Restaurant Benchmarking: Where Your Business Stacks Up

where your restaurant stacks up in its benchmarks
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KPI’s and Benchmarks: How Can KPI’s Help Your Restaurant Live Up To Its Potential?

Your business seems to be thriving. The doors are open, guests are enjoying your food and drinks, and you’ve got a great ambiance. Servers are bustling about, carrying trays and taking orders. Your cooks are leaning over stoves, stirring, plating, and sending out the perfectly arranged dishes your restaurant has quickly become known for…

But are you meeting your goals? Do you have measurable benchmarks for success or ways to define whether or not your restaurant is profitable and efficient? Are your stakeholders happy with your restaurant’s performance?

Though significantly less elegant or exciting than service, benchmarking with defined Key Performance Indicators (KPI’s) is essential to the success of your restaurant.  With meaningful goals and targets, you’ll be able to:

  • Quickly understand the health of your business
  • Troubleshoot problem areas
  • See where you stack up relative to both industry standards and your own standards for success.  

So What Is a KPI, Anyway?  

The name sounds like daunting business-speak, dreamed up by someone who has never walked through a busy dining room or kitchen. In the fast-paced field of restaurant ownership, revenue becomes king and important metrics get overlooked.

Monitoring KPI’s are critical for the success of your restaurant. In simple terms, it is a measurement put in place to define what’s important to your business.  They can be qualitative (think food quality or overall guest satisfaction) or quantitative (net profit, prime cost, table turn, etc.).

Before you can effectively use KPI’s, you need to figure out which measures are important, and what those measures will actually tell you.  

Defining Your KPI’s

To start, you might want to look at places where your restaurant is underperforming: Is your labor cost too high? Do you have menu items that have expensive ingredients and don’t sell? Are you turning tables fast enough to make rent?  

If you’re struggling to answer these questions, you can start with big-picture KPI’s, then drill down into benchmark numbers to see where the problems lie.   

The Big Picture: Slicing and Dicing Revenue and Space

On its own, revenue is an almost-useless metric.  However, once you put it into context, it can be a valuable tool for determining the health and performance of your restaurant.

KPI’s like Sales per Seat or Sales per Square Foot can tell you how effectively you’re using your space and give you hints about how much room you have to grow.  

Revenue and Labor

Another way to give revenue context is by comparing it to the labor needed to generate that revenue.  Sales per Server or Sales per Man-Hour can give insight into how strong your staff is and how they contribute to overall revenue.  

By way of example, think about hiring a busser.  You might balk at the added payroll expense, but if that busser means that you can turn more tables and bring in more revenue, you’ll see improvements in these KPI’s.  

These metrics will also help with identifying staffing shortfalls. They can help point to inefficient staff in need of improvement or highlight top performers for recognition. Managing labor costs helps you not only reduce labor costs but also achieve your goals and measure progress toward your KPIs.

Labor cost control is an important part of managing business processes and measuring your KPIs.

Driving Business With KPI’s

How often do guests return to your restaurant?  If you can track repeat business, it will give a great deal of insight into how successful you are at creating ambiance and loyalty, and these guests often spend more, and more often.  

Are you selling enough add-ons?  Things like appetizers, sides, or desserts, all of which have high-profit margins and could easily be on every table.  

To Track Something Is to Improve It

“The most important part of the KPI process is defining weaknesses and

places to do better.”  

By defining goals and assigning measurability to them, you unlock the tools to actually improve.  KPI’s become the basis for SMART goals (Strategic, Measurable, Achievable, Relevant, Time-based), which can help guide your business and help your restaurant live up to its potential.  

With a clear set of KPI’s and an understanding of their relationship to benchmarks, you’ll have a clear picture of how successful your restaurant is relative to your own standards and the standards of the industry.  

You’ll have the data to make changes, to find restaurant efficiency, and help your restaurant be the absolute best it can be.

One of our accountants can get in touch with you and make sure you’re meeting your goals today!

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