7 Essential KPIs for Running a Thriving Sandwich Bar

Running a successful sandwich bar can be challenging - especially when trying to understand which metrics matter most. Whether you're a new business owner or a seasoned pro, keeping track of your key performance indicators (KPIs) is vital for success. In this article, we'll explore the top seven KPIs that every sandwich bar owner should monitor.

First on the list is average order value (AOV). This metric measures the average amount customers spend per order. In the competitive sandwich industry, increasing your AOV is a great way to boost revenue and profitability.

• Repeat purchase rate

• Customer satisfaction score

The next two KPIs on our list, repeat purchase rate and customer satisfaction score, go hand in hand. A high customer satisfaction score often leads to increased loyalty and repeat purchases. By tracking these metrics, you can identify areas where your sandwich bar excels and where there's room for improvement.

• Revenue per square foot

• Inventory turnover

• Employee turnover rate

• Number of new customers acquired

Finally, we have three additional KPIs that are critical for any sandwich bar owner. Revenue per square foot helps you understand how efficiently you're using your space. Inventory turnover is a measure of how quickly you're selling your products. The employee turnover rate can tell you a lot about the health of your workplace culture, and number of new customers acquired is a key indicator of growth.

Now that you understand the basic KPIs for a sandwich bar, let's dive deeper into each metric to learn how to track and calculate them correctly. Whether you're looking to optimize your operations, improve customer satisfaction, or boost your bottom line, these KPIs will help guide your decisions towards success.

Average order value

One of the top seven KPIs for sandwich bars is the average order value, which measures the average amount of money spent by customers per transaction.

Definition

The average order value (AOV) is the average amount of money spent by customers per transaction.

Use Case

AOV is used to assess the overall revenue generated by the sandwich bar and its ability to maximize sales opportunities per customer.

How To Calculate KPI

To calculate AOV, divide the total revenue by the number of transactions. The formula for calculating AOV is:

Calculation Example

If a sandwich bar generates a total of $10,000 in revenue from 500 transactions, the AOV would be:

KPI Advantages

• AOV helps sandwich bar owners to identify upselling opportunities and promote higher-margin items to customers.
• By tracking AOV over time, sandwich bar owners can assess the effectiveness of pricing strategies and menu changes.

KPI Disadvantages

• AOV alone does not indicate how much each customer spends, making it difficult to target individual customers with personalized offers or promotions.
• AOV does not consider the actual food sold per transaction, so it may provide an incomplete picture of operational efficiency.

KPI Industry Benchmarks

According to industry benchmarks, the average order value for sandwich bars is approximately $10 to $15 per transaction.

Repeat Purchase Rate

In the highly competitive world of sandwich bars, keeping your customers coming back is vital to your success. One key metric to measure customer loyalty is the repeat purchase rate. In this section, we will discuss the definition of this KPI, its use cases, how to calculate it, KPI advantages, KPI disadvantages, and industry benchmarks.

Definition

The repeat purchase rate is a metric that measures the percentage of customers who make a repeat purchase from your sandwich bar. It is an essential component of customer lifetime value and reflects the quality of your products and services, as well as the effectiveness of your marketing and customer retention efforts.

Use Case

By measuring the repeat purchase rate, you can identify your most loyal customers and target them with personalized offers and promotions. You can also monitor the changes in customer behavior and adjust your marketing strategies accordingly to improve customer retention.

How To Calculate KPI

The formula for calculating the repeat purchase rate is:

For example, if you have 100 customers, and 40 of them have made a repeat purchase, the repeat purchase rate would be:

Calculation Example

Suppose you own a sandwich bar that serves an average of 200 customers per month. In January, 60 customers made a repeat purchase. The repeat purchase rate for January would be:

KPI Advantages

• Measures customer loyalty and retention
• Helps identify the most profitable customers
• Provides insights into the effectiveness of your marketing and customer retention strategies

KPI Disadvantages

• Does not measure customer satisfaction or referral rate
• Can be affected by seasonal or external factors, such as holidays or economic downturns
• Can be inaccurate if customer data is incomplete or outdated

KPI Industry Benchmarks

The repeat purchase rate varies by industry and business type. However, the following benchmarks can serve as a reference:

• Food and beverage industry: 20-40%
• Retail industry: 20-30%
• Online retail industry: 30-50%

Customer Satisfaction Score

The customer satisfaction score (CSS) metric is a crucial KPI for measuring the satisfaction levels of customers at a sandwich bar. It quantifies the degree to which customers feel satisfied with the services, products, and overall experience that the sandwich bar offers. Understanding the satisfaction level of customers is key to identifying areas that need improvement and determining the overall success of the business.

Definition

The CSS metric measures customer experience and satisfaction based on ratings of various service or product features of a sandwich bar.

Use Case

Knowing the satisfaction levels of customers is important in determining the level of loyalty they have towards your business. Customers who rate the sandwich bar high in terms of quality, speed of service, and overall experience are more likely to become repeat customers and recommend the sandwich bar to their friends and family.

How To Calculate KPI

The CSS is calculated by adding up all the scores from customers and dividing it by the number of customers who have responded. The formula for calculating CSS is:

Where A, B, and C are the scores achieved for each criterion and N is the total number of responses.

Calculation Example

Suppose a sandwich bar receives 30 responses from customers for its quality, speed, and overall experience. The responses are on a scale of 1-10 for each criterion where 1 is the lowest and 10 is the highest satisfaction level. The results are as follows:

• Quality: 20 (out of 30 responses)
• Speed: 18
• Overall Experience: 24

Using the CSS formula: CSS= (20+18+24)/30, the customer satisfaction score of the sandwich bar is 2.07.

KPI Advantages

• Helps to identify areas of improvement based on customer feedback.
• Helps to retain customers by improving their level of satisfaction.
• Helps to measure the overall success of the sandwich bar.

KPI Disadvantages

• Scores may be subjective and vary from customer to customer.
• Customers may give higher scores due to reasons unrelated to the sandwich bar, such as mood.
• Small samples sizes may become less reliable.

KPI Industry Benchmarks

The average CSS score for a sandwich bar is around 90%. Anything below 75% indicates significant room for improvement in the business.

Revenue per square foot

Revenue per square foot (RPSF) is a KPI that measures the average amount of revenue a sandwich bar generates per square foot. It is a crucial metric as it indicates how efficiently the business is utilizing its space to generate profits.

Definition

Revenue per square foot is the total revenue (excluding taxes) generated by a sandwich bar in a given period divided by the total square footage of the store.

Use Case

RPSF can help sandwich bar owners to evaluate the effectiveness of their sales strategies, identify areas for improvement and determine the scalability of their business.

How to Calculate KPI

Calculation Example

Let us assume a sandwich bar generates a total revenue of $10,000 in a month. The store is 1,000 square feet.

KPI Advantages

• Measures the effectiveness of sales strategies and store layout
• Helps to identify trends and opportunities for expansion or improvement
• Benchmarking against similar businesses can provide insights into how well the business is performing compared to the industry

KPI Disadvantages

• Certain external factors such as location, target market and seasonality can affect RPSF.
• Does not consider total profitability, only measures per square foot, so a larger store may have a higher RPSF, but not necessarily a higher profit.
• May not accurately reflect sales in a situation where a business rents additional space outside the store for storage or other non-sales activities.

KPI Industry Benchmarks

According to the National Retail Federation, the average revenue per square foot for quick-service restaurants (which includes sandwich bars) in the United States is approximately $1,350 per square foot per year. However, this can vary greatly depending on the location and nature of the business.

Inventory turnover

Measuring and tracking inventory turnover is crucial to keep a sandwich bar running efficiently. Keeping track of this metric separates successful sandwich shops from unsuccessful ones. Here's a detailed explanation of inventory turnover:

Definition

Inventory turnover is the number of times a sandwich bar sells and replaces its stock within a particular period. It is a ratio that determines how effectively a sandwich bar can manage its inventory levels. Knowing this metric helps business owners to set stocking policies, improve cash flow, and evaluate cost-effectiveness.

Use Case

If a sandwich bar has low inventory turnover, it suggests that the business may have ordered too much stock or have a lack of demand for specific products. The inventory might end up collecting dust, and there may be a possibility of expiration. On the other hand, high inventory turnover may suggest that the sandwich bar may have difficulty meeting demand due to low stock levels. Finding the ideal inventory turnover rate that works for the sandwich bar is the key to success.

How To Calculate KPI

Use this formula to calculate inventory turnover:

Calculation Example

Let's say the sandwich bar's cost of goods sold for a period is $100,000, and the average inventory is $20,000 during that period. Using the formula above:

The sandwich bar's inventory turned over five times within the given period.

KPI Advantages

• Helps identify slow-moving or problematic inventory items
• Enhances financial planning
• Reduces excess inventory and holding costs
• Improves cash flow
• Enables better purchasing decisions

KPI Disadvantages

• May not be suitable for all businesses or products
• Industry benchmarking may not be reliable
• Can be influenced by seasonal trends or market conditions

KPI Industry Benchmarks for 'Inventory turnover'

The benchmark for inventory turnover varies depending on the industry. For sandwich bars and cafes, an inventory turnover ratio of 4-6 is considered good. However, it's essential to keep in mind that multiple factors, like the location, customer demand, and the sandwich bar's size, play a significant role in determining the ideal inventory turnover rate for a business.

Employee turnover rate

Employee turnover rate is a KPI that measures the number of employees who leave a company during a given period. It is a crucial metric that provides insights into employee retention and the overall health of the organization.

Definition

The employee turnover rate is the percentage of employees who leave a company within a specific period, typically a year. It includes voluntary and involuntary departures, as well as retirements.

Use Case

Employee turnover rate is an essential KPI for HR departments. It helps organizations track their recruitment and retention efforts. High employee turnover rate may indicate a problem in the organization, such as low employee morale, poor leadership, or inadequate compensation.

How To Calculate KPI

The formula for calculating employee turnover rate is as follows:

For example, if a company has 100 employees at the beginning of the year and 20 employees leave throughout the year, its employee turnover rate is:

Calculation Example

Suppose a sandwich bar has 10 employees at the beginning of the year, and during the year, five employees quit. The average number of employees during the year is:

The employee turnover rate for the sandwich bar is:

KPI Advantages

• Helps identify retention issues early on and implement corrective measures
• Provides insight into how the organization is performing
• Informs HR decisions, including hiring, training, and benefits

KPI Disadvantages

• The rate does not differentiate between voluntary and involuntary separations
• The calculation does not consider the length of service or the role of departing employees
• The industry benchmarks may vary depending on the industry and the region

KPI Industry Benchmarks

The employee turnover rate benchmarks vary by industry and region. The average employee turnover rate for the restaurant industry is 73% per year.

Number of new customers acquired

In the world of sandwich bars, the number of new customers acquired is a key performance indicator (KPI) that measures the success of a business in attracting new customers. As a serial entrepreneur who has started and run multiple businesses, I have found that tracking this metric is essential for a sandwich bar's long-term success.

Definition

The number of new customers acquired measures the number of new customers that have made a purchase at a sandwich bar during a given period. It is used to track the effectiveness of marketing and advertising efforts, as well as the overall appeal of a sandwich bar's offerings.

Use Case

For sandwich bar owners and operators, the number of new customers acquired is a crucial metric that can help identify areas for improvement in marketing and customer experience. Increasing this value can lead to higher revenue and a larger customer base.

How to Calculate KPI

Calculation Example

KPI Advantages

• Helps identify areas for improvement in marketing and customer experience
• Can lead to higher revenue and a larger customer base
• Provides insight into the effectiveness of advertising and promotional efforts

KPI Disadvantages

• Does not provide insight into customer satisfaction or loyalty
• May be difficult to attribute new customers to specific marketing or advertising efforts
• May be affected by seasonality and other external factors

KPI Industry Benchmarks

According to industry benchmarks, a sandwich bar should aim to acquire a minimum of 10-15% of new customers each month.