Key performance indicators of restaurants

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Key performance indicators of restaurants
One key performance indicator of restaurants is same-location sales. (Restaurant image by René Schulz from Fotolia.com)

Restaurant owners and managers are often judged by key performance indicators. These key performance indicators can reflect a restaurant's financial health, customer satisfaction, marketing efforts, management effectiveness and certain operating costs. The website of the National Restaurant Association see Resources) has a number of performance indicators for the general state of the restaurant industry. Key performance indicators are used by fast food, casual dining, mid-scale and even fine-dining establishments.

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Sales per head

One key restaurant performance indicator is sales per head, according to Profitable Hospitality, an online reference site. Sales per head is calculated by dividing the total sales in pounds by the number of customers. Sales per head is often called "average ticket." Restaurants usually calculate their sales per head at different times during the day. For example, most restaurant managers like to know what their sales per head are during the lunch and dinner hours. Restaurants also track their sales per head each week or month, looking for various positive or negative trends. For example, sales per head trend downward when a restaurant runs discounts.

Total labour costs

Total labour costs are one of the largest expenses that restaurants incur. Hence, restaurant owners must constantly keep track of their labour costs. Labour costs include the salary or hourly wages, benefits, insurance, retirement and bonuses that restaurants pay out. One way that restaurants can lower labour costs is to have fewer workers on hand for slower periods. For example, a manager can lower his labour costs by sending one employee home early after the lunch rush.

Customer satisfaction

Customer satisfaction is another key performance indicator for restaurants. Restaurant companies usually like to measure key elements of their restaurant, such as food quality, hospitality, speed of service and cleanliness. Some restaurants use mystery shoppers to visit their units at unannounced times. Mystery shoppers are usually employed by marketing research firms. The mystery shopper will typically eat at the restaurant during lunch or dinner, then fill out an evaluation form. Restaurant managers can also pass out surveys in the dining area for customer satisfaction feedback.

Advertising response rates

Most restaurants keep track of their advertising expenditures and return on investment. For example, many restaurants advertise in coupon magazines that are distributed to residences in their area. The restaurant will usually keep track of the number of customers who use the coupons. Subsequently, the restaurant owner will determine if the coupon advertisement generated enough sales to justify running additional ads. Restaurants also study the responses of yellow page and online advertisements.

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