Top 4 Sales KPIs Every Restaurant Manager Needs to Track

tracking restaurant KPIs

Posted: Feb. 07, 2019

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 best restaurant KPIs to track and boost sales are:  

  1. Sales per labor hour
  2. Sales per head
  3. Revenue per available seat hour
  4. Table turnover rate

Sales Per Labor Hour

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.

To predict the right staff schedule, calculate your target SPLH with this formula:

Sales Per Labor Hour = Total Sales/Hours Worked

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.

It’s important to effectively utilize every hour on the job, so you need a trained, sales-oriented FOH team. Here are a few ways to increase the sales efficiency of your staff:

Food and Drink Sales Per Guest

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.

Revenue Per Available Seat Hour

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.

The two factors are the hours open and the seats available. Here’s how to calculate RevPASH:

Step 1: Seat hours = Number of Seats/ Hours open

Step 2: RevPASH = Total revenue/ Seat hours

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.

Table Turnover Rate

Whether your restaurant is fast-casual dining or white-tablecloth service, tracking the table turnover rate is essential for any sit-down restaurant. Here’s how to calculate your table turnover rate:

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. 

Once you know the average time it takes for a table to sit, eat, pay, and leave (also called the check time), you can take deliberate steps to improve the rate. Very often, the biggest problem lies in service; the FOH is too slow or a slow legacy system is used to process payments. Four effective ways to improve your table turnover rate are:

  1. Have servers approach the table in under one minute
  2. Save time with prep work and clear communication
  3. Rearrange the floor plan or redecorate
  4. Use new technology to quicken your service

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.

 

Posted: Feb. 07, 2019 | Written By: Emma Alois

Management

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It’s a fact: The quality of your restaurant’s POS system can mean the difference between profit and loss. Having the right POS solutions positively affects the functionality of every aspect of your business. From maintaining optimum customer care standards, to your ability to manage your inventory, effective POS can help your restaurant succeed beyond your wildest expectations.

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