As a restaurant owner or manager, you are no doubt tracking the sales figures and profits using a restaurant POS system. If “average check sizes” and “cost of food versus sales” are where you stop, though, you have an incomplete picture of why your restaurant is earning what it is.
Key performance indicators (KPIs) are not a behemoth task to avoid; they are actually your best resources for making great decisions. The most successful restaurants are tracking dozens of KPIs at a time.
KPIs cover all grounds, from sales and marketing initiatives to human resources. Here, we focus on the top four sales-oriented KPIs that can dramatically boost profitability.
The sales-per-labor-hour (SPLH) KPI assesses the earnings generated by your business each hour. An efficient labor hour is achieved when the resources available generate the most revenue.
In this KPI, the two influential factors are labor hours and sales revenue. Because there’s little that influences this factor, labor hours don’t change significantly. Sales revenue is the complete opposite since it’s influenced by peak hours, holidays, weather patterns, and more.
Over time, tracking your sales levels will help you predict customer arrival patterns, and thereby, make efficient shift schedules that balance the number of workers necessary against the demand.
Take the total sales desired and divide by the total number of hours scheduled. If your target sales for Sunday are $3,000 and your scheduled hours are 30, the target SPLH is $100.
Sales per head gives you a full picture of what appeals most to guests and whether time of day impacts total spending. It also reveals underperforming dishes that have a negative impact on the BOH’s productivity while doing little to boost profits. Alternatively, it shows which popular or hot-selling items to increase prices and improve margins on. What’s more, this KPI will tell you the best time (slow periods) to run a promotion or happy hour to increase sales.
To calculate the sales per guest, divide the total sales of the time period by the number of guests. For a vivid picture, calculate the sales per head during breakfast, lunch, dinner, week, month, and year.
This KPI is called RevPASH and is fairly new to the scene. It’s popular among restaurant owners and managers because it’s proven to be crucial for profitability. You learn when profits are suffering because of empty seats.
If you have a 50-seat restaurant open for 10 hours, you have 500 seat hours per day. If your revenue is $2,000 that day, the RevPASH would be $4 ($4 = $2,000/500).
RevPASH is incredibly useful and should become a part of your daily financial review. By measuring your actual revenue per hour divided by the number of seats you have, you can make changes that improve your hour-by-hour profitability.
Determine a specific time period, count the number of seated tables in that time period, and divide by the total number of tables on the floor.
There are many factors that influence your table turnover time, so do not expect the rate to improve with a single change. If profits are suffering from low turnover, patiently observe the restaurant’s operations, check your other KPIs, and make step-by-step changes. To get started, see if these seven easy ways to improve turnover rate apply to your restaurant.
These four KPIs are stellar for keeping your profits stable and when regularly reviewed, can even increase productivity and sales. Check them daily to get control of your restaurant’s profitability.
There’s a lot that your POS can show you; see how to harness more restaurant data from your POS system.