Why Tracking KPIs is Essential for Restaurant Success
Running a restaurant is more than just serving great food. Behind the scenes, data-driven decisions can make the difference between thriving and barely breaking even.
Key Performance Indicators (KPIs) help restaurant owners measure what’s working, what’s not, and where to focus efforts. Without tracking KPIs, you’re making business decisions in the dark.
From table turnover rates to food costs, these are the 10 most important restaurant KPIs every owner should track to improve profitability, efficiency, and customer experience.
1. Revenue Per Available Seat Hour (RevPASH)
Why it matters: Measures how efficiently your restaurant uses its seating capacity.
Formula:
Total revenue ÷ (number of available seats × opening hours)
Example: If your restaurant has 50 seats and operates for 8 hours, but only earns £2,000 a night, your RevPASH is £5 per seat per hour.
📌 How to improve it: Increase table turnover with efficient service and digital payments like Pay @ Table to reduce wait times.
2. Average Customer Spend
Why it matters: Understanding how much customers spend per visit helps with menu pricing and promotions.
Formula:
Total revenue ÷ number of customers served
📌 How to improve it: Encourage upselling with strategic menu design or limited-time offers sent via email marketing.
3. Table Turnover Rate
Why it matters: The faster you turn tables, the more revenue you generate.
Formula:
Number of tables served ÷ total number of tables
📌 How to improve it: Use queue management tools to reduce wait times and implement pre-payment options to speed up table clearing.
4. Cost of Goods Sold (COGS)
Why it matters: Measures how much you’re spending on ingredients compared to revenue.
Formula:
(Beginning inventory + purchases) – ending inventory
📌 How to improve it: Reduce food waste by tracking portion sizes and negotiating better supplier deals.
5. Gross Profit Margin
Why it matters: Shows how much profit you make after covering direct costs.
Formula:
(Total revenue – COGS) ÷ total revenue × 100
📌 How to improve it: Adjust menu pricing, reduce ingredient waste, and monitor supplier costs.
6. Labour Cost Percentage
Why it matters: Labour is one of the biggest restaurant expenses. Keeping it under control is key to profitability.
Formula:
(Total labour costs ÷ total revenue) × 100
📌 How to improve it: Use smart scheduling software to avoid overstaffing during slow periods.
7. Customer Retention Rate
Why it matters: Loyal customers spend 67% more than new ones (Harvard Business Review).
Formula:
((Customers at end of period – new customers) ÷ customers at start of period) × 100
📌 How to improve it: Implement a loyalty programme or personalise offers via email marketing.
8. Online Review Score
Why it matters: 94% of diners check online reviews before visiting a restaurant (BrightLocal).
📌 How to improve it: Encourage happy customers to leave reviews and respond professionally to negative feedback.
9. Waste Percentage
Why it matters: Every bit of food waste is lost revenue.
Formula:
(Total food waste ÷ total food purchased) × 100
📌 How to improve it: Train staff on portion control and consider sustainable restaurant practices.
10. Break-Even Point
Why it matters: Helps you understand exactly how much revenue you need to stay afloat.
Formula:
Fixed costs ÷ (1 – (Variable costs ÷ Total sales))
📌 How to improve it: Increase revenue with upselling, optimised table turnover, and smart menu pricing strategies.
Final Thoughts: Track KPIs, Improve Performance
Running a restaurant is complex, but tracking these KPIs makes it easier to make smart business decisions. By measuring sales, costs, efficiency, and customer satisfaction, you can increase profitability and improve the overall dining experience.
To make your restaurant even more efficient, check out:
• How digital payments improve restaurant operations
• The best ways to build your restaurant’s email list
• How to improve table turnover with queue management
Small improvements in these areas can lead to big results for your bottom line.
