Opening and running a restaurant can be an enormous task. As any business owner already knows, it isn’t just a case of serving food to happy customers; there’s also a lot going on behind the scenes.
Whether you’re opening a new restaurant or you’re already a restaurateur, keeping track of a wide range of restaurant benchmarks can effectively measure your success.
But what exactly are restaurant benchmarks, and how can they help your bottom line? These are the questions we’re here to answer with this comprehensive guide.
Restaurant benchmarks are a set of metrics, ratios, and industry standards that let restaurateurs keep track of their restaurant business and the efficacy of their operations. They’re like key performance indicators (KPIs) that provide a way to measure restaurant performance and customer satisfaction based on various restaurant industry standards.
Using quantitative data (i.e., numerical data) to measure your restaurant’s successes and failures is a great way to keep an eye on what you’re doing well and what needs to improve. Qualitative restaurant benchmarks (i.e., non-numerical information) can also be beneficial.
Benchmarking allows restaurant owners to track their performance. It’s possible to use restaurant metrics to work out what to tweak or upgrade in their restaurant operations.
For example, if you keep an eye on your profit margins each month, you’ll have a better idea of how much money you have coming in. Combined with information about what marketing strategies you used in a particular period, this could help you maximize the efficacy of your marketing tactics.
Measuring your customer satisfaction rates can also help you improve customer retention, which could, in turn, lead to increased restaurant profits.
There are several ways to measure your restaurant benchmarks. It mainly involves keeping a thorough record of all purchases and sales, then using good old-fashioned math to work out your profitability.
However, there are a couple of hands-off ways you can track your metrics by using automation.
Point-of-sale systems (or POS systems) are like high-tech cash registers. They’re equipped with dashboards that automatically produce sales reports, letting you easily track specific restaurant benchmarks in real time.
POS technology can also be used in conjunction with self-service kiosks. KioskBuddy, for example, synchronizes with Square POS systems; customers place and pay for orders on the KioskBuddy interface, and management staff can then use the Square reporting feature to look at various metrics.
KioskBuddy also shows real-time sales data in its interface, giving users crucial insight into their business’s performance over a specific period.
Rewards programs are a fantastic way to entice restaurant customers back for another visit. Customers can collect points on everything they purchase and redeem them for discounts or freebies on a later visit.
Rewards programs also make it easy to see who is returning for more and precisely which menu items are popular in your restaurant.
Here are seven common restaurant benchmarks to help you measure your restaurant performance and guidance on how to calculate them.
A simple metric to calculate, the value of your total sales is a vital restaurant benchmark.
Working out your total sales is straightforward. Find the sum of your gross sales (all money earned from food sales, wine sales, liquor sales, and the sales of any other menu item), then subtract any customer discounts and refunds.
Track your monthly sales to ensure you know exactly how much money you have coming in.
Another easy restaurant benchmark is the sum of your total costs.
To calculate your total restaurant costs, tally up the value of all outgoing expenses each month. This will include food and staffing costs and any additional expenditures: rent, bills, licensing fees, insurance, etc.
The cost of goods sold (also known as COGS) is exactly what it sounds like — it’s the total cost incurred for everything you sell within a specific timeframe. This metric is different from your overall total costs, as it’s only referring to the cost of sold items; it excludes things like rent and insurance costs.
However, it isn’t just a simple case of adding up the cost of ingredients used to make each menu item. You also need to factor in the labor costs involved in making it. If your chefs are paid hourly, for example, you should calculate how long it would take them to produce each dish on your menu, then calculate the labor costs based on their wages.
Add the labor costs and cost of ingredients for each dish, and you’ll have an idea of your COGS.
From your total costs and total sales data, you can calculate the total profits you expect to earn over a given time period — usually a tax year. This can help you see how much money you should have left in your accounts at the end of said period.
To calculate your operating profits, simply take your total costs away from your total sales revenue — this is your gross profit minus your operating costs.
Next, subtract any taxes from your operating profits to determine your net profit value.
Your net profit isn’t the same as your profit margin. Net profit is the total amount of profit you’ll have in your account. In contrast, your profit margin is a profitability ratio — it shows you the percentage of your sales that has been turned into profit.
For example, if you have a profit margin of 41%, you are achieving a net profit of $0.41 per $1 of sales.
To calculate your profit margin, divide your income by your total revenue, then multiply by 100 to turn the number into a percentage.
The food cost percentage is a restaurant benchmark that lets you measure the difference between the cost of creating your menu dishes and the money you earn from them.
To calculate your food cost percentage, divide your total food costs by your total sales, then multiply by 100.
If you have a high food cost percentage for a specific dish, it could be worth charging more for it or trying to reduce the cost of ingredients.
Keeping an eye on your employee turnover rate is a good way of checking in on your staff's satisfaction rates. To calculate it, divide the number of employees who have left your team by the average number of employees on your payroll. Multiply it by 100 to turn it into a percentage.
A high employee turnover rate means you probably have to spend more time than you’d like training new employees — this can impact profitability, as new staff members are less productive. It’s also a sign that your employees aren’t feeling happy or fulfilled, which is a problem you should address in order to maintain a good working environment.
If you have a high turnover rate, it’s time to improve your employee benefits. You’ll want to keep every member of your staff satisfied and well paid — you may need to increase your floor staff or management salaries and improve the benefits you give your team. This could actually save you money in the long run.
From full-service restaurants to fast-food joints, all kinds of food-service businesses should use restaurant benchmarks to measure and gauge their successes.
Benchmarking can be used to track financial performance and elements like returning customers and overall satisfaction rates — of both guests and staff. Restaurant benchmarks like this can help business owners manage a restaurant they’re proud of and could help improve their financial performance as well.
If you’re looking for a way to simplify your restaurant operations and track your metrics, download KioskBuddy and set up an easy-to-use self-service kiosk. It’s quick to get started and produces useful kiosk performance reports to help you stay on top of your KPIs.
Sign up for KioskBuddy today and get a 30-day free trial.