If you had checked out our previous blog post, you would have come across the different operational restaurant metrics we use to gauge a restaurant's health. Today we will be talking about the other two kinds of metrics which are performance and customer metrics in detail.
Performance metrics help gauge the restaurant's performance using data that is readily available from the Point of Sale System (POS) used by the restaurant.
Some of the widely used Performance Metrics are as follows:
Average Revenue Per Seat (ARPS) is the average revenue made from each cover or seat in the restaurant. It is a good metric with which we can understand if the restaurant is underutilized or not.
ARPS = Total Sales/ Number of Seats or Covers
The Average Revenue Per Square Meter measures the average sales volume achieved per square meter of dining space available in the restaurant. This metric helps bring to light whether the dining space in a restaurant is being utilized efficiently or if more tables need to be added to bring in more sales.
Average Revenue Per Square Meter = Total Sales/ Available Area in Square Meter
Trying to find out how fast customers are cycled in for the same table is very useful. It helps you identify key areas you can work on and how you can speed up service. It gives you insight into how you can handle your reservations and handle your staff efficiently. Table turnover rate visualizes this data for you. Another way to improve the table turnover rate is to switch to a mobile ordering system for your restaurant.
Table Turnover Rate = Guests Served for a Specific Time/ Total Available Covers
Running a restaurant is not a simple task and a lot of factors are involved in running it successfully. That being said, keeping your workforce happy and motivated is one key factor to look out for when managing a restaurant. Employee turnover takes into account the number of employees that have left your restaurant for various reasons. Keeping this number low is imperative to running a successful restaurant.
Employee Turnover Rate = (Employees Relieved/ Total Number Of Employees) x 100
This restaurant metric measures the margin of a particular dish once its cost of ingredients is excluded. They help us understand how much each item contributes to the overall pre-tax profit.
Contribution Margin = Selling Price - Price of Ingredients.
This restaurant metric gives a detailed look into the utilization rate of every seat based on the number of hours the restaurant is open. It helps you understand when your restaurant is witnessing a surge in the number of customers and when the footfall is low. Using this metric you can design promotions to drive up for the lost traffic and boost sales. We've done a separate post on restaurant promotions that you might find useful as well. Do check it out.
Revenue Per Available Seat Hour = Revenue/(Number of Seats x Number of Hours Open)
This restaurant metric measures the average time a table is occupied. It helps figure out waiting times for when a restaurant is busy.
Time Per Table Turn = Time Between the First Order and the Checkout.
Overhead rate is just the fixed costs associated with running a restaurant. Keeping overhead costs at about 30% of your revenue is a safe way to go. If you would like to know in detail based on the hours open you can use the formula underneath.
Overhead Rate = Total Fixed Costs/ Number of Hours Open
In the previous article, we had talked about labor costs. If you wanted to get a more detailed report of your labor costs, you can break them down into front and back house costs. It will give you a breakdown of how much you're paying your staff like a captain, manager, chef, etc.,
Customer metrics are another key aspect of running a restaurant. These metrics help us visualize how well and loyal the customers that come to our restaurant are.
This restaurant metric helps you understand how well you have promoted your restaurant. It calculates the cost undergone to acquire each new customer.
Customer Acquisition Cost = Cost Of Marketing/ Total New Customer Acquired
It is another customer-related restaurant metric that deals with the retention of old customers. Keeping hold of regular customers is a very hard thing to do in the current market and keeping track of this number regularly will help you make better decisions that will keep your customer happy.
Customer Retention Rate = ((Total Customer - New Customer)/Total Customers) x 100
Keeping a regular track of these metrics will help steer your restaurant in the right direction.
19th March 2021