7 Must-Track KPI Metrics for Thriving Mediterranean Restaurants

As a serial entrepreneur, I have seen first-hand the importance of tracking key performance indicators (KPIs) to measure the success of a business. For those in the culinary industry, tracking KPIs is just as crucial. In fact, did you know that the Mediterranean restaurant industry has seen a growth rate of 6.1% in the past year alone?

So, what are the top seven Mediterranean restaurant KPI metrics that you should be tracking? Here are just a few to get you started:

• Number of repeat customers: This metric is a great indicator of customer loyalty and overall satisfaction with your restaurant's offerings.
• Average customer rating: Keeping track of customer ratings can help you identify areas for improvement and ensure that every customer has a positive experience.
• Table turnover rate: This metric measures how quickly tables are turned over during a given time period, allowing you to optimize your seating and waitstaff schedules.

But what about metrics like customer satisfaction rate, food cost percentage, labor cost percentage, and gross profit margin? Don't worry, we will cover those in detail below. Keep reading to discover why tracking these KPIs is crucial to the success of your Mediterranean restaurant.

Number of Repeat Customers

One of the most critical key performance indicators (KPI) for Mediterranean restaurant owners is the number of repeat customers. This metric is a measure of customer loyalty and the ability of the restaurant to keep customers coming back. Below you will find a detailed explanation of what this KPI is, its use case, how to calculate it, advantages, disadvantages as well as industry benchmarks.

Definition

The number of repeat customers is the count of customers who have visited a restaurant more than once within a given period. A repeat customer is someone who had a good experience at the restaurant and is likely to return, providing a solid base for the restaurant's revenue and overall financial performance.

Use Case

The number of repeat customers helps in measuring customer loyalty and satisfaction. A high percentage of repeat customers indicates that a restaurant is providing excellent service and customer experience, while a low number of repeat customers suggests a problem with the food, service, or atmosphere. Drastically reducing the number of new customers required to maintain the same customer base increases profitability.

How To Calculate KPI

Number of Repeat Customers = Total Number of Repeat Customers ÷ Total Number of Customers X 100

Calculation Example

If a Mediterranean restaurant had 500 total customers, and 200 of them returned as repeat customers, the number of repeat customers would be:

Therefore, the restaurant's percentage of repeat customers is 40%.

KPI Advantages

• The metric is easy to track and calculate.
• High customer loyalty helps increase profitability and overall financial performance of the restaurant.
• Repeat business implies a successful marketing strategy.

KPI Disadvantages

• There is no benchmark or standard measurement to compare against.
• The metric does not measure the satisfaction level of the customers.
• Repeat customers may not be enough to prevent churn.

KPI Industry Benchmarks

According to a study of over 8000 restaurants, the average percentage for repeat customers is 27%. An above-average percentage would be around 40%, while anything below 20% would be considered to need improvement.

Average customer rating

As a Mediterranean restaurant owner, tracking average customer rating is crucial to improve the overall customer experience and attract new customers. Here's everything you need to know about this essential KPI.

Definition

Average customer rating is the average score a restaurant receives from its customers on various review platforms such as Yelp, Google, or Facebook. It is an important metric that reflects the overall satisfaction level of customers with the restaurant's food, service, ambiance, and pricing.

Use Case

An average customer rating is a key indicator of the restaurant's performance. A high rating indicates that customers appreciate the quality of the restaurant's food and service, which can attract new customers. On the other hand, a low rating can negatively impact the restaurant's reputation and drive customers away, leading to decreased revenue.

How To Calculate KPI

To calculate the average customer rating, you need to add the ratings received on various review platforms and divide the sum by the total number of reviews. Here's the formula for calculating the average customer rating:

Calculation Example

Let's say your restaurant received the following ratings on Yelp: 5 stars, 4 stars, 3 stars, and 2 stars. The total number of Yelp reviews is 4. Here's the calculation for the average customer rating:

KPI Advantages

• Reflects customer satisfaction level
• Helps in improving customer retention
• Attracts new customers
• Can be used for benchmarking against the industry

KPI Disadvantages

• Depends on customer's subjective opinion
• Not always an accurate representation of the restaurant's quality
• Can be influenced by fake reviews or competitors' reviews

KPI Industry Benchmarks

The restaurant industry average rating on various review platforms varies, but typically ranges from 3.5 to 4 stars out of 5. However, the specific benchmark can vary depending on the restaurant's location, cuisine, and price point.

Customer satisfaction rate

Customer satisfaction rate is a essential key performance indicator (KPI) for Mediterranean restaurants. It allows restaurant owners to evaluate how satisfied customers are with their experience at the restaurant and how well the restaurant is meeting customer expectations. Here is a detailed explanation of the sub-headers:

Definition

Customer satisfaction rate is a KPI that measures the percentage of satisfied customers at a Mediterranean restaurant within a certain timeframe. This KPI helps restaurant owners understand how well their performance meets customer expectations and identify areas that needs improvement.

Use Case

Customer satisfaction rate can be used to make informed decisions about the restaurant. It can help restaurant owners to evaluate their marketing strategies, menu items, customer service, and atmosphere. Additionally, this KPI can be used to analyze customer feedback and identify potential areas of improvement.

How To Calculate KPI

To calculate customer satisfaction rate:

Calculation Example

Suppose that a Mediterranean restaurant serves 500 customers in a month. Out of those customers, 400 are satisfied, while the other 100 are not. The customer satisfaction rate for the restaurant is:

KPI Advantages

• Helps to identify customer preferences and improve customer service
• Increases customer loyalty and retention
• Builds a positive reputation for the restaurant

KPI Disadvantages

• The KPI may not reflect the strengths and weaknesses of the restaurant's operations
• The KPI may be skewed by factors not related to the restaurant, e.g. price
• The KPI results may be too easily influenced by outliers

KPI Industry Benchmarks

According to industry benchmarks, an average customer satisfaction rate for Mediterranean restaurants is between 80%-85%. By setting a higher KPI benchmark, restaurant owners can strive to exceed industry standards and achieve better customer satisfaction.

Food Cost Percentage

As a serial entrepreneur in the restaurant industry, I have learned the importance of tracking key performance indicators (KPIs) to ensure the success of my businesses. One of the most crucial KPIs in the restaurant industry is the food cost percentage. In this chapter, we will explore what this KPI is, how to calculate it, its advantages and disadvantages, and industry benchmarks.

Definition

The food cost percentage is the percentage of a restaurant's total sales that is spent on food cost. This KPI helps restaurant owners and managers understand the profitability of their menu offerings.

Use Case

Calculating the food cost percentage is essential for any restaurant that aims to operate profitably. A high food cost percentage indicates that a restaurant is spending too much on ingredients and not charging enough for its menu offerings.

How To Calculate KPI

Calculating the food cost percentage is relatively simple. You need to divide the cost of goods sold (COGS) by the total sales and then multiply by 100. The formula looks like this:

Calculation Example

Let's assume that a restaurant has a COGS of $3,000 and a total sales of $10,000 in a month. To calculate the food cost percentage, we would use the following formula:

Therefore, the food cost percentage for this restaurant is 30%.

KPI Advantages

• The food cost percentage helps restaurant owners and managers to identify ways to reduce costs and improve profitability.
• It provides insights into menu pricing and helps to determine whether pricing should be adjusted.
• It helps to identify food waste and inefficiencies in inventory management.

KPI Disadvantages

• It does not take into account other overhead expenses such as labor and rent, which are also crucial factors in determining profitability.
• It assumes that all menu items have the same profit margin, which may not be the case.
• It doesn't consider fluctuations in food prices, which can vary seasonally and regionally.

Industry Benchmarks

The ideal food cost percentage varies depending on the restaurant's concept and location. However, as a general rule, a food cost percentage of 28-35% is considered acceptable for most restaurants.

Labor cost percentage

Definition

Labor cost percentage is a key performance indicator (KPI) that helps restaurant owners and managers track labor costs as a percentage of total sales. It represents the amount of revenue spent on labor costs, including salaries, wages, and benefits, compared to sales revenue.

Use Case

Restaurant owners and managers can use labor cost percentage to:

• Monitor labor costs and identify cost-saving opportunities
• Compare labor costs across different time periods or locations
• Set labor cost targets and adjust staffing levels accordingly
• Benchmark against industry standards

How To Calculate KPI

To calculate the labor cost percentage, use the following formula:

Calculation Example

Suppose a restaurant has total labor costs of $20,000 and total sales of $80,000 in a month. To calculate the labor cost percentage:

The labor cost percentage for this restaurant is 25%.

KPI Advantages

The benefits of labor cost percentage include:

• Helps identify labor cost-saving opportunities
• Easy to calculate and understand
• Enables comparison with industry standards
• Helps monitor labor costs over time

KPI Disadvantages

The limitations of labor cost percentage include:

• Does not account for variations in labor costs by position or department
• Does not consider the quality of employee performance
• May not reflect labor efficiency or productivity

KPI Industry Benchmarks

According to the National Restaurant Association, the industry benchmark for labor cost percentage is 30%. However, this may vary depending on the type of restaurant, location, and other factors.

Gross profit margin

In the restaurant industry, gross profit margin (GPM) is a fundamental KPI that indicates the percentage of profit earned on each dollar of revenue after deducting the cost of goods sold (COGS). This indicator measures the efficiency and profitability of a restaurant's operations, including its kitchen, menu, pricing, and purchasing strategies.

Definition

The formula for calculating gross profit margin is:

The gross profit margin indicates the proportion of revenue remaining after accounting for the direct cost of producing the goods or services sold. A high GPM implies that a restaurant is earning more profit relative to its costs, while a low GPM suggests that a restaurant is operating with narrow margins and may need to re-examine its pricing, menu, or cost controls.

Use Case

Gross profit margin is a critical KPI for restaurants because it directly affects their profitability. By regularly measuring GPM, restaurant owners and operators can identify potential cost savings and revenue opportunities, such as adjusting menu pricing, negotiating favorable contracts with suppliers, reducing waste, or improving portion control.

How To Calculate KPI

To calculate gross profit margin, you need two inputs: revenue and cost of goods sold. Revenue is the total amount of sales generated by a restaurant over a specific period, while COGS includes all direct costs associated with producing and serving the food and beverages, such as ingredients, packaging, labor, and utilities.

The formula for calculating the GPM is:

Calculation Example

Suppose that a Mediterranean restaurant generated $150,000 in revenue over a month and spent $50,000 on COGS, which includes food and beverage, labor, and packaging. We can calculate its gross profit margin as follows:

This result indicates that the restaurant earned $0.67 for every $1 of revenue it generated after deducting its direct costs, implying that its operations are relatively efficient and profitable.

KPI Advantages

• Gross profit margin helps restaurant owners and operators identify areas of their operations with the highest potential for profit improvement.
• GPM provides a simple and easily understandable metric that reflects a restaurant's efficiency and profitability.
• GPM can be used to benchmark and compare a restaurant's performance against industry averages or its historical data.

KPI Disadvantages

• Gross profit margin does not account for non-production expenses, such as rent, utilities, marketing, and overhead, which can significantly affect a restaurant's overall financial performance.
• GPM is not a comprehensive measure of a restaurant's performance and may need to be complemented by other KPIs, such as net profit margin, average order value, or customer retention rate.
• GPM can be affected by seasonal fluctuations, supply chain disruptions, or changes in demand, making it difficult to compare or extrapolate over time or geography.

KPI Industry Benchmarks

According to a study by the National Restaurant Association, the median gross profit margin for full-service restaurants in the U.S. was 64.8% in 2019. However, this figure may vary widely depending on the restaurant's location, cuisine, size, and other factors.

Table turnover rate

Table turnover rate is a key performance indicator (KPI) used to measure the number of times a restaurant table is occupied during a specific period. By measuring this KPI, restaurant owners and managers can learn how quickly tables are turned over and how efficiently their restaurant operations are.

Definition

Table turnover rate is a metric used to indicate the number of times a table at a restaurant turns over within a defined period.

Use Case

The table turnover rate KPI is essential for restaurants to understand how efficiently they're operating. If the table turnover rate is low, it indicates problems like long wait times, slower services, or tables remaining unoccupied for longer. In contrast, a high table turnover rate can signal successful operations, shorter wait times, faster services and makes more efficient use of restaurant space and staff.

How To Calculate KPI

To calculate the table turnover rate, you need to divide the number of times your tables turn over in a given time period by the total number of tables in your restaurant. The formula is:

Calculation Example

Suppose a restaurant with 20 tables had 80 table turns on a Saturday evening. To calculate the table turnover rate:

Table turnover rate = 4

The table turnover rate for the given period is 4.

KPI Advantages

• Measures efficiency: This KPI measures the restaurant's efficiency in table management to maximize the use of resources.
• Helps identify problems: Low rates indicate problems in the restaurant's service and management; thus, this can help to make significant operational improvements.
• Determine pricing strategy: Table turnover rates can help the management set competitive pricing strategies that reflect their operational efficiency compared to competitors' rates.

KPI Disadvantages

• Disregards quality: This KPI does not measure the quality of the restaurant's service or customer experience.
• Assumes equal table sizes: The KPI formula assumes similar table sizes. In reality, the tables likely vary in size and capacity.
• Imperfect measurements: Calculation is problematic when significant changes in reservations, no-shows, and unexpected increase or decrease in table requests occur.

KPI Industry Benchmarks

The ideal Table turnover rate depends on the restaurant's concept and location; in general, Industry benchmarks for table turnover rate are difficult to establish. Fine dining restaurants may have lower table turnover rates than fast-food establishments that expect faster patron turnover.

In conclusion, as the Mediterranean restaurant industry continues to grow, it is important to track key performance indicators (KPIs) to measure the success of your business. Keeping track of metrics such as number of repeat customers, average customer rating, and table turnover rate can give you valuable insights into customer loyalty, satisfaction, and operational efficiency.

However, it is also important to track metrics such as customer satisfaction rate, food cost percentage, labor cost percentage, and gross profit margin to ensure that your restaurant is financially sustainable and providing high-quality food and service to customers.

By regularly monitoring and analyzing these KPIs, you can make data-driven decisions and implement strategies to improve your restaurant's performance and profitability. With the right metrics in place, you can take your Mediterranean restaurant to the next level and continue to thrive in a competitive industry.