A successful and responsible restaurant manager uses Key Performance Indicators (KPIs) to find out if effort, time and money are being devoted correctly towards the restaurant’s goals.With KPIs, you can quickly identify any problems in the way you’re running your restaurant and act accordingly, or spend time on nurturing the areas in which you’re doing well. The list of KPIs is long and not all of them will be relevant to you.
Focusing on finding the important and relevant KPIs will ensure that you keep leading your restaurant towards success, and to help you get started, we have listed a few that are always relevant to a restaurant manager. There is especially one KPI that many tend to overlook but can easily save you money if taken into consideration.
Kitchen labor hours: You should keep track of how many hours your kitchen staff work to measure their productivity. A good idea is to break it down into smaller categories to find out how long they spend on each task; preparing for today’s service, cooking the main courses, cleaning, etc. The results will indicate varies things – for instance, if you are short on kitchen staff, if you have the right staff or if they spend too much time on the wrong tasks.
Food costs: Not running a tight ship in regard to stock can cost you a lot of money. But by adding up food purchases for the week and comparing them to actual food sales, you can quite quickly get an understanding of your stock needs. If you are not used to doing this, you might have to prepare yourself for a potential unpleasant surprise as we often buy and waste too much food without knowing it!
Best and worst selling items: Relating to the point above, it is a waste of money buying the wrong items. Find out which wine, main course or coffee is the best-selling one in your restaurant and focus on rationalizing your inventory. This can be done by looking at sales from your POS system.
Front of House & Restaurant Management
Staff productivity: By looking at how many main courses, starters, desserts, non-alcoholic and alcoholic drinks, side orders, etc. each individual waiter is selling, you will get an insight into two things: you will learn how well your menu appeals to your customers, including if you have the right choices of starters, if your dessert selection is satisfactory and what kind of wine is the most popular one. But most importantly, you will find out how productive your waiters are. Set some standard for how much they need to sell on a weekly or monthly basis or how many cups of coffee they should be able to make in an hour. Then compare those figures to the actual sales – perhaps some of them need to step up their game to increase sales?
Customer feedback: The customers’ perception of you is worth gold, so this is one of the most important KPIs on the list. You can get your customers’ feedback in different ways; you can use feedback forms, save and go through complaints, look at the comments on Facebook, Tripadvisor or any other interactive platform you may use, etc. You can use your customers’ honest opinions to find a way to improve on the areas in question.
Linen costs: The cost of uniforms, aprons, tea-towels, towels and cloths can come as a shock to many restaurant managers as they tend to overlook this point. Try to count how many of each item is actually being used every day and then consider if you can cut down costs here. Perhaps the obligatory uniform should consist of only a t-shirt instead of a whole outfit? Or maybe you can wash your tea-towels yourself instead of continuously buying new ones?
Staff & Employment Management
Total Labor Cost: One of the two most costly entries on your budget is labor cost, and that’s why you need to know the exact spending on this particular need. It’s not enough to be aware of the hourly pay per employee – the total labor cost also includes insurance costs, retirement schemes, superannuation charges and other taxes that will apply to your payroll.
Length of employment: One cost-cutting option for this heavy entry is to keep hold of your staff. If you have a high labor turnover, you have to put a lot of money aside for training – money you could otherwise spend on turning any possible negative KPIs into positives. The way to keep hold of you staff is through good people management – and you can get five tips on how to keep your restaurant staff happy here.
Sick days: Falling ill is humanly, and having a sneezing and coughing waiter in the dining room is neither very sanitary nor attractive. Better to find a replacement then. However, a good restaurant manager will keep an overview of how often employees call in sick, as you might be able to spot a pattern. In the case of a high number of sick days, you need to talk to the specific employee and get to the bottom of it. Continuously calling in replacements is costly and might cause labor troubles.
As you can see, the KPIs are closely connected but nonetheless important to focus on individually. And as mentioned in the beginning, this is just a small selection of KPIs useful to constantly evaluate and lead your restaurant in the right direction.