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5 key metrics to running a profitable restaurant

The data you must track — and how to act on it

Paul Goetz is the chief revenue officer of Upserve, a restaurant management platform. This article does not necessarily reflect the opinions of the editors or management of Nation’s Restaurant News.

Running a restaurant is no easy feat. We can only act on what we know, and too many operators don’t know what they don’t know. To keep costs down while getting the most out of every hour, meal and cover, you need to know what drives important deliverables like repeat purchases, faster turn times and high tickets. 

It comes down to a combination of the tastes of your guests and staff performance. These aspects aren’t easy to guess, and they require a look at several key metrics. Not only does this data need to be made available to managers, but it also needs to be easy to understand (and acted upon) to make the most of every shift. 

1. Historical sales trends: Historical sales trends show how your sales today compare to the previous day or the same day last week, month, quarter or year. This type of detailed data is important to record and save daily to understand whether business is trending up or down. It’s one of the most effective ways for a restaurant to forecast and plan.

Reacting quickly can only be done when enough information is gathered to proactively strategize. For instance, running a huge promotion during the Phoenix summer won’t be as effective as it will during the winter, when the snowbirds return. Trending sales data lets you understand exactly what’s popular when — and why — well in advance. 

2. New vs. repeat guest breakdowns: Another important metric to track is new vs. returning customers. Converting a new customer is difficult, and the lifetime value of each needs to be as high as possible to create the most return for your marketing and advertising budget. When you know how much business comes from repeat guests, you’ll better understand how to drive loyalty in a cost-effective way.

Every restaurant needs regulars to make its menu items the talk of the town and drive new business. According to a recent study by the National Restaurant Association, repeat customers make up 71 percent of sales at quick service; 68 percent at fast casual; 64 percent at casual dining; 63 percent at family dining; and 51 percent at fine dining. No matter how much you spend on marketing, it can’t compete with a customer recommendation. 

3. Server performance metrics: A first-class customer experience starts with your employees. Measuring how each server performs historically and relative to other servers in a handful of categories that support the restaurant’s goals creates a successful work environment. Measuring servers lets you see how they stack up, who can coach whom and who’s driving revenue. 

You can’t coach your staff to emulate your best server if you don’t know why he or she is the best. With well-defined and documented procedures in place, your entire crew will understand the expectations for succeeding and growing with the business. It also allows you to replicate and incentivize good behaviors to maximize service efficiency.

4. Menu item retention metrics: Some menu items bring customers back, while others are never ordered. Regardless of what you think your restaurant should be, the market speaks with what customers order and pay for. Your menu itself is your product, and if it’s filled with items nobody wants, you’re not making the most of those opportunities.

Food prices are volatile, regardless of whether you’re serving shrimp, muffins or juice. While your menu may have hidden gems that drive loyalty, rotating seasonal items in and out may be the only way to keep menu prices stable. When tomatoes are cheaper, offer a marinara dish; when cucumbers are cheaper, change up the salads or add pickles. Do whatever it takes to bring customers back.

5. Real-time labor costs: As a percentage of gross sales, labor costs shouldn’t prohibit you from making margins and having a profitable night. Even with forecasting, you’ll sometimes find yourself overstaffed or understaffed, but with real-time insights into labor costing, you can make decisions on the fly to cut staff and maximize ROI on slow nights. 

The National Restaurant Association found the median total sales per full-time employee at limited-service restaurants should be $45.33 per hour, or $68,571 per year. According to the U.S. Census Bureau, this drops to $56,000 per year across the entire industry — versus $226,000 for grocery stores — when factoring in full-service establishments. Focusing on this metric in real time, shift to shift, ensures you’re getting the most value, meeting guest expectations and creating better margins.

These five metrics aren’t the end-all solution for your restaurant; they’re simply the starting point to build a solid foundation and understand where you really stand — with the data to prove it. You’ll proactively resolve most issues, and as new ones inevitably come up, you’ll react much faster than the competition. That’s why data analysis is the most important task your restaurant will ever take on. 

Paul Goetz is the chief revenue officer of Upserve, a restaurant management platform. Upserve offers a complete suite of solutions for restaurant operators. 

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