Measure to Manage - 25 Most Important KPIs for All Restaurant Businesses
Whether you disliked assessments during your school life or not, as a businessman you would know that the corporate world doesn’t really provide an option.
Continuous evaluation and assessment of organizational operations is a MUST if you want your business to survive and prosper. A successful business requires its owner to be data-driven. And the restaurant industry is no exception to this rule.
Determining whether your restaurant is doing well goes much farther than your customers leaving with a satisfied appetite and giving positive reviews. Also, a busy kitchen and fully occupied tables are not sufficient in predicting that you will make higher profits and continue to excel.
The food industry is highly dynamic and vast by its very nature. Therefore, most of the top restaurateurs analyze their business performance by using several different metrics. These Key Performance Indicators (KPIs) are essential in finding out which areas in your restaurant need improvement and which areas hold promising returns.
However, did you know that there are several different KPIs in the restaurant industry besides the traditional cash flows and the cost of raw materials? In fact, there are special KPIs for different categories in a restaurant business that can help you manage the operations smoothly and make informed decisions within the right time frame.
Read on to find out what they are.
Sorted category-wise for easier tracking, following are the 25 most important KPIs for all restaurant businesses.
Category: Revenue (measured in $)
1. Revenue Per Available Seat Hour (RevPASH)
As the name suggests, this is a measure of the revenue earned by your restaurant per available seat hour.
Available seat hours mean the number of seats available during the regular hours of operation. Therefore, the higher the value of this KPI, the higher your restaurant is earning from its given seating capacity.
This helps you identify the top-selling time intervals and the effectiveness of the current seating arrangement.
RevPASH can be calculated as follows.
RevPASH = revenue earned / available seat hours
2. Revenue Per Available Square Meter (RevPAM)
Divide the total sales by the total dining area of your restaurant and you get the revenue per available square meter.
RevPAM = total sales / total dining area in square meter
A large figure of RevPAM signifies a good generation capability of the serving division in your restaurant.
3. Revenue Per Table
This KPI measures the average sales from each restaurant table on any given day.
Needless to say, that this figure should be as high as possible as it shows the capability of your restaurant to earn well.
Revenue per table = (revenue / number of tables) / number of days in the reporting period
4. Amount Of Dining
The KPI of the amount of dining speaks volumes about the customers of your restaurant and how much they generally spend. It denotes the effectiveness of deals, discounts and other combos offered by your restaurant.
Amount of dining = total revenue (including take away etc.) / number of checks or bills
Category: Service (usually expressed as a % or as a number)
5. Tables Served Per Waiter
This KPI signifies the average number of tables served by a waiter in a given period of time.
The appropriate value for this indicator will vary from restaurant to restaurant. Consider factors such as the total seating capacity in your restaurant, the total number of wait staff, the peak service hours, and so on in order to decide whether the workload on each waiter is justified or not.
Formula = tables served / number of waiters
6. Unavailability Of Menu Items
No one likes it when you order a dish but are denied service because the required food items are unavailable or out of stock.
Therefore, make sure that such a scenario never arises in your restaurant by using this KPI that shows the number of uncompleted orders.
Formula = number of unavailable menu items / total orders x 100
7.Time Per Table Turn
As the name suggests, time per table turn is the amount of time for which the guests normally occupy a table.
This should be usually lower because customers seated for a long time is likely to mean more talking and chatting among each other and idle occupancy for your restaurant seats.
This, in turn, also affects your RevPASH.
Use the following method to calculate this KPI.