7 key metrics in the Restaurant Industry

7 key metrics in the Restaurant Industry

Like all industries, the gastronomy and hostelry faces lots of challenges. Therefore, it is important for managers to understand and use all possible metrics to get a perfect overview on their business. Measuring is the only way to improve: we do need metrics.

It is acceptable just to compare two situations empirically (instead of using absolute metrics, based on numbers and equations), but numbers don’t lie. Somebody said that numbers are like those friends who always tell you things the way they are, no matter how you may feel about it.

As business consultants with a reliable experience we are used to value and draw a picture of restaurants health based upon 7 key indicators:

Historical sales

This KPI is essential, not just to have an idea of «how you have been doing until now», but also in case a restaurant is for sale and you want to invest in it.

Labor costs

Wages, taxes and employee benefits are very important when running a restaurant business. It is crucial to be aware of it.

Cost of goods

This is one of the least important KPI for one reason: if you own a restaurant and you increased its value through emotional indicators or fame, you will have enough room to adapt your prices based on the cost of goods. This cost is normally the same for all competitors.

Prime cost

On the contrary of the cost of goods, the prime cost is critical because it can reach 70% of your budget. The interesting point is its definition: Prime cost = cost of goods + labor costs. It shows the reduced impact of the cost of goods, as labor costs usually define most decisions in restaurant management.

Staff turnover:

Finding a good cook or good waiter is very challenging, because well-trained staff can find easily another job. Staff turnover may be very stressing. A lack of staff can increase the waiting time and to avoid this situation (which may end up with bad reviews), restaurant managers usually take fast and bad decisions and hire unsuitable employees.

Server Performance

How many guests are served by one person in a specific time range? According to us, this indicator is as important as conflictive. We don’t like to compare people with others, because sometimes, the success of one employee is the result of positive and negative behavior of all employees (including an specific employee). The top scorer always received the ball from another player.

How can CLX4 help you to improve some metrics?

If you read deeper what we just wrote, you will see how important our technology is for a restaurant, reducing staff turnover, increasing the number of guests served and helping to improve server performance.

At this point, the relevancy of the historical sales metric will decrease, and another one will slowly overtake it: future sales.

Please contact us and discover how to concentrate on future sales.

Guillermo Ortiz | CFO & Strategy

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