Restaurant KPIs: What 4 Important KPIs Should You Track?

By: | February 10, 2023 | Tags: , |
restaurant kpis

Do you know what restaurant KPIs to track if you want to market your restaurant?

You need to track your marketing efforts to ensure they are working to boost your restaurant’s success.

Important data: There are more than 700,000 restaurants in the US, and each one wants customers.

It’s clear that if you are a restaurant owner, you’ll need to work hard to make sure you get ahead of the competition and you do all you can to find customers and keep them.

This is not always easy, but once you know how to do it and you’re consistent with your marketing and other efforts, it will certainly be something that pays off. 

However, tracking restaurant KPIs aren’t enough.

In addition to tracking restaurant performance metrics, what else matters when it comes to boosting the success of your restaurant?

Of course, you’ll need to know where you stand within your business in terms of your finances and your marketing if you want to be sure that you’re making the right choices and definitely getting noticed. You can’t just put measures in place and hope they’re the right ones; you need to check to see if what you are doing is working.

This is where restaurant KPIs come in. 

Let’s start discovering more details about restaurant KPIs and examining which restaurant KPIs are important to track.

KPIs (or key performance indicators) are a way to measure the performance of your business over time. Each type of business will need to look at different things, which can make it hard to know what it’s best to measure when you run a restaurant.

With that in mind, here are some of the main KPIs you should take when you run a restaurant that will help you move forward in the right way. 

Important Restaurant KPIs

Sales Per Employee

In business, you need to be sure that every employee is making a positive difference, and therefore the sales per employee KPI can help you. You’ll be able to see exactly which employees are doing well and which are lagging behind. Some employees will naturally generate more sales than others, but when you measure the KPI, you’ll be able to determine who is not doing quite as much. 

This is not done so you can berate the staff members who are not making as much profit as others; it is done so you can ensure they get the training they need to be better – if they want it. 

By using technology, you can see exactly which staff members took which orders in your restaurant. You can see who was able to upsell side dishes and desserts or additional drinks and who did not.

In this way, it’s easy to arrange for a one-on-one employee discussion to talk about the sales and to see where help can be given. By looking at this particular KPI, you can put measures in place to bring everyone up to the same high standard, boosting your overall profits considerably. 

Labor Cost

Your labor cost is the money you spend on your employees. This isn’t just their salary, but also any perks you might offer, as well as accounting for time off due to sickness or vacation days. Your labor cost will go hand in hand with your cash flow – if you have hired people, you must know that you can pay them. 

It’s important to measure your labor cost when you’re considering which KPIs are most crucial because you’ll have to address the issue if you’re paying too much and your cash flow is affected negatively.

Unless you look at the KPIs, you’ll never know whether this is an issue or not. Lastly, using menu maker or integrating QR code menus can not only enhance customer convenience but also potentially aid in monitoring and managing labor costs more effectively.

Cost Of Goods Sold

Your cost of goods sold (or COGS) KPI means the cost of your ingredients. In other words, how much does it cost to make each dish? It would be impossible to know that you were charging enough per plate if you didn’t know how much it costs you to buy the ingredients.

Add this to the cost of your labor and anything you use within your business to make it more comfortable, creative, and different, such as a background music service, and you can work out your real total. You can then use this figure to work from to determine how much you can charge your customers. 

You’ll need to make a profit on each dish in order to build your business and stay open. However, you’ll also need to ensure you’re not charging a lot higher than your competitors – unless you have a USP that means you can – otherwise, you might find it hard to get customers in the first place.

There is a fine balance between charging too little, too much, and just enough. Without your knowledge of how much each dish costs to make, you’ll never be able to reach that ‘just enough’ level with any kind of confidence. 

Cash Flow

restaurant kpis

One of the most crucial KPIs to keep checking on is your cash flow. This is essentially the money that goes in and out of your business and, to simplify business practices to the extreme, the more money that comes in and the less money that goes out, the better. So you need to keep an eye on both expenses and income to make sure that the latter is great than the former, which means you make a profit. 

When you understand cash flow better, you can ensure you have the right measures in place to create a profit. You can also make sure that you are able to chase up any outstanding payments and pay people on time – both of these are crucial.

Of course, in a restaurant, you do have the added advantage of customers paying there and then, so you don’t have to wait for an invoice to be paid for the most part, although this could be something you do if you run a catering business out of your restaurant, for example. 

Once you know how your cash flow is, you can start to make predictions about future income and about the equipment you might be able to buy and when you can buy it. Having this all prepared in advance means you’ll be ready to take that step when the time comes, pushing your business further. 

Restaurant KPIs: Frequently Asked Questions

Do restaurants have KPIs?

Yes. All businesses have key performance indicators you need to track to determine which marketing efforts are working.

What are KPIs in restaurants?

Restaurant owners and managers should track sales per employee, labor cost, cost of goods sold, and cash flow.

Wrapping Up: Restaurant KPIs

In closing, by reading this post, you discovered four important KPIs you should track to boost the income of your restaurant.

Readers, please share so restaurant owners and managers discover these important restaurant KPIs.

I look forward to your views in the comments section. Are there additional restaurant KPIs restauranteurs should track?

Author: Editorial Staff

This post was made possible by the support of our readers.

  1. Bella Silverstein

    Rule of thumb: Use acronyms only after the first reference, thus: “What four important key performance indicators (KPIs) should you track? In other words, which KPIs are the most important?” That way, all your readers know what you’re talking about.

    • Janice Wald

      Hi Bella,
      Great hearing from you. I agree with your comment. I actually realized myself after setting up the guest article.

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