As a restaurant owner, you’re always looking for ways to boost your revenue. One key metric to focus on is your Average Order Value (AOV). Understanding what AOV is and how to improve it can have a significant impact on your bottom line. In this blog, we’ll explore what AOV is, how to calculate it, and strategies to increase it.
What is AOV in Restaurants?
Average Order Value (AOV) is a metric that tells you the average amount of money customers spend each time they place an order. It’s a crucial number because it helps you understand your sales performance and customer spending habits.
Why is Average Order Value important?
According to a study by RetailDive, increasing your AOV by just 10% can boost your revenue by up to 33% without needing to attract more customers. This makes AOV a powerful tool for maximizing your restaurant’s profitability.
How to Calculate Average Order Value
Calculating AOV is straightforward. You can use the AOV formula to determine it. Here’s the formula you need:
Average Order Value (AOV)=Total Revenue/ Number of Orders
For example: If your restaurant made RM10,000 in revenue from 500 orders, your AOV would be:
AOV=10,000/500=20
So, the average order value is RM20. This means, on average, each customer spends RM20 per order.
How To Boost Average Order Value in the Restaurant?
- Offer Upsells and Cross-Sells
Encourage your staff to suggest additional items that complement a customer’s order. For instance, if someone orders a burger, suggest they add fries or a drink. Studies have shown that upselling can increase sales by 10-30%. Training your team to effectively recommend add-ons can make a significant difference.
- Create Combo Meals
Combine popular items into meal deals. For example, offer a burger, fries, and a drink as a combo. This not only simplifies the ordering process for customers but also encourages them to spend more. According to a report by QSR Magazine, combo meals can increase AOV by up to 25%.
- Introduce Premium Options
Offer higher-priced items or premium versions of your dishes. These could include specialty ingredients or larger portions. The key is to provide options that justify the higher price while still appealing to your customers.You can serve your usual dishes with an enhanced customer service or you can just cook them using high quality ingredients.
- Run Limited-Time Promotions
Promotions and special offers can create a sense of urgency and encourage customers to spend more. For example, a “buy one, get one free” offer on appetizers can increase the total order value. According to Nielsen, promotions can drive up AOV by 15-20% when used strategically.
- Enhance Your Menu Design
Design your menu to highlight high-margin items and encourage customers to try more expensive dishes. Use descriptive language and appealing visuals to make premium items more enticing. Menu Engineering studies show that well-designed menus can increase AOV by up to 30%.
- Optimize Your POS System
Check if your POS system allows your customers to have add-ons in their orders. For example, if your customers are ordering burgers then they should automatically get suggestions to add fries or coke to their order. This helps in increasing the average order value. If your customers have to add additional items to their order by going back to the menu and then selecting, it would demotivate them.
Increasing your Average Order Value is a powerful way to boost your restaurant’s revenue without needing to attract more customers. By using the AOV formula to track your performance and implementing strategies such as upselling, combo meals, and promotions, you can enhance your customers’ dining experience and increase their spend.
Remember, the key is to provide value and make it easy for customers to spend more while enjoying their meal. With these strategies, you can improve your AOV and see a positive impact on your restaurant’s financial health.
