Understanding Restaurant KPIs: What to Measure and Why
Running a restaurant involves more than serving great food—it’s also about running a business with precision. Key performance indicators (KPIs) give restaurant owners a snapshot of how efficiently they’re operating and where profits might be slipping away. Monitoring the right metrics can make the difference between a thriving operation and one struggling to stay afloat.
1. Prime Cost
Prime cost combines your cost of goods sold (COGS) and labor expenses. It typically represents 55–65% of total sales, depending on your concept and location. Tracking this regularly helps identify whether payroll or food costs are creeping too high.
Formula:
COGS + Total Labor ÷ Total Sales = Prime Cost %
2. Food and Beverage Cost Percentage
This KPI measures how much of each sales dollar goes toward ingredients and beverages. Consistent increases could signal waste, theft, or poor portion control.
3. Labor Cost Percentage
Labor is one of your biggest controllable expenses. Compare daily or weekly labor cost percentages to sales trends to ensure you’re scheduling staff efficiently.
4. Average Check Size
Your average check size reveals how much each guest spends. If it’s decreasing, look at menu pricing, server upselling, or customer demographics. Increasing check size—even by $1 per customer—can dramatically boost profitability.
5. Table Turnover Rate
This measures how often tables are seated and cleared during service. A high turnover rate indicates efficient operations, while a low one may point to slow service or bottlenecks.
6. Gross and Net Profit Margins
Gross profit shows earnings after food costs; net profit reflects what’s left after all expenses. Regularly reviewing both keeps you grounded in your true financial picture.
:
A bistro tracking KPIs monthly discovered its labor costs were rising faster than sales. Adjusting staffing schedules by just one hour per day improved profit margins by 3%.
Monitoring KPIs isn’t about micromanagement—it’s about visibility. By focusing on metrics that truly matter, you can make data-driven decisions that keep your restaurant efficient, profitable, and primed for long-term success.