As every restaurant manager knows, operating a profitable restaurant requires hard work and constant improvement. As consumer preferences evolve and competition grows, it’s essential for restaurant owners to keep a tight pulse on their business operations to ensure they’re remaining competitive.
Restaurant analytics can be used to maintain the control and visibility you need to manage a successful business day in and day out. In this article we’ll show you how to use restaurant analytics to track these five key metrics, and how to improve each one to maximize your performance:
- Sales Per Labor Hour
As one of your biggest investments, your employees play a crucial part in your overall restaurant success. To ensure staff is staying productive, managers should use restaurant analytics to regularly track sales per labor hour (SPLH). This business metric measures the amount of average sales generated per labor hour worked. To find it, calculate the total sales generated in a certain period, and divide it by the total labor hours worked in that period.
Running sales reports for different time periods can provide deeper insight into your restaurant's efficiency. Metrics will vary greatly depending on the type of restaurant you own. For quick serve restaurants, you will want to monitor smaller time periods such as 15 minute intervals. For table service, an hourly measurement should be sufficient. Referencing sales volume during key time periods to labor hours used will provide you with the best measure of overall economics, service and customer satisfaction.
Once you’ve found your SPLH, compare it to different periods of time to determine when your restaurant is most –and least– profitable. These baseline numbers should be used as a benchmark for future sales, and as a motivator for staff to increase their previous sales amount. Encourage staff to increase table turns and push add-ons to generate more sales in less time. Leverage technology to streamline wait staff operations and increase your overall efficiency.
- Food Cost Percentage
Your restaurant business depends on the food you serve to generate a profit year-round. When prioritizing restaurant analytics, food cost percentage is a metric you don’t want to skip out on. Break down each meal you serve by its ingredients and determine the cost per ingredient, per serving. Add up all ingredients to establish your total menu item food cost, divide by its menu price, and multiply by 100 to find your food cost percentage.
This is a key business metric for restaurants looking to maximize their overall profitability. Ideally, a restaurant’s food cost percentage should be between 25% and 35% per meal. To improve your percentage, look for unnecessary ingredients that can be cut to reduce meal cost without sacrificing meal quality, or consider vendors that charge less for certain food items.
Remember also that product mix has a lot to do with overall food cost. For example, selling loss leaders without mixing in higher margin items can impact profitability. Be sure to measure plate cost per item as compared to the percentage of actual sales for the day. This will give you a theoretical food cost based on product mix.
- Average Check Size
The average check size can say a lot about your restaurant sales success. Typically, the bigger the average check, the bigger the success when it comes to your overall sales. To find it, add up the total sales during a specific period of time, and divide that by the amount of checks processed per period.
This will give you deeper insight into your customer activity and is a great benchmark to use for future improvement. For example, if your average check size was $35 in April, encourage your staff to beat that amount in May by offering a small incentive. To help accomplish this, have servers prioritize meal add-ons such as desserts, drinks, and appetizers. Make charging for extras such as drink refills, sides, and sauces mandatory– because even the smallest sales make a big difference over time.
Tracking cover count (the number of diners, or number of meals served) is often difficult to track. If you use an entree count, this can be more effective when trying to measure the overall head count and per person average spend. Remember also that average spend varies by meal period and day of the week.
- Table Turnover Rate
Just as important as your average check size, your table turnover rate indicates how efficiently you are serving your customers. A large average check size is great, but if you have a low turnover rate, your restaurant isn’t fully maximizing its potential.
To calculate table turnover rate, take advantage of your restaurant analytics to find the number of parties served in a period of time and divide it by the number of tables on the floor. If 100 parties were served from 5:00pm to 8:00pm, and you have 23 tables, your table turnover rate is 4.3 (meaning each table was turned 4.3 times during the dinner rush).
Ideally, you want your table turnover rate to be as high as possible, while maintaining the guest experience your restaurant aims to uphold. To boost this business metric, make sure you’re using innovative restaurant technology to streamline the kitchen preparation, seating and table management, and checkout process. Also make sure you have an organized seating system, and that your seating layout is arranged in a way that makes the most of your space.
- Average Pour Cost
Average pour cost is one of the most influential restaurant analytics, and often one of the most overlooked. Knowing how much each drink costs to prepare helps owners operate a productive and profitable bar. This can be found by taking the dollar amount it costs to make a drink, dividing it by the selling price, and multiplying by 100.
It’s suggested that pour costs be between 18% and 24% to manage your bar’s profitability. Keep this percentage controlled by properly training staff on portioning drinks and implementing a jigger or measured pouring spout to maintain precision per drink. If you find your pour costs are still too high, it may be time to increase the price of your drinks.
To stay competitive in the restaurant industry, owners should leverage their restaurant analytics to make better business decisions. Continual evaluation and improvement to your business operations will lead to a more profitable restaurant year after year. Tracking business metrics may seem like a daunting task, but your restaurant POS system can automatically collect and generate the reports and calculations you need with the click of a button.
Ready to invest in your restaurant operations? We offer POS solutions with strong reporting capabilities to help keep better track of your business operations. Contact CRS today.