Running multiple restaurant outlets can feel like a juggling act. You have to keep customers happy, manage costs, and grow your business—all at once. To achieve this, tracking the right metrics is essential. Monitoring these metrics helps you understand your restaurant’s performance, pinpoint problems, and make data-driven decisions.
Let’s dive into the key metrics you need to measure for your multi-outlet restaurant’s success.
What Are the Five Key Metrics That Will Be Used to Measure Restaurant Performance?
Start by focusing on these five essential metrics:
1. Sales Per Square Foot
Sales per square foot show how effectively your space generates revenue. A well-utilized space means higher returns.
- Formula: Total Sales ÷ Total Square Footage
- Industry benchmark: Full-service restaurants average $300-$800 per square foot, while quick-service averages $200-$400.
Track this metric to decide if your outlets are too large or too small for their location.
2. Food Cost Percentage
Your food cost percentage measures how much you spend on food relative to your revenue. It’s a direct indicator of cost control.
- Formula: (Cost of Goods Sold ÷ Total Sales) × 100
- Ideal range: 28%-35% (depending on your restaurant type).
If your food cost is too high, review inventory, portion sizes, and supplier contracts.
3. Labor Cost Percentage
Labor is one of your biggest expenses. Monitoring it ensures you don’t overspend on staffing.
- Formula: (Total Labor Costs ÷ Total Sales) × 100
- Ideal range: 25%-30% for full-service and 20%-25% for quick-service.
Use a restaurant-specific POS system to schedule staff efficiently and avoid unnecessary overtime.
4. Customer Retention Rate
Returning customers spend more and cost less to acquire. Track your customer retention rate to measure loyalty.
- Formula: ((Customers at the End of the Period – New Customers) ÷ Customers at the Start of the Period) × 100
- Industry average: 60% retention is considered good.
Use loyalty programs or personalized promotions to boost this metric.
5. Average Order Value (AOV)
A higher AOV means your customers are spending more per visit.
- Formula: Total Revenue ÷ Total Orders
- Ways to increase AOV: Upselling, combo offers, and premium menu options.
What Are the 7 Restaurant-Specific Ratios?
For a deeper analysis, use these seven ratios tailored for restaurants:
1. Prime Cost Ratio
Prime costs include food and labor costs. This ratio helps you see if your pricing and expenses align.
- Formula: (Cost of Goods Sold + Labor Costs) ÷ Total Sales
- Ideal range: Below 65%.
2. Inventory Turnover Ratio
This ratio tells you how quickly your stock is being used.
- Formula: Cost of Goods Sold ÷ Average Inventory
- Aim for 4-8 inventory turnovers per month.
A low turnover means overstocking, while a high turnover might lead to stockouts.
3. Gross Profit Margin
This metric shows how much profit you make after food costs.
- Formula: (Total Sales – Cost of Goods Sold) ÷ Total Sales × 100
- Average benchmark: 60%-70%.
4. Table Turnover Rate
This measures how many times a table is occupied during service.
- Formula: Total Guests ÷ Number of Tables
- Ideal range: 3-4 turnovers during peak hours.
5. Beverage Cost Percentage
Like food costs, this tracks your beverage expenses.
- Formula: (Cost of Beverages Sold ÷ Beverage Sales) × 100
- Ideal range: 18%-24%.
6. Sales Mix
This shows the percentage of sales from each menu category.
- Formula: (Category Sales ÷ Total Sales) × 100
- Use this to decide if you need to promote or remove certain items.
7. Employee Turnover Rate
High turnover leads to training costs and lower productivity.
- Formula: (Employees Who Left ÷ Total Employees) × 100
- Industry average: 73% annually (according to the National Restaurant Association).
Why Tracking Restaurant KPIs Matters
Key Performance Indicators (KPIs) are more than just numbers. They provide insights into how each outlet is doing. By tracking restaurant metrics, you can:
- Identify underperforming outlets: Compare metrics like AOV or table turnover rates.
- Streamline operations: Spot inefficiencies in food prep, staffing, or inventory.
- Growth plan: Use data to make informed decisions about expanding to new locations.
How to Implement a KPI System for Your Restaurant
Using a POS system is one of the best ways to track and manage KPIs for a restaurant. Here’s how it helps:
1. Centralized Data Collection
A multi-outlet POS system tracks sales, inventory, and customer data in one place.
2. Real-Time Insights
Access reports anytime to monitor food costs, labor expenses, and sales trends.
3. Customizable Reports
Generate specific reports for each outlet or compare them side by side.
4. Integrated Tools
Features like automated inventory tracking and sales forecasting save time and reduce errors.
For instance, EasyEat’s POS system provides real-time insights into food costs and sales, helping restaurant owners make quick, informed decisions.
Real Statistics Highlighting the Importance of KPIs
- Restaurants that use data-driven decision-making see a 5%-10% increase in profits (source: Deloitte).
- Poor inventory management leads to food waste, costing restaurants $162 billion annually in the U.S. alone (source: ReFED).
- Restaurants with loyalty programs increase customer retention by 20%-25% (source: Bain & Company).
These stats underline the importance of tracking and acting on KPIs effectively.
Tips for Consistent KPI Tracking Across Outlets
- Standardize Processes
Ensure all outlets follow the same reporting methods for accurate comparisons. - Hold Regular Reviews
Review performance metrics weekly or monthly to stay on top of trends. - Invest in Training
Train managers and staff to understand KPIs and use tools effectively. - Set Clear Goals
Align KPIs with specific objectives like reducing food costs or increasing customer retention.
Monitoring your multi-outlet restaurant’s performance isn’t just about collecting numbers—it’s about using them to drive success. By focusing on metrics like food cost percentage, labor cost percentage, and customer retention rate, you can identify areas for improvement and make smart decisions.
Start small. Pick a few KPIs, track them consistently, and use the data to make changes. With the right metrics and tools, you can ensure your restaurant outlets thrive in a competitive market.
