The Most Important Restaurant KPIs for 2023

The fast-paced world of the food industry requires businesses to stay ahead of trends, consumer preferences, and evolving health standards. Today, as consumers become more discerning and vocal about their choices, businesses need to understand and measure their performance through well-defined metrics. Enter Restaurant Key Performance Indicators (KPIs). From renowned restaurants in bustling cities to local delights like my uncles' food truck in Findlay, Ohio, KPIs offer invaluable insights into the restaurant's operations, customer satisfaction, and overall business health.

This article outlines the top 15 KPIs every restaurant should monitor. For each KPI, we'll provide its definition, significance, data collection methods, and tools that facilitate its tracking. By the end, you'll grasp the essential role these metrics play in the thriving restaurant business.

Top 15 Restaurant KPIs

1. Average Ticket Size

• Definition: The average amount customers spend per transaction.
• Why it matters: Helps gauge pricing strategy effectiveness and customer spending patterns.
• Data collection: Point of sale (POS) systems.
• Tools: Square, Clover.

2. Table Turnover Rate

• Definition: The number of times a table is occupied during a specific period.
• Why it matters: Faster turnover can indicate efficient service and maximize revenue.
• Data collection: Restaurant reservation and POS systems.
• Tools: OpenTable, TouchBistro.

3. Occupancy Rate

• Definition: Percentage of restaurant seating capacity utilized during a given period.
• Why it matters: Helps in staffing decisions and identifies peak times.
• Data collection: Reservation systems and manual counts.
• Tools: Resy, SevenRooms.

4. Food Cost Percentage

• Definition: Percentage of total sales spent on food ingredients.
• Why it matters: An indicator of profitability and menu pricing efficiency.
• Data collection: Inventory and purchase records, sales data.
• Tools: MarketMan, Orderly.

5. Labor Cost Percentage

• Definition: Percentage of total sales spent on employee wages.
• Why it matters: Helps optimize staffing and maintain profitability.
• Data collection: Payroll systems, sales data.
• Tools: Toast, Planday.

6. Customer Feedback and Ratings

• Definition: Feedback scores and comments from customers.
• Why it matters: Direct insight into customer satisfaction and areas of improvement.
• Data collection: Customer surveys, review sites.
• Tools: Yelp, Tripadvisor.

7. Customer Retention Rate

• Definition: Percentage of returning customers over a specific period.
• Why it matters: Indicates customer loyalty and overall satisfaction.
• Data collection: Loyalty programs, reservation systems.
• Tools: LoyaltyLion, Thanx.

8. Online Ordering Growth Rate

• Definition: Growth in the number of online orders over time.
• Why it matters: Highlights the effectiveness of online platforms and delivery partnerships.
• Data collection: Online ordering platforms.
• Tools: Uber Eats, Grubhub.

9. Gross Profit Margin

• Definition: The difference between sales and the cost of goods sold as a percentage.
• Why it matters: A primary profitability metric.
• Data collection: Sales and expense records.
• Tools: Any accounting software, e.g., QuickBooks.

10. Inventory Turnover

• Definition: The number of times inventory is sold or used in a period.
• Why it matters: Indicates menu item popularity and inventory management efficiency.
• Data collection: Inventory and sales records.
• Tools: SimpleOrder, BlueCart.

11. Marketing ROI

• Definition: Return on investment for marketing activities.
• Why it matters: Gauges the effectiveness of marketing campaigns.
• Data collection: Sales data, marketing spend.
• Tools: Google Analytics, Mailchimp.

12. Employee Turnover Rate

• Definition: Percentage of employees that leave the restaurant in a given period.
• Why it matters: High turnover can indicate workplace issues and can increase training costs.
• Data collection: HR records.
• Tools: BambooHR, Workday.

13. Waste Percentage

• Definition: Percentage of food purchased that is wasted.
• Why it matters: Reducing waste can improve profitability and sustainability.
• Data collection: Inventory records, waste logs.
• Tools: LeanPath, Winnow.

14. Reservation No-Shows

• Definition: Number of reservations where customers didn't arrive.
• Why it matters: No-shows can significantly impact revenue.
• Data collection: Reservation systems.
• Tools: Bookatable, Tablein.

15. Menu Item Profitability

• Definition: Profit generated from each menu item.
• Why it matters: Helps in menu optimization and promotion of profitable dishes.
• Data collection: POS systems, ingredient costs.
• Tools: MenuSano, PeachWorks.

Why Restaurant KPIs Matter

With the competitive nature of the restaurant industry, having an edge is crucial. This edge often comes from understanding your operations at a granular level. KPIs serve as the mirror reflecting the health of your business, from finances to customer satisfaction. In today's digital age, where data is abundant, restaurants that leverage KPIs to drive decisions are better positioned for success.

From managing food costs to optimizing marketing efforts, these KPIs give restaurants the tools they need to thrive. Embracing these metrics can result in improved profitability, customer experience, and overall business health.