: The direct cost of ingredients and beverages used to produce the items you sell, expressed as a percentage of sales.
Why it’s important: Critical for profitability. High percentages indicate waste, inefficient purchasing, or incorrect pricing.
How to calculate:
COGS = (Beginning Inventory + Purchases) – Ending Inventory
Food Cost Percentage = (Total Food Cost / Total Food Sales) x 100
Beverage Cost Percentage = (Total Beverage Cost / Total Beverage Sales) x 100
Typical benchmarks: Varies by concept, but generally 25-35% for food and 18-28% for beverages.
3.Labor Cost Percentage:
What it measures: The percentage of your total sales spent on employee wages, salaries, benefits, and payroll taxes.
Why it’s important: Labor is often the second-largest expense. Tracking this helps optimize staffing levels and control costs.
How to calculate: (Total Labor Costs / Total Sales) x 100
Typical benchmarks: Varies by service style, often 25-35%.
4.Prime Cost:
What it measures: The combined total of your COGS and labor costs. This is your biggest controllable expense.
Why it’s important: A holistic view of your most significant variable costs. Keeping this in check is vital for profit.
How to calculate: COGS + Total Labor Costs (often expressed as a percentage of sales).
Typical benchmarks: Ideally under 60-65% of total sales for full-service restaurants.
5.Gross Profit Margin:
What it measures: The percentage of revenue remaining after deducting the cost of goods sold.
Why it’s important: Shows the profitability of your core products before other operating expenses.
How to calculate: ((Total Sales – COGS) / Total Sales) x 100
6.Net Profit Margin:
What it measures: The percentage of revenue remaining as profit after all expenses (COGS, labor, rent, utilities, marketing, etc.) have been deducted.
Why it’s important: The ultimate indicator of your restaurant’s overall financial success.
How to calculate: ((Total Revenue – Total Expenses) / Total Revenue) x 100
7.Average Check Size (or Average Per Person Spend):What it measures: The average amount a customer spends per transaction or per person.Why it’s important: Helps assess menu pricing, upselling effectiveness, and customer purchasing behavior.How to calculate: Total Sales / Number of Checks or Total Sales / Number of Guests Served.
8.Break-Even Point:What it measures: The point at which your total revenue equals your total costs (fixed and variable), meaning you’re neither making a profit nor a loss.Why it’s important: Crucial for understanding how much revenue you need to generate just to cover your expenses.How to calculate: Total Fixed Costs / ( (Total Sales – Total Variable Costs) / Total Sales)
II. Operational Efficiency KPIs
These KPIs focus on how smoothly and effectively your restaurant runs.
9.Table Turnover Rate:
What it measures: The total amount of money generated from food, beverage, and other sales.
Why it’s important: Maximizes revenue potential, especially during peak hours. Helps optimize seating and service flow.
How to calculate: Number of Parties Served / Number of Tables Available (for a given period).
10.Revenue Per Available Seat Hour (RevPASH):
What it measures: The revenue generated per seat per hourWhy it’s Why it’s important: A powerful metric that combines revenue, time, and capacity. It tells you how efficiently you’re utilizing your dining space.
How to calculate: Total Revenue / (Number of Seats x Operating Hours)
11.Inventory Turnover Ratio:
What it measures: How quickly your inventory is sold or used over a specific period.
Why it’s important: High turnover indicates efficient inventory management, reduced waste, and optimal cash flow. Low turnover can mean over-ordering or slow-moving items.How to calculate: COGS / Average Inventory
12.Food Waste Percentage:
What it measures: The amount of food purchased that ends up as waste, typically as a percentage of food purchases or sales.
Why it’s important: Directly impacts food cost. Reducing waste improves profitability and sustainability.
How to calculate: (Cost of Wasted Food / Total Food Purchases) x 100
13.Order Accuracy Rate:
What it measures: The percentage of orders taken and delivered without errors.
Why it’s important: Directly impacts customer satisfaction and can lead to wasted food and lost revenue if errors are frequent.
How to calculate: (Number of Correct Orders / Total Orders) x 100
14.Service Time / Speed of Service:
What it measures: The average time it takes from order placement to food delivery, or from customer arrival to departure.
Why it’s important: Crucial for customer satisfaction, especially in quick-service or fast-casual environments. Impacts table turnover
III. Customer Experience & Marketing KPIs
These KPIs focus on how smoothly and effectively your restaurant runs.
15.Customer Satisfaction Score (CSAT):
What it measures: How satisfied customers are with their dining experience.
Why it’s important: Happy customers are more likely to return and recommend your restaurant.
How to calculate: Often gathered through surveys (e.g., “How satisfied are you on a scale of 1-5?”). (Number of Satisfied Customers / Total Survey Respondents) x 100.
16.Net Promoter Score (NPS):
What it measures: Customers’ likelihood of recommending your restaurant to others.
Why it’s important: Identifies promoters (loyal advocates), passives, and detractors, indicating overall loyalty and potential for word-of-mouth growth.
How to calculate: Based on a single question: “On a scale of 0-10, how likely are you to recommend us?” (% Promoters – % Detractors).
17.Customer Retention Rate:
What it measures: The percentage of customers who return to your restaurant over a specific period.Why it’s important: Retaining customers is more cost-effective than acquiring new ones. Directly impacts long-term profitability.
How to calculate: ((Customers at End of Period – New Customers Acquired) / Customers at Start of Period) x 100
18.Online Review Ratings & Volume:What it measures: Your average star rating on platforms like Google, Yelp, and TripAdvisor, and the number of reviews received.
Why it’s important: Heavily influences new customer acquisition (local SEO) and customer trust.
19.Social Media Engagement:
What it measures: Likes, shares, comments, and reach on your social media posts.
Why it’s important: Indicates brand visibility, community building, and the effectiveness of your social marketing.
20.Online Ordering Growth Rate:
What it measures: The increase in the number or value of online orders over time.
Why it’s important: Crucial for restaurants with significant takeout/delivery business, reflecting the success of digital channels.
IV. Employee Performance KPIs
These KPIs focus on the performance and satisfaction of your staff, which directly impacts customer experience and operational efficiency
21.Employee Turnover Rate:
What it measures: The frequency at which employees leave your restaurant over a given period.
Why it’s important: High turnover indicates potential issues with workplace culture, pay, or management, and leads to increased hiring and training costs.
How to calculate: (Number of Employees Who Left / Average Number of Employees) x 100
Regularly tracking and analyzing these KPIs will provide invaluable insights into your restaurant’s performance, allowing you to make informed decisions that drive growth and profitability.