10 Examples of KPIs in Restaurants and Reasons Why You Need One

KPIs, or key performance indicators in restaurants, help people in the food industry determine how well the actions they take are aligned with their goals. When using this, those who work in restaurants can identify if there are areas for improvement.

Understanding the different metrics to measure can help you determine which one is best for your restaurant to use. In this article, we discuss why it’s important to measure restaurant KPIs and list a few that you can track.

Related Article: Definition of KPI and Types, Factors and How to Apply It

Table Of Contents

1 Why is measuring restaurant KPIs important?
2 10 examples of KPIs in restaurants
2.1 1. Cost of goods sold
2.2 2. Gross profit
2.3 3. Labor cost ratio
2.4 4. Employee turnover rate
2.5 5. Average desk occupancy rate
2.6 6. Value of spending per head
2.7 7. Main cost ratio
2.8 8. Guests per server per hour
2.9 9. Average per person
2.10 10. Wasted food

Why is measuring restaurant KPIs important?

Measuring restaurant KPIs is important for them to improve service and continue to satisfy diners. They can also use KPI data to focus on how best to use their budget, staff and time.

Restaurants that collect KPI metrics can see how their current activity compares to past activity and predict future trends.

Related Article: 130 Examples of KPIs in Various Business Divisions and Tips for Using Them

10 examples of KPIs for restaurants

Here’s a list of 10 KPIs for restaurant owners to measure:

1. Cost of goods sold

The cost of goods sold allows restaurants to see how much money they are spending on supplies, such as menu ingredients. This helps determine how well your restaurant is managing its inventory and can help you plan future purchases.

You can find this metric by adding starting inventory to purchases made during a specified period, then subtracting the ending inventory amount. The formula will look like this:

(Beginning inventory + Purchases in period) – Total ending inventory = Cost of goods sold

Example: Jack’s Crab House started a business with a capital of 500,000 and purchased an additional 800,000 worth of crabs for the last month. Their remaining inventory at the end of the month is worth 200,000. Using the formula, determine their cost of goods sold is 1,100,000.

(500.000 + 800.000) – 200.000 = 1.100.000

2. Gross profit

Gross profit is the total revenue generated by the restaurant after deducting the cost of goods sold. Restaurants use this metric to determine how profitable their business is and to see if they have a net profit.

To find your gross profit, find your total revenue and subtract your cost of goods sold. The formula will look like this:

Total revenue – Cost of goods sold = Gross profit

Example: Pine Crest Diner had total revenue of 2,000,000 last month, with cost of goods sold 520,000, so gross profit was 1,480,000.

2.000.000 – 520.000 = 1.480.000

3. Labor cost ratio

The labor cost ratio is the relationship between labor costs and gross sales. Labor costs may include hourly wages, payroll taxes, health care and other related costs. To calculate this metric, you divide labor costs by sales so it looks like this:

Labor cost / Sales = Labor cost ratio

Example: Heather and Holly’s Farmhouse Food spent 4,000,000 in labor costs last year and made 20,000,000. This means that their labor cost ratio is 20%.

4,000,000 / 20,000,0000 = .2 or 20%

4. Employee turnover rate

The turnover rate or employee turnover is the number of employees who leave the company during a specified period of time. This metric can be helpful in determining how satisfied your employees are working at your restaurant. It can also help to see how effective you are at retaining talent and providing advancement opportunities.

You can find your employee turnover rate by dividing the number of restaurant employees who quit during a period by the number of employees still working at the end of the period. The formula will look like this:

Number of employees who quit / Number of employees who worked = Turnover rate

Example: The Mason Jar Draft House has 10 servers that are down at the end of the year, for a total of 200 employees remaining. This means their employee turnover rate is 5%.

10/200 = 0.05 or 5%

5. Average desk occupancy rate

The average table occupancy calculation examines the average number of diners visiting a restaurant over a period. Restaurants can use these rates to help them determine if they are using their seating capacity effectively.

To find this number, you divide the number of occupied tables by the total number of tables. The formula looks like this:

Number of occupied tables / Total number of tables = Average table occupancy

Example: Better Days Bistro has 24 occupied tables and a total of 96 tables. This means that the average table occupancy will be 25%.

24 / 96 = .25 or 25%

6. Spending value per head

Value spend per head is a metric that restaurants can use to see on average how much money a customer spends eating there. This helps restaurants see what time of day diners spend the most time.

They can then use this data to prepare promotions to encourage customers to eat at less popular times. To calculate the spend per head metric, you divide your total revenue by the number of customers. The formula looks like this:

Total revenue / Number of customers = Expenditure per head

Example: South Side Pizza made 500,000 on a Friday night when they had 50 customers. This means that their average spend per head is 10,000 for a Friday night.

500.000/50 = 10.000

7. Main cost ratio

The prime cost ratio is the total cost of producing a restaurant and can help companies determine the minimum selling price for their food and beverages. Typically, businesses aim to have a prime expense ratio between 45% and 75%.

When calculating your prime cost ratio, you first find the prime cost by adding your cost of goods sold to your labor costs. Then divide this value by the total number of sales. To calculate it would look like this:

(Cost of goods sold + labor cost) / Total amount of sales = Main cost ratio

Example: ABC resort has cost of goods sold 450,000 and labor costs 900,000, making its main costs 1,350,000. Restaurants can then divide 1,350,000 by 2,000,000, their total sales amount, to get a 67.5% prime expense ratio.

(450,000 + 900,000) / 2,000,000 = 0.675 or 67.5%

8. Guests per server per hour

The guests per server per hour metric looks at how many customers the server serves in a typical hour, which can indicate the efficiency of your server. The formula to find your guests per server per hour is the total number of guests served divided by the number of server hours and looks like this:

Total number of guests / Number of hours worked = Guests per server per hour

Example: Anita served 45 guests in five hours while working at ABC Burgers and Fries, and her manager wanted to know the average number of guests served per hour. He divides 45 by 5 and finds that he serves an average of nine guests per hour.

45 / 5 = 9

9. Average per person

Average per person is the amount of money the servers make for each customer they serve. Knowing these metrics is important to see which servers are making the most money.

You can find the average per person by dividing the total server sales by the number of guests they served. Count:

Total number of server sales / Number of guests served = Average per person

Example: At XYZ restaurant, Ibnu earns 200,000 in one night and serves 50 guests. On average, Morgan earns 4,000 per person he serves. However, Ibnu’s co-worker, Aji, made 500,000 in one night and served 80 guests. The average per person is 6,250. Based on this data, Aji earns more per person than Ibnu.

  • 200.000 / 50 = 4.000
  • 500.000/80 = 6.250

10. Wasted food

Food wasted is a percentage of how much food is not eaten in relation to the amount of food purchased and can help companies looking to reduce waste in their operations.

Typically, this involves weighing the food wasted and dividing the amount of food purchased that went unused by the total amount of food purchased. Count:

Weight of food wasted / Total food purchased = Percentage of food wasted

Example: Mama’s Italian restaurant found that they had 6 Kg of food wasted. When calculating their leftovers, they divided 6 by 60, the total amount of food purchased and found the amount of food wasted was 10%.

6/60 = .10 or 10%

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