Boost Your Restaurant's Success with These Top 7 KPI Metrics

Welcome to our blog on the top seven restaurant KPI metrics. As a successful serial entrepreneur in the food industry, I can attest to the importance of tracking and calculating these metrics to ensure the success of your restaurant.

Did you know that the restaurant industry is projected to reach a market size of $1.2 trillion by 2023? With so much revenue on the line, it's crucial to focus on the key performance indicators that will help you achieve your business goals.

• Revenue per table
• Repeat customers percentage
• Staff turnover rate

These are just a few of the KPIs we'll be discussing in this article. By tracking these metrics and making informed decisions based on the results, you'll be able to drive growth and boost your restaurant's success.

• Customer satisfaction score
• Gross profit margin
• Online reviews rating
• Average time spent at the restaurant per table

Ready to learn more about these essential KPIs and how to track and calculate them effectively? Keep reading to discover everything you need to know.

Revenue per table

As a restaurant owner, it is essential to track metrics that matter the most for your business. One such metric that will help you evaluate your restaurant's sales performance is revenue per table.

Definition

Revenue per table measures the average amount of money spent per table during a given period, helping you assess your restaurant's overall revenue performance.

Use case

The revenue per table metric enables you to identify sales trends and make informed decisions to increase revenue. For example, if your restaurant is experiencing a slow season, analyzing this KPI can help determine whether you should change your menu or marketing tactics.

How to calculate KPI

To calculate revenue per table, divide the total revenue earned in a period by the number of tables that turned over during the same period.

Calculation Example

Suppose your restaurant earned $25,000 during the month, and the number of tables that turned over during the same period is 1,000. The revenue per table will be:

KPI Advantages

• Revenue per table provides a clear understanding of your restaurant's sales performance over time, helping you make informed decisions.
• It helps to identify sales trends and take appropriate measures to increase revenue.
• It helps to optimize table availability and make the best use of your establishment's seating capacity.

KPI Disadvantages

• Revenue per table can be misleading if some tables sit empty or the table layout is such that some tables generate more revenue than others.
• It does not take into account the cost of food and labor, making it necessary to supplement it with other KPIs.

KPI Industry Benchmarks

Revenue per table can vary significantly depending on your restaurant's niche and location. However, industry benchmarks indicate that a restaurant that generates between $17 and $22 per person would have a revenue per table of about $60 to $80.

Repeat customers percentage

Repeat customers percentage is the percentage of customers that return to the same restaurant over a given period of time. It is an important KPI for restaurant owners to track in order to determine how well their establishment is performing in terms of customer loyalty and satisfaction.

Definition

The repeat customers percentage KPI measures the percentage of customers who have returned to dine at a specific restaurant more than once.

Use Case

Restaurant owners use this KPI to measure customer satisfaction, as a high percentage indicates that customers are satisfied with the restaurant and their experience there. Repeat customers are also more likely to spend more money and leave positive reviews, making them an important business asset.

How To Calculate KPI

The formula for calculating repeat customers percentage is:

Calculation Example

Suppose a restaurant has had a total of 500 customers over the course of a month. Out of these 500, 100 have returned to dine at the restaurant again. The repeat customers percentage for this restaurant for the month would be:

KPI Advantages

• Indicates customer satisfaction and loyalty towards the restaurant
• Helps restaurant owners identify areas where they could improve to retain customers
• Repeat customers are more profitable, as they are more likely to spend more money and refer new customers to the restaurant

KPI Disadvantages

• A high repeat customer percentage does not always indicate profitability or growth
• May not reflect less frequent customers who still spend a significant amount of money at the restaurant
• May not factor in new customers who may not have had the opportunity to return yet

KPI Industry Benchmarks

The benchmark for repeat customers percentage varies by restaurant type and location. However, a repeat customer percentage of 20% or higher is generally considered to be a good benchmark for most full-service restaurants.

Staff turnover rate

Keeping your top-performing employees is an essential aspect of running a successful restaurant. Staff turnover rate KPI is a measure of the number of employees who have left within a certain period. Understanding this KPI can help you identify staffing issues, improve retention rates and reduce recruitment costs.

Definition

Staff turnover rate KPI is a metric that measures the percentage of employees that leave your organization within a specific period.

Use Case

Understanding your staff turnover rate KPI can help you identify potential staffing issues and take appropriate steps to address them. For example, if your staff turnover rate is too high, this may indicate issues with employee retention, employee engagement, or training programs.

How To Calculate KPI

To calculate staff turnover rate KPI, use the following formula:

Calculation Example

Suppose your restaurant had 30 employees in the previous year, and 10 of them left. In this case:

Your staff turnover rate for the previous year would be 33.33%.

KPI Advantages

• Helps identify staffing issues
• Helps improve retention rates
• Reduces recruitment costs

KPI Disadvantages

• Does not indicate the reasons why employees left
• Does not indicate the impact of hiring new employees
• May not be suitable for measuring staff turnover in industries with a high turnover rate (e.g., hospitality)

KPI Industry Benchmarks

• Quick-service restaurants: 150% - 250%
• Casual dining restaurants: 40% - 70%
• Fine dining restaurants: 20% - 30%

Customer satisfaction score

Customer satisfaction score (CSS) KPI measures the level of satisfaction customers have with your restaurant's food quality, service, general ambiance, and overall experience.

Definition

CSS measures customer perception of their experience with the restaurant. The score can range from 0 to 100, with higher scores indicating increased satisfaction.

Use Case

Track CSS to gauge customer satisfaction and identify areas where improvements need to be made. Using CSS, you can monitor customer behavior and adapt your services and processes to meet their needs accordingly.

How to Calculate KPI

The formula to calculate CSS is:

Calculation Example

If 300 customers were surveyed, and 250 were satisfied with their experience, the CSS would be:

KPI Advantages

• Allows you to monitor and track customer satisfaction levels
• Can help to improve customer loyalty and retention rates
• Enables comparison of CSS with industry benchmarks to assess the restaurant's performance level

KPI Disadvantages

• Only provides a snapshot of customer satisfaction levels and does not take into account broader external factors
• Surveys might only capture the opinions of certain customer segments

KPI Industry Benchmarks

The average CSS across the industry is around 80%. However, different types of restaurants and customer demographics can lead to different industry benchmarks.

Gross Profit Margin

Gross Profit Margin is a key performance indicator that measures the percentage of revenue that remains after subtracting the cost of goods sold (COGS). It is a clear indication of a restaurant's profitability and business efficiency over time. As a pro serial entrepreneur, I always track this metric when running a restaurant business.

Definition

Gross Profit Margin measures the percentage of revenue left after subtracting COGS from total revenue.

Use Case

Gross Profit Margin is an indicator of a restaurant's profitability and business efficiency. It helps identify inefficiencies in the supply chain, food costs, and restaurant operation.

How To Calculate KPI

Calculation Example

Let's assume that a restaurant has total revenue of $50,000 and COGS of $20,000. Using the formula above, the Gross Profit Margin would be:

KPI Advantages

• Gross Profit Margin helps identify inefficiencies in the supply chain, food costs, and restaurant operation.
• It is a clear indicator of a restaurant's profitability and business efficiency.
• It helps to set realistic revenue and profit goals.

KPI Disadvantages

• Gross Profit Margin does not account for other expenses such as labor, rent, and utilities.
• It does not consider the impact of price changes on revenue and profits.
• It is not a comprehensive measure of a restaurant's performance.

KPI Industry Benchmarks

According to industry benchmarks, the average Gross Profit Margin for a restaurant should be around 70%.

Online reviews rating

As a restaurateur, online reviews rating is one of the most important KPIs to track. In today's world, consumers often rely on online reviews before choosing to dine at a restaurant. Therefore, having good ratings is critical for business success.

Definition

Online reviews rating measures the average rating received by the restaurant on various online review platforms like Yelp, Google, TripAdvisor, etc.

Use Case

The online reviews rating KPI can help you improve customer satisfaction and retention. By tracking this KPI, you can identify areas of improvement in your restaurant operations and provide better dining experiences to your customers.

How To Calculate KPI

To calculate the online reviews rating KPI, add up all the ratings received on various online review platforms and divide the total by the number of reviews received. The formula for the online reviews rating KPI is:

Calculation Example

Suppose your restaurant received 100 online reviews with an average rating of 4.5 stars. To calculate the online reviews rating KPI, you will use the following formula:

Therefore, your restaurant's online reviews rating KPI is 4.5.

KPI Advantages

• Improving customer satisfaction: By tracking and improving online reviews rating, you can provide better services, experiences, and quality food to customers.
• Increased visibility: Having a high online reviews rating can make your restaurant more visible to people searching for places to dine.
• Positive impact on revenue: A high online reviews rating can positively impact the revenue of the restaurant as diners often choose to eat at highly rated places.

KPI Disadvantages

• Dishonest reviews: Sometimes online reviews can be biased or dishonest, which can give an inaccurate rating.
• Robust tracking required: Online reviews rating requires continuous tracking on various review platforms, and responding to all reviews may be challenging for the restaurant staff.

KPI Industry Benchmarks

Online reviews rating KPI benchmarks can vary depending on the type of restaurant and the location. However, a rating of 4 and above on a scale of 5 is considered good.

Average time spent at the restaurant per table

Definition: The average time spent at the restaurant per table KPI measures the amount of time customers spend at a restaurant. This metric helps restaurants understand how to optimize table turnover, which can increase revenue and customer satisfaction.

Use case: This KPI is particularly useful for restaurants that experience high traffic and long wait times. This metric can help these restaurants understand how to optimize table turnover and reduce wait times. Additionally, tracking this KPI can help restaurants understand customer behavior and preferences.

How to calculate KPI: To calculate the average time spent at the restaurant per table, divide the total time customers spent at the restaurant by the number of tables that were occupied during that time period.

Calculation example: A restaurant serves 200 customers during a lunch service that lasts four hours. During that time, 50 tables were occupied. The total time customers spent at the restaurant was 400 hours.

KPI advantages:

• Helps restaurants understand customer behavior and preferences.
• Optimizes table turnover, which can increase revenue and customer satisfaction.

KPI disadvantages:

• May be difficult to accurately track, especially in large restaurants or during busy periods.
• Could be affected by external factors like weather or holidays.

KPI industry benchmarks:

• The average time spent at a restaurant per table is approximately 60-90 minutes.
• The benchmark may vary by restaurant type, menu, and location. For example, fine-dining restaurants may have longer table turnover times compared to fast-food chains.