With knowledge comes power. Restaurants have many moving parts, and the areas which determine profitability are constantly in flux. Keeping all areas of profitability optimized requires great attention, careful monitoring, and meticulous management. Only through observing every dollar that moves into and out of a restaurant can you ensure the operation is as profitable as possible. However, there are so many performance indicators and metrics in restaurant management it can be difficult to determine which of these you should be watching.
So, which Key Performance Indicators (KPI) require the most attention, and how can these be used to run your restaurant more successfully?
Obviously, you want to know how many people are coming into your restaurant, but this metric is actually much more helpful than it initially seems. By carefully recording covers for each day of the year, you’re able to more effectively predict a week’s business based on the previous years numbers. With this, it becomes easier to staff appropriately and avoid over ordering.
The Price Per Average customer (PPA) figure is one of the easiest and most useful KPIs to actively monitor and manage. This figure shows exactly how much each customer spends in the restaurant, and observing this figure over time can show how menu and staffing changes are influencing the restaurant. Also, the PPA for each server can be compared to show who sells the most and who could use some sales training. Getting more dollars onto checks is the fastest and most effective way to make more money, and this all comes back to your service staff.
Your liquor and food cost percentages show you at a glance how much you make from specific menu items or drinks. This gross profit indicator shows which items you make the most money from, which items you should be selling more of, and which items you may need to raise the price of. With this one simple metric, you’re shown dozens of areas that you can improve your profitability.
Table Turnover Rate
While this number is heavily dependent on the style of dining your restaurant offers, you always want to turn tables as fast as possible without compromising the experience or making the guests feel rushed. The faster you turn a table, the more people you are able to serve in a given service. Compare the table times among several different servers to find an ideal balance to work toward.
Labor costs can make or break a restaurant, and an effective head chef and GM should know how to control these costs without compromising the food quality. Inexperienced staff and poor management can sink all of your profits into unnecessary labor costs. Fortunately, though, this is an easy problem to rectify as long as it is constantly monitored.