Restaurant metrics (also called key performance indicators or KPIs) are calculations that show how your business is performing. Most restaurant owners and managers have their own ideas of which metrics are actually the most important KPIs to track. Here, I’ve created a pretty exhaustive list of 30 common restaurant metrics so you can pick what makes the most sense for your business.
Key Takeaways:
- You don’t need to figure all of these restaurant calculations; pick the ones that measure areas where your business is struggling and start there.
- If you don’t know where to start and just want a general idea of your restaurant performance, start from the top and work your way down.
- Using any software like a point-of-sale (POS) system, inventory management software, or restaurant reservation system makes figuring restaurant performance metrics much easier.
- Figuring metrics can feel scary. Try not to let that stop you. Knowing how your restaurant is performing empowers you to make educated business decisions moving forward.
Operational Metrics
Operational metrics are the figures you encounter during everyday restaurant management. These metrics are the backbone of your operation. A good restaurant manager or owner should keep constant track of these numbers. Like a fever is the first sign that someone might be ill, these operational restaurant metrics are the first sign that a sector of your business needs your attention.
To figure these metrics quickly and accurately, grab a list of your fixed costs, like rent and utilities, plus your most recent profit and loss (P&L) statement before you start. These will help ensure your calculations are current and accurate.
1. Cost of Goods Sold (COGS)
Cost of goods sold, commonly abbreviated as COGS, refers to the direct costs of the items you sell to the public. Your COGS includes the costs of all of your ingredients, garnishes, and packaging for items you produce on-site or purchase and resell ready-to-eat (RTE) or ready-to-drink (RTD). COGS does not include indirect costs like overhead and labor, however. Essentially, your COGS tells you how much money you are spending on the products you sell. This shows you very quickly if your items are priced correctly and if you are likely turning a profit.
How to Calculate COGS
Your COGS numbers are closely tied to the dollar value of your food and beverage inventory. So before you can figure your COGS, you need to do at least two inventory counts, at least one week apart. Though, most restaurants figure COGS on a monthly basis, so if you do monthly inventory counts, that’s all you need.
To calculate COGS, you need three numbers:
- Beginning Inventory: This number is a dollar amount, expressing the total value of your entire on-hand food inventory at the beginning of the time period you are measuring. Your beginning inventory number would be the total dollar amount from your previous month’s inventory count.
- Ending Inventory: This number is also a dollar amount, expressing the total value of your current on-hand inventory.
- Purchases: This number is a dollar amount; the total amount of money you spent purchases supplies between inventory counts. You get the totals from your vendor invoices.
The formula for calculating COGS is:
( Beginning Inventory $ + Purchases $ ) – Ending Inventory $ = Cost of Goods Sold $
If you use inventory software to track your inventory counts, your inventory management system will automatically figure your COGS. All you need to do is run the COGS report in the software’s management dashboard.
Understanding Your Calculation
A COGS of 30% or lower is the standard restaurant industry target. If your COGS is around that number, congratulations! If your COGS is lower, that means you are generating a great profit from the supplies you purchase. If your COGS is higher than 30%, the fastest fix is to raise your menu prices, but you should do a little more digging to diagnose exactly what is going on. You may be buying more expensive supplies than you need or losing ingredients due to spoilage before you can sell them. Try negotiating with your suppliers for lower-priced supplies, switching to lower-priced ingredients, and watching your food waste more carefully.
2. Gross Profit Margin
Your gross profit is the money you have left after subtracting the direct costs of your ingredients and supplies. Gross profit goes hand in hand with COGS—where COGS reveals your costs, gross profit reveals your likely profit. Though keep in mind this profit calculation does not account for overhead costs like rent and utilities or indirect costs like labor. Gross profit is more of a quick calculation that tells you if you need to take a deeper dive. In restaurants, gross profit margin is typically expressed as a percentage of sales.
How to Calculate Gross Profit
Calculating gross profit is easy—if you have already calculated your COGS. All you need to figure your gross profit is your total sales and your COGS for a specific time period. So, if you have figured your COGS for a month, you want to use your overall sales for the same month.
From there, the formula for gross profit margin is:
( Total Sales – Cost of Goods Sold ) ➗ ( Total Sales X 100 ) = Gross Profit Margin %
Understanding Your Calculation
A typical gross profit for a successful restaurant is around 45%. If your gross profit is in that range, you’re doing great. A higher gross profit margin is terrific and could indicate that your team is doing a good job controlling costs. Though it could also indicate that you can afford to spend a little more on higher-quality ingredients. If your gross profit is lower than 45%, you should absolutely do some more digging to identify exactly where your losses are coming from: spillage, spoilage, low sales, or high vendor prices.
Gross profit does not account for many of your expenses that are further down the line of your profit and loss reports. A gross profit of 45% or higher suggests that you’ll likely have profit that flows through to your bottom line after all your expenses are accounted for. A gross profit of less than 45% could leave you with less than zero on your bottom line.
3. Net Profit Margin
When you hear people say that the “average restaurant profit margin is 5% to 10%,” net profit margin is what they mean. This number tells you precisely what percentage of your total revenue is actually profit. To get an accurate net profit margin, you will need to know your COGS, labor cost, and total sales, as well as your total operating expenses.
Operating expenses are those that are incurred in carrying out a day-to-day business that are not directly connected to production. Payroll taxes, employee benefits, administrative costs, fees paid to online delivery platforms, rent, repairs, taxes, and licenses are all operating expenses. Just add up all of your operating expenses that are not COGS or labor.
How to Calculate Net Profit Margin
Like gross profit margin, net profit margin is expressed as a percentage of your overall sales. Subtract your COGS, labor, and expenses from your total sales. Then divide this number by your total sales and multiply by 100.
[ ( Total Sales – COGS – Labor – Expenses ) / Total Sales ] X 100 = Net Profit Margin
Understanding Your Calculation
Any positive number is a good net profit margin, especially in 2023, when the restaurant industry is experiencing so much disruption. But traditionally, a “good” net profit margin is between 5% and 10%. A net profit margin above 10% is excellent. If your net profit margin is low or negative, that is an indication that your costs are out of whack somewhere. Don’t let your anxiety overwhelm you. It is better to know now so you have a chance to adjust your operation. You’ll need to do some detective work (and a little more math) to figure out where you need to shore up your business.
If your net profit margin is low, but your gross profit margin is good, that indicates that you need to check your expenses. You could be overpaying for rent, utilities, labor, or delivery fees. If your gross and net profit margins are both low, that indicates you should revisit what you’re spending on supplies.
4. Flow-through Rate
The final piece of the gross/net margin puzzle is flow-through rate. Flow-through (sometimes spelled flow-thru) rate measures the difference between your sales (revenue) and your profit. It tells you literally how much of your top-line revenue “flows through” your balance sheet to become bottom-line profit. A good flow-through rate tells you that your operation is efficient and that your costs and expenses are in line. A low or negative flow-through rate shows that you are spending too much money somewhere. This number is useful if your sales are high but you don’t seem to have any actual profit at the end of the day.
How to Calculate Flow-through Rate
Like calculating COGS, with flow-through rate, you need numbers from two different time periods because we need to see the difference over time. You need your overall sales figures and overall profit figures from two different periods. Since you already compile some of these numbers to figure your inventory costs, it makes sense to figure flow through at the same time.
[ ( Starting Profit $ – Ending Profit $) ➗ (Starting Overall Sales $ – Ending Overall Sales $ ) ] x 100 = Flow Through %
As with most restaurant metrics, your flow-through rate is expressed as a percentage. In this case, the flow-through number tells you what percentage of your overall sales (revenue) is actually profit.
Understanding Your Calculation
Many high-volume restaurants set a flow-through target of 50%. That number can be hard for independent restaurants to hit, so don’t get discouraged if your operation falls a little short. Like profit, any positive flow-through number is a great sign that your business is healthy. Running an independent restaurant is incredibly hard, so any amount of revenue flowing through to your bottom line is terrific.
Flow-through comes to restaurants through the hotel industry. Independent restaurant groups tapped hotel-trained hospitality managers to help them reach profitability, and those managers brought over some new metrics. You’re looking mostly for a positive flow-through number, and trying to identify ways to increase that number over time. Checking your flow through regularly helps you ensure a profit at the end of the fiscal year.
5. Overhead Rate
Overhead is all the costs associated with running your restaurant beyond the production of your products. Overhead includes costs like rent, insurance, utilities, and advertising. Overhead does not include costs related to production, like hourly labor or inventory.
However, overhead does include some costs that you think of as labor expenses. If you have salaried chefs or managers, or administrative staff like a bookkeeper or accountant, those wages should be counted as overhead since they are not related to production. You’ll have to pay these salaries regardless of how much food you sell.
How to Calculate Overhead Rate
Grab your most recent profit and loss statement. Add up all the costs and expenses that are not directly related to producing food and beverage. This is your total overhead amount. You’ll divide this number by your sales for the same time period and multiply by 100. This will give you your overhead rate, expressed as a percentage of sales. The formula looks like this:
( Total Overhead $ / Total Sales $ ) X 100 = Overhead Rate
Understanding Your Calculation
Most restaurants look for an overhead rate no higher than 35%. If your overhead is higher than that, you should look for places you can scale back. This could mean renegotiating your lease or software fees or choosing a less expensive marketing strategy. If you can’t roll back your overhead costs, then you can try to cut costs in other categories like labor or inventory.
Overhead costs can be a little confusing. It can help to think of overhead as all the costs that you’ll have to pay regardless of how busy you are or how much you sell.
6. Labor Cost
Labor cost is the money your restaurant spends on hourly wages expressed as a percentage of your total sales. Labor cost is a simple calculation meant to illustrate the effectiveness of your hourly staff and generally does not include salaried workers or payroll taxes in its calculation.
How to Calculate Labor Cost
To figure your labor cost, begin with the dollar amount that you spent on hourly wages for a certain time period. Divide that number by the total sales for the same time period, and multiply the result by 100.
( Labor $ / Sales $) X 100 = Labor Cost
Understanding Your Calculation
Industry standard for overall labor cost is 30% of sales; however, that target typically includes payroll taxes. To stay on course, a restaurant should aim to keep hourly labor cost percentage closer to 20%. If your hourly labor cost is higher, that may be an indication that your restaurant is overstaffed or your sales are low.
If your staff all appear to be busy, you should develop a strategy to increase your sales per customer. This could mean raising menu prices, but it could also mean training staff to upsell.
If you track your staff hours in your POS system, pull real-time labor reports at least once per shift. You can typically pull these flash reports from the POS station and print them to the screen or on receipt paper. Then, adjust your staffing levels in real time to stay on target.
7. Prime Cost
Prime cost is the combination of your COGS and your labor cost expressed as a percentage of total sales. Prime cost essentially includes all the costs that are not covered by overhead. This metric is an excellent shorthand for seeing if you are managing your variable costs well.
How to Calculate Prime Cost
To figure prime cost, add the total dollar amount of your COGS to the total dollar amount you spent on labor for a certain time period. Divide this number by your total sales for the same time period, then multiply the result by 100.
COGS $ + Total Labor Cost $ = Prime Cost $
( Prime Cost $ ➗ Total Sales $) X 100 = Prime Cost %
Understanding Your Calculation
To maintain profitability, restaurants generally aim for a prime cost of 55% to 60%. A prime cost higher than 60% is an indication that you need to trim either your labor or your COGS. Lower than 55% could be an indication that your operation is understaffed or overpriced.
8. Breakeven Point
Breakeven point is the point at which your restaurant starts to generate profit. Your restaurant’s breakeven point can be figured for various timeframes, such as the time it will take from your opening day to your first day of expected profit based on projected sales and costs. Alternatively, you can break down your fixed and variable costs to daily figures in order to figure a daily breakeven point.
How to Calculate Breakeven Point
To figure your breakeven point, you need your total expenses (those that do not fluctuate, like rent, utilities, etc.), total costs, total labor, and total sales for a given time period. First, subtract your total costs and total labor from your total sales. Divide the result by your total sales. Then, divide your total expenses by the resulting number.
Total Expenses / [ (Total Sales – Total Costs – Total Labor) / Total Sales] = Breakeven Point
If your restaurant sold $100,000 in one month, paid $55,000 in fluctuating costs like COGS and labor, and $27,000 in expenses (rent, licenses, utilities, etc.), your breakeven point in dollars was $60,000 for that month; meaning you started earning profit after selling $60,000 worth of food and drink.
Understanding Your Calculation
The example above is a post-mortem number, but you can use the same formula with projected numbers to figure a projected breakeven point by month or by day. For example, let’s say the expenses for a coffee shop break down to $300 per day, and historically, average COGS and labor track as $390 and $480, respectively, with average daily sales around $1,500. This coffee shop would breakeven daily at around $714 daily in sales, or:
$300 / [ ( $1,500 – $390 – $480 ) / $1,500 ] = $714.29
Daily and weekly breakeven points are two of my favorite metrics. I relied on them often to make decisions while managing restaurants. When you have to make split-second decisions about what dishes to ask the staff to push or whether to accept a last-minute large party booking, knowing how far away you are from earning a profit that day really helps.
9. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
This one is a mouthful and contains several scary-sounding accounting words. EBITDA is the most common way to compare businesses to one another. It measures a business’s ability to generate cash long-term. Most restaurants only figure this metric when attempting to sell their business. And most restaurant operators typically enlist the help of an accountant to get their books in order to figure this. The sale price of your restaurant is usually some multiple of your EBITDA.
Beyond making your business attractive to potential buyers, EBITDA can help you with long-range planning. Figuring your EBITDA can show you if you have the budget to upgrade your equipment or afford a major renovation.
How to Calculate EBITDA
As with most restaurant metrics, you’ll typically express your EBITDA as a percentage of your overall sales. To figure your EBITDA, you’ll need your overall sales and expenses. For this calculation, you won’t include taxes, interest payments, or depreciation and amortization expenses (if you have them).
[ ( Sales – Expenses ) ➗ Sales ] X 100 = EBITDA %
What is depreciation and amortization? These are accounting practices that spread major costs (like equipment or loans) over the span of time you are paying them off. Your bookkeeper or accountant likely figures your depreciation and amortization when filing your annual taxes. Some small restaurants or those that lease equipment may not have any depreciation or amortization.
Understanding Your Calculation
Restaurant EBITDA usually falls between 12% and 30% of overall sales. If your EBITDA is in a healthy range, that means you likely have the resources to finance a major equipment purchase or expansion. If you are selling your restaurant, a strong EBITDA means you’ll likely fetch a good price from interested buyers. An EBITDA below 12% will be less attractive to buyers, so you might expect some low-ball offers. If you’re not selling, a low EBITDA could encourage you to press pause on any large discretionary purchases or expansion plans.
Most of the restaurants I managed did not regularly calculate EBITDA unless we were considering expanding or selling the business. This might not be a figure that you calculate often, but it is a key figure when you need to make big decisions.
Food Costs & Menu Metrics
10. Actual Food Cost
Actual food cost is the amount of money your restaurant spent on ingredients expressed as a percentage of sales. Some restaurants track beverages as part of their food cost, and others track those purchases and sales separately. Which way your restaurant tracks these costs is a matter of preference; restaurants that track separately enjoy the ability to pinpoint waste or off-target costs more specifically.
How to Calculate Actual Food Cost
Whichever strategy you choose, the math is the same and essentially a version of the standard COGS formula. To figure this metric, you need the total dollar value of your food inventory at two points in time, along with your purchases and sales for the same time period. Then, you plug those numbers into this formula:
[ ( Beginning $ + New Purchases $ ) – Ending Inventory $ ] ➗ Sales X 100 = Actual Food Cost %
Understanding Your Calculation
Most restaurants aim for an actual food cost of 25% to 35%. The range varies by restaurant type, with higher-end restaurants expecting to pay top dollar for rare ingredients hitting the top of the range. Quick service restaurants that sell a high volume of a few dishes typically see a food cost on the lower end. If your actual food cost is higher than 35%, you may be spending more than you can afford on ingredients or pricing your menu too low. If you think your prices are otherwise fine, but your food cost is still high, then you might have a food waste or spoilage problem.
Actual food cost is a post-mortem number. If your calculation shows that you are off target, there is not much you can do but make a plan to do better in the next inventory period. For this reason, many restaurants that struggle to meet their actual food cost targets perform weekly rather than monthly inventory counts. Learn more about figuring food cost and use our free calculator in our article, How to Calculate Food Cost Percentage.
11. Theoretical Food Cost
Theoretical food cost is what your food cost should be based on your orders and sales. This number is a helpful tool to see if your team is ordering products effectively. Calculating theoretical food cost manually will take you some time—probably a full afternoon. A POS or restaurant management application that tracks invoices, recipes, and sales all in one place, however, can pull this information on a single report.
How to Calculate Theoretical Food Cost
To begin, you need to find your theoretical cost of goods sold. To get this number, you need to know the per-item cost of each menu item—literally a tally of the cost of each ingredient (including garnishes like toothpicks in sandwiches) that goes into its preparation. Then, multiply those numbers by the quantity of each item that was sold in the time period you are considering.
As in:
( Item A Food Cost x Units of A Sold ) + ( Item B Food Cost x Units of B Sold ) + ( etc. …) = Theoretical Food Cost $
This math can be figured by hand. It is much easier if you have already figured the cost of each recipe when you designed your menu. Once you have your theoretical COGS number, the theoretical food cost equation is quick to figure. Simply divide your theoretical COGS by the total sales and multiply the result by 100.
( Theoretical Cost of Goods Sold $ / Food Sales $ ) X 100 = Theoretical Food Cost %
Understanding Your Calculation
This number is useful on its own. For example, if your target food cost percentage is 28%, but your theoretical food cost is 35%, that is a sign that you need to update your ordering standards. Theoretical food cost can also be compared to your actual food cost to provide a deeper picture of your operation, as in the calculation that follows.
12. Variance
Variance is the difference between your theoretical food cost and your actual food cost, or what your food cost is versus what your food cost should be. This number shows restaurant operators the accuracy of their food and beverage ordering and usage. If most of the food and beverage you order is actually being sold, rather than wasted or spoiled, then your variance will be low.
How to Calculate Variance
To figure variance, simply subtract your actual food cost percentage from your theoretical food cost percentage:
Actual Food Cost % – Theoretical Food Cost % = Variance
Understanding Your Calculation
A restaurant’s variance will probably never be zero. There will always be some degree of waste, food comps, or spoilage. The mark of an efficient food and beverage operation is keeping the variance small. If your operation is running well, the variance should be less than 2%. If your variance is higher, that is an indication that you are not selling the products you paid for. This could be due to products expiring before they can be sold, high comps due to customer service issues, or theft.
If you have concerns about supply controls or theft, the best way to manage these concerns is to track your inventory with inventory software and regularly figure your inventory variance. This software automatically calculates your variance when you input physical inventory counts, saving you a ton of administrative time.
13. Portion Cost
Portion cost (sometimes called per-item food cost) shows you how much you are spending on the ingredients for a single serving of a particular dish. Portion cost shows you how much you can afford to spend on ingredients and helps you determine your menu prices.
How to Calculate Portion Cost
To figure your portion cost, you need the cost of all of the ingredients in a particular dish. So gather your most recent vendor invoices to ensure your prices are accurate. Add up the cost of each ingredient—remember garnishes and seasonings—and you have your portion cost. The formula looks like this:
Ingredient 1 Cost + Ingredient 2 Cost + Ingredient 3 Cost + (etc. …) = Portion Cost
Understanding Your Calculation
Portion cost will vary dish by dish. The portion cost helps you set your menu prices. If your overall food cost target is 30%, you can help yourself reach it by pricing your menu items 30% higher than their portion cost. For example, if an order of onion rings has a $5 portion cost, you’d want to list it on your menu for at least $6.50.
This is simplifying things a bit. You can afford to charge more than a 30% markup on some dishes (like sides), while some (like steaks) won’t sell if you price them too high. The key is to price your items so you turn some profit on everything and hit your overall food cost targets by selling a combination of items.
14. Contribution Margin
Contribution margin is another way of looking at individual dishes. Only instead of looking at the dishes’ costs, contribution margin calculates how much profit a dish contributes to your restaurant operation. Contribution is a profit-based way of looking at your products as opposed to a cost-based approach.
How to Calculate Contribution Margin
To figure a dish’s contribution margin, you need the portion cost and the menu price. All you do is subtract the portion cost from the menu price.
Menu Price $ – Portion Cost $ = Contribution Margin
Understanding Your Calculation
Like portion cost, your contribution margin will vary from dish to dish. And while portion cost and contribution margin seem like reverse images of one another, it’s good to know each one since they change the way you think and talk about each menu item. For example, contribution margin is more helpful in a line-up meeting with your service staff. Sales staff more readily understand, “Push the salmon over the steak; we make $12 per plate on the fish.”
Talking with your kitchen team, however, portion cost is more impactful. You’re more likely to convince a line cook to portion carefully by letting them know each portion of cauliflower gratin costs $7.
The dishes that have the highest menu prices often don’t have the highest contribution margin. You’ll likely find that vegetable and cheese-based dishes have a much higher contribution margin than a steak. And when you get into beverages, nothing beats the contribution margin of spirits.
Sales & Traffic Metrics
Tracking your sales and customer traffic helps you determine where you have opportunities to shift your staffing levels or adjust your hours of operation. Sales and traffic figures can also show you where you have opportunities to upsell or speed your service to accommodate more customers.
15. Cover Count
Cover count is the number of customers, or covers, in your restaurant at a given time. Your cover count is the baseline for figuring several other metrics, so it is important for your cover counts to be accurate. Additionally, many restaurants track cover count by daypart and by server. This gives you an accurate view of how many customers your staff can handle.
How to Calculate Cover Count
The best way to calculate cover count is to track the number of customers on each check. If you use handwritten checks, you can tally them at the end of the shift. If you use a POS system, make sure your staff enter the correct cover count on each of their POS tickets.
A reservation system can also track cover counts, but these don’t always catch nuances like a table of four customers with only three people actually dining.
Understanding Your Calculation
In a counter service restaurant, a good cover count will depend on how quickly your staff are able to complete customer orders. In a full service restaurant, a good cover count depends on the number of available seats in your dining room. Cover count is also related to the number of times a full service restaurant can turn a table—that is, seat it with a new party.
16. Check Average
Check average calculates the amount the average customer spends on a single meal in your restaurant. This tells you if you are seeing a return on the time and money you’re investing in your menu items and service.
How to Calculate Check Average
To calculate check average, you need to divide your gross sales by your cover count. If you are open for multiple dayparts (or meal times), it will be most helpful to figure your check average for each day part separately. Since breakfast, lunch, dinner, and happy hour items vary widely in price. The formula looks like this:
Total Sales $ ➗ Total # of Customers = Check Average
If you use a POS system, you can easily pull this calculation from a report. Virtually every restaurant POS system tracks check average. Though to ensure the calculation is accurate, you need to make sure your staff enter a correct customer count on every check.
Understanding Your Calculation
To maintain profitability, you need a healthy check average. What makes a healthy check average varies by restaurant type. Quick service restaurants tend to see an average of $8 to $15 per person, full service restaurants can expect $16 to $25, and fine dining restaurants can see check averages up to $500.
To get a sense of what your check average could be, add the sum of one mid-priced item from each of your menu sections. If your check average is around this total, you’re doing great. If it is lower, then you might want to consider some training in upselling techniques.
17. Turn Time
Turn time is the time it takes for the average customer to complete a meal in your restaurant. Turn time is useful for seeing how efficiently your restaurant serves its customers. If your check average is low or you are not profitable, your turn time could show you opportunities to operate more efficiently and squeeze in more customers.
How to Calculate Turn Time
You calculate turn time by measuring the amount of time each table is occupied. Then, you add those numbers and divide by the number of tables to get the average. This is much easier with a reservation system or a POS system, both of which can track each table from the moment the customer is seated until the table is cleared and reset. Though, if you have a front desk staff, you could come close by using pencil and paper tracking. The math looks something like this:
(Table 1 Dining Time + Table 2 Dining Time +…..) ➗ Number of Tables = Turn Time
Understanding Your Calculation
Most restaurants analyze turn time by party size. And if your POS or reservation software has a turn time report, those are usually organized by party size as well. So you’ll see how long a party of two (or two-top) takes versus a 12-top. This helps you forecast future table seatings so you can build in turns, thereby serving more customers and generating more revenue.
Target turn times vary by restaurant type. But in most cases, you should see that a two-top takes 1.5 hours or less for dinner, with parties of four or more verging closer to two hours.
In some restaurants, I’ve shortened turn times by shifting bottled beer and by-the-glass wine service from bartenders to servers, and helping chefs create new dishes that spread the workload throughout the kitchen line during business rushes.
18. Table Turnover Rate
Table turnover rate is related to turn time, but gives you a different view. The turn rate is the number of tables that you turn in a given shift—literally how many times a different party sits at the same table. Table turnover rate shows you if your whole dining room is operating efficiently.
How to Calculate Table Turnover Rate
To figure your table turnover rate, first choose a time period. Typically, you’ll measure an entire meal service, like lunch or dinner. Track the number of tables that you seat in that time frame. Then divide that number by the total number of tables in your dining room.
Total # of Tables Seated ➗ Total # of Available Tables = Table Turnover Rate
Understanding Your Calculation
Most full service restaurants try to hit a turnover rate of 3. That is, they seat each table an average of 3 times per service. This isn’t an exact number—you probably turned some tables 4 times, and others 2—but it is accurate enough to make some operational decisions. A table turnover rate is hard to reach. But it is a worthwhile goal since the more turns you can get, the more revenue you can generate from the same level of resources. If you can crack table turnover rate, you’ll be well situated for restaurant profitability.
If your turn rate is low, try incentivizing earlier and later diners. You can attract early parties for a 5:00 first seating with early bird specials, family meal deals, or happy hour promotions. On the later side, encourage customers after 9:00 with late-night happy hours or dessert tasting menus.
19. Revenue per Square Foot
Revenue per square foot tells you how much sales you generate compared to your location size. It is a helpful calculation to determine if you have enough seating space or if your restaurant location is the right size for your concept.
How to calculate Revenue per Square Foot
To figure your revenue per square foot, you divide your annual sales by the location’s square footage (including kitchens, restrooms, and other non-revenue generating spaces). You can typically get the most accurate square footage figure from your lease. With the figures in hand, the formula is simple:
Annual Sales $ ➗ Square Footage = Revenue per Square Foot $
Understanding Your Calculation
Like most restaurant metrics, revenue per square foot varies by restaurant type. Though, with revenue per square foot, quick service restaurants tend to have higher targets than full service as quick service restaurants tend to operate in smaller locations than full service operations. A good revenue per square foot for a quick service restaurant ranges from $250 to $400. Full service restaurants typically look for $150 to $325.
If you are struggling with profitability, revenue per square foot is a good place to start investigating your options. If your revenue per square foot is low, you might want to look at ways to bring more customers through the door or new ways to bring in more cash without adding seating (like offering grab-and-go options).
20. Revenue per Available Seat Hour (RevPASH)
Revenue per available seat hour tells you how much revenue you generate from each seat in your space. This metric is a favorite of every general manager I know. RevPASH can show you the exact money-making potential of every seat. So, if you have empty seats in your dining room, you know exactly how much money it could be making if you fill it.
How to Calculate Revenue per Available Seat Hour (RevPASH)
First, you need to calculate your available seat hours. You do this by multiplying the total number of your restaurant seats by the number of daily hours you operate, by the number of days in a time period. It is common to figure your seat hours by hour, day, week, or month.
Sales per Hour $ ➗ (Total # of Seats X # of Hours X # of Days) = RevPASH
Understanding your Calculation
Your RevPASH will vary by hour and by day of the week, so it can be tricky to pinpoint your ideal RevPASH. The longer the timeline you choose (by month, for example), the lower the RevPASH will look. It’s not uncommon to see a RevPASH of $3 to $5. If you are hoping to raise your overall profitability, focusing on your RevPASH can help you see the incremental changes as your sales increase.
If your RevPASH is lower than you’d like, it could be because your restaurant is not full, customers aren’t ordering much, your staff aren’t selling, or your menu is underpriced. If your RevPASH is low, your other metrics can point you in the right direction to raise it.
Try figuring your RevPASH by hour of the day. This will show you what times of day you have the greatest opportunity to increase your revenue and times when you don’t need to do anything but scoop up sales.
Customer & Marketing Metrics
No restaurant drives sales and builds longevity without customers. These metrics can help you measure your customers’ engagement and the impact of your customer communications.
21. Customer Acquisition Cost (CAC)
Customer acquisition cost shows how effectively your marketing dollars are being spent—literally, how much money you have spent for each new customer you receive. To accurately figure CAC, a restaurant needs the ability to track new customers.
This can be done by attaching a promotional code or coupon to the advertising you placed and tracking the number of discounts you apply each day. It is a good idea to program a specific discount button into your POS for each promotion to increase trackability.
Alternatively, you could compare the cover counts from a POS or table management app for a similar period before your marketing campaign and after.
How to Calculate Customer Acquisition Cost
Once you have a plan for tracking, the math for CAC is straightforward:
Marketing Expenses $ ➗ Total # of New Customers Acquired = CAC
If offering a discount is part of the marketing strategy, however, be sure to include the total dollar amount of the accumulated discount as part of the expense in your calculation.
Understanding Your Calculation
If you spent $2,500 on ad placement in a local newspaper and gained 200 new customers, and offered a discount to those new customers that, over the course of the promotion, cost you $800, your CAC would be $16.50, or:
( $2,500 + $800 ) / 200 = $16.50)
For an upscale restaurant where the average check is $65 per person, this CAC might be fine, especially if those guests later return to pay full price. For a coffee shop, where the check average is $7 per person, though, a $16.50 CAC might not be worthwhile.
22. Customer Retention Rate
It is a classic restaurant adage that regular customers are what build a restaurant business. Your customer retention rate is essentially a numerical representation of how well you are building relationships with regular customers.
How to Calculate Customer Retention Rate
To get this figure, you need to know your total number of unique customers. To track this accurately, you need a customer list from either your POS or reservation system. You’ll also need to be able to gauge customer-level change over time so you can see how many new customers you are adding.
(Ending Customer # – New Customer # ➗ Beginning Customer #) X 100 = Customer Retention Rate
Understanding Your Calculation
Most restaurant customers are not regulars, especially if you’re located in a tourist location. Don’t be surprised if your customer retention is 30% to 50%. A CAC of 30% is actually considered healthy enough. Between 30%–40% is very good, and anything higher than 50% is excellent.
For figuring customer retention, a restaurant POS that uses payment data to automatically update customer profiles is the most accurate. Most restaurant POS systems that include payment processing (like Toast, Square, and Lightspeed) can do this.
23. Customer Churn Rate
Just like there are multiple angles to measure and talk about your food cost, there are multiple ways to measure your customer retention. Customer churn rate is the flip side of customer retention rate. Your churn rate is, essentially, the difference between your customer retention rate and 100%. So if your customer retention rate is 40%, then your churn rate would be 60%.
How to Calculate Customer Churn Rate
You can calculate your customer churn rate using the customer retention rate formula, then simply subtract the result from 100. As in:
100% – Customer Retention Rate = Customer Churn Rate
Understanding Your Calculation
It might sound silly to just flip the way you talk about your customer retention by focusing on churn rate instead. But churn rate is necessary for figuring the next metric, which is customer lifetime value.
Don’t be shocked if your churn rate is 50% or more. Most restaurants have a fairly high churn rate. But once you start measuring it, you can look for ways to improve your operation to lower your churn rate.
24. Customer Lifetime Value
Customer lifetime value shows how much money your average customer spends with your restaurant over their total visits. Customer lifetime value is based on your churn rate, so the longer you can retain customers, the bigger their lifetime value will be. This is a helpful metric for measuring how much money your customer retention efforts are adding to your gross sales.
How to Calculate Customer Lifetime Value
To figure your customer lifetime value, you need your customer churn rate and your check average for the same time period. You can measure this metric by the day, week, month, or year. Though, most restaurants choose to measure this monthly. Once you have your numbers, the calculation is simple:
Check Average $ ➗ Customer Churn Rate % = Customer Lifetime Value $
It’s easiest to convert your customer churn rate percent to a decimal figure. So, if your churn rate is 60%, you’d use the decimal form of the percentage, 0.60 in the formula.
Understanding Your Calculation
If you have a high churn rate, your customer lifetime value will be low—because customers don’t spend much time with you. If you are good at retaining customers, your customer lifetime value will be high. Because price points vary widely, it is difficult to define an industry standard customer lifetime value. You should start aiming for a lifetime value of at least your target check average, then build from there.
It takes at least four visits to turn a customer into a regular. So if you can get your customer lifetime value to four times your target check average, you’re on a glide path to building regular customers.
A straightforward way to increase your customer lifetime value is to run a loyalty program. This can be a simple punch card system, or a more complex points-based digital loyalty software that integrates with your POS system.
25. Conversion Rate
Conversion rate measures how customers respond to your digital marketing efforts. Conversion rate is great for tracking the effectiveness of your website, and social media, text, email, or print marketing campaigns. Conversion rate measures how many customers make a purchase after seeing your marketing materials, expressed as a percentage of the total audience that interacted with your advertisement or website. Essentially, how many people who see your ad (or website) convert into customers?
How to Calculate Conversion Rate
In a printed advertisement—like a discount card you hand out at a food festival—you can track the number of cards you hand out then tally the cards that are returned to your restaurant. With your website or social media ads, you can typically find these numbers in your back-end dashboard.
Understanding Your Calculation
A conversion rate of 3% to 6% is considered very strong for the restaurant industry. You’re in a highly competitive industry where customers are swamped with choices. So, any number of people coming into your restaurant based on a marketing campaign is great. If you have a campaign that converts closer to 10% or more, keep running it; whatever you are doing is a winning strategy.
Know your local laws before offering freebies. The marketing team of a restaurant I managed once printed a slew of lovely “free cocktail” cards and handed them out at a major industry event. We had to immediately rescind the offer though; serving free alcohol would have violated the restaurant’s liquor license.
Staff Performance Metrics
Every restaurant has staff, even if it’s only a handful. These metrics help you track their productivity and identify opportunities for training. As a former restaurant manager, I want to encourage you to remember that, unlike customers, your staff shows up for your business every day. In this age of staffing shortages, it is a smart business move to train and encourage your staff in order to retain them rather than use metrics to penalize them with lost shifts or write-ups.
26. Tip Percentage
Tip percentage is the amount of tips your service staff receives from customers, expressed as a percentage of their individual sales. Tip percentage is generally a good indicator of how well cared for your customers feel. A high tip percentage tends to correlate with strong employees.
How to Calculate Tip Percentage
To calculate tip percentage, you need your server or bartender’s individual sales and individual tips. If you use a POS to track your staff tips, you can see both of these numbers on their closing POS reports. Though typically, those reports only track credit card tips. For an accurate picture, you’ll want to include cash tips, too. Then you divide their total tips by their total sales and multiply by 100.
The formula for tip percentage looks like this:
(Total Tips $ ➗ Total Sales $) X 100 = Tip Percentage
Understanding Your Calculation
Tip percentages tend to be lower in quick service restaurants than in full service restaurants. In quick service, a tip percentage of 10% to 15% is good. In full-service, a good tip percentage ranges from 16% to 18%. Servers averaging over 18% are doing an excellent job. Team members that bring in less than 15% may need some additional training, especially if their co-workers’ averages are higher.
Sometimes high tip percentages are more related to customers liking a staff member’s personality. And, of course, tips are not sales. A server or bartender might have a high tip percentage, but if their sales are low, they could still be good candidates for upselling training.
27. Ticket Time
Ticket time is the best productivity measure for your kitchen staff. Ticket time tells you how long it takes your kitchen team to prepare menu items. It can help you identify bottlenecks or overwhelmed kitchen stations. You can also use it to identify your strongest line cooks or chefs. This metric requires meticulous attention to paper tickets or a kitchen display system (KDS) that tracks digitally.
How to Calculate Ticket Time
To calculate your ticket time, you need the total number of tickets for a shift, plus the time it took for each course to be prepared. You can write the ticket times on paper tickets, then input this information into a spreadsheet at the end of the night. You’ll need to add up the elapsed cooking time for each ticket (i.e., the number of minutes from the ticket printing in your kitchen to the plates walking out the door). Then, divide this sum by the total number of tickets for the shift.
The formula for calculating ticket time is:
Total Cooking Time From All Tickets ➗ Total # of Tickets = Average Ticket Time
If you use a KDS system, you can pull a kitchen productivity report that tracks this information. A KDS report can also show you ticket times by dish and by multiple days and hours so you can compare different cooks who work the same station.
Understanding Your Calculation
The industry standard for ticket time is under 10 minutes for appetizers and under 20 minutes (or 30 during a rush) for entrees. If your ticket times are slower than that, you could be sending too many menu items to a single station, which slows your whole operation. Or, you could have some cooks that need additional training or additional prep time. You might also see an opportunity to slow down the pace at the front of house to give the kitchen some breathing room.
28. Sales per Labor Hour
Many restaurant professionals consider this figure to be the most important indicator of a restaurant’s health. Knowing your sales per labor hour helps you quickly determine how many staff you should schedule based on sales projections or help you see opportunities to increase your team’s productivity.
How to Calculate Sales per Labor Hour
To figure your sales per labor hour, start with your total sales for a week. Then, add the number of labor hours worked for the week, including front of house (FOH) and back of house (BOH) staff, dishwashers, night cleaners, etc. Divide the total sales by the total hours worked.
Total Sales $ ➗ Total # of Hours worked by Hourly Staff = Sales per Labor Hour
For example, if your total sales for a week are $30,000 and your hourly FOH and BOH team worked a combined total of 550 hours, your sales per labor hour would be $54.55.
$30,000 / 550 = $54.55
Understanding Your Calculation
You have to compare your sales per labor hour to your overall menu prices to gauge what a healthy range is for your restaurant. If the restaurant in the example above mostly sells $3.00 hotdogs, then $54.55 is pretty good. But if it is a full-service restaurant with entrees starting at $25, $54.55 starts to look pretty puny.
A sales per labor hour that is low compared to your menu prices is a sign that you need to ramp up your sales. You can typically increase your sales per labor hour by training your team on upselling or expanding your revenue centers (like adding online ordering or catering).
29. Actual vs Scheduled Hours
Actual versus scheduled hours shows how often your staff members are varying from their scheduled shifts. This information is helpful when planning your future staff schedules and also tells you if your labor forecasts and budgets are accurate. It can also help you identify staff members who are taking extra time with their opening or closing tasks and who might need some additional training.
How to Calculate Actual versus Scheduled Hours
To calculate this metric, you need to track your team’s scheduled hours and hours worked. The simplest calculation is to simply subtract the total hours you scheduled a staff member to work in a day or week from the total hours they actually worked in that timeframe. Like this:
Total Hours Scheduled – Total Hours Worked = Actual vs Scheduled Hours
If you use scheduling software that integrates with your POS, you can get much more detailed calculations, showing the spread of hours that are worked versus what you scheduled and also show you frequent shift swappers.
Understanding Your Calculation
Ideally, there is little variance in your actual versus scheduled hours calculation, though you should expect some. If you have staff members that are regularly working over their scheduled hours, there might be tasks you could train them to perform more efficiently. Or, you might find that your schedule forecasts are actually unrealistic. Staff that regularly work under their scheduled hours might be less committed to the work and looking to leave soon. Check in with them to find out if you’re missing something that could renew their passion for their work.
Looking at actual versus scheduled hours has frequently helped me identify staff members with whom I needed to check in. Frequently, employees working under their hours were dissatisfied with their work or going through a difficult time at home. On more than one occasion, simply checking in with them helped me find a way to retain a good employee.
30. Employee Turnover Rate
Employee turnover rate quantifies what percentage of your staff have left your business over a certain period of time. Industrywide, the hospitality industry struggles with turnover; a recent study by Hourwork found that in 2022, only 54% of quick service restaurant employees reached 90 days of work before quitting.
How to Calculate Employee Turnover Rate
To figure the employee turnover rate for your restaurant, you need to divide the number of employees that separated from your business (quits, terminations, etc.) by your total number of employees. Then multiply that result by 100.
( # of Employees Separated / # of Employees ) x 100 = Employee Turnover Rate
For example, a restaurant that lost 10 employees from a staff of 30 has an employee turnover rate of 33.33%. The owner of that restaurant might feel pretty good that he or she has a lower turnover rate than the industry standard. Every time an employee leaves your business. However, there are costs associated with searching for a replacement, then hiring and training that replacement.
Understanding Your Calculation
Currently, the employee turnover rate in restaurants is at a record high. For the past several years, it has been well over 80% industrywide. So, if your turnover rate is less than 70%, you’re doing pretty good. If your turnover rate is higher than 70%, you should look at your people managers and see if you have opportunities to set a new tone or better support your team.
The Cornell School of Hospitality Management found that replacing a front-of-house employee costs $5,864 for hourly staff. According to the National Restaurant Association, replacing a manager can cost as much as $15,000. At the end of the day, retaining the staff you have is just good business.
How to Collect Data & Analyze Restaurant Metrics
Collecting all of the data you need to figure your restaurant metrics takes time in the back office. Once you have the data, the math is pretty straightforward. The tricky bit of restaurant metrics-minding is figuring out what the numbers mean and what actions you need to take to improve them. Here are some basic guidelines to get started.
Decide What to Measure
As you can see from the list above, there are dozens of metrics you could use to measure your restaurant’s productivity. Most restaurants don’t track every possible metric all the time. Decide what information is important to you; is it your staff productivity or your overall costs? Is it the efficiency of your supply ordering and production? Choose what you want to measure so you can plan how to collect the data you need.
Choose a System to Collect Data
You can collect data in a spreadsheet like Google Sheets, in a written log book, or use software like a point-of-sale system or accounting tool. The key is to collect the same type of data (like sales, customer volume, or inventory counts) every day for a week, month, quarter, or year so you have numbers to work with. Using a POS system speeds this process exponentially since it automatically collects a ton of data for you.
Be careful when relying on POS data for things like cover counts. The data is only as accurate as the people inputting it. If your staff are not inputting the actual guest count on all their checks, your numbers will be off. Even using a POS system, you still need to do some light auditing every day.
When I managed restaurants, I spot-checked guest counts on checks during service and checked the guest counts on my servers’ closing reports, then matched those to the reservation system counts. If the cover count is off, reports like your average cover will be off, as will your staff productivity reporting.
Compare Numbers & Analyze Data
With your data collected, it’s time to perform your calculations. If you are just starting to calculate metrics, start with at least a week’s worth of data for whatever you are tracking. Perform your calculations and compare them to your targets. If any numbers seem incredibly off, search your manager’s logs or ask team members if anything uncommon happened that might have impacted the numbers.
Did a large party come in but only order appetizers? Were there several no-shows, resulting in overstaffing and product spoilage? Did one of your social media posts drive in more business than expected, and you ran through product? This research will help you determine the causes of the numbers you are seeing.
Make Operational Changes
Make some calculated changes to your operation based on the numbers and the causes you think are driving them. If an uncommonly rainy summer shuts down your busy patio for lunches and dinners, you might run a rainy-day happy hour promotion to boost traffic. If you are seeing lots of food waste due to spoilage, adjust your ordering and delivery cadence to get smaller quantities more frequently. If your labor numbers are off, try cross-training and staggering your staff clock-in times.
Recalculate Metrics After a Set Time
After you make a change, like adjusting your order cadence or staggering your staff clock-in times, give the changes enough time to have an impact. Recalculate your metrics after a week or a month and see if your operational adjustments have moved the needle at all.
Restaurant Metrics Tips & Best Practices
Staying on top of your restaurant metrics is one of the major restaurant management tasks. If you have never calculated metrics and tracked key performance indicators, starting now can feel impossibly daunting. My advice is to start small. Start tracking one variable this month. Here are some of my other top tips:
Pick Your Favorites
Every restaurant manager and owner has a metric that they think is the most revealing. For me, it was breakeven point and labor cost. I tracked those through every shift, waiting to cross the breakeven threshold, then manage labor targets to maintain profitability. One of my co-managers was obsessed with RevPASH and used that to wring sales from every available seat.
Pick a metric that resonates with you and helps you make decisions on the fly. When you feel fluent with one set of metrics, pick new favorite focuses for the next quarter. Within a year, you’ll be thinking in metrics, and you’ll be much more confident when you need to make hard business decisions.
Figure Metrics at a Regular Cadence
No one figures every single metric every day. Pick which metrics you’ll track daily and add them to your manager log. Most people choose labor cost, food cost, check average, and average cover. Figure more big-picture metrics like your food cost variance, actual versus scheduled hours, and COGS on a monthly basis. Some others, like customer acquisition cost and turnover rate should be figured when you have relevant data (when you are running a marketing campaign, or in the case of turnover, at least once per year).
Use Software
There has never been a wider variety of affordable restaurant point-of-sale and accounting software available for independent restaurants. You should use them. I’ve figured metrics for restaurants using spreadsheets and pen and paper as well as using POS and other software. I can tell you without hesitation; using the software is better. It speeds the data-gathering process and allows you to make more refined, complex calculations with confidence.
My favorite part is that most modern restaurant software is cloud-based, so you are not tied to a desk in a tiny (usually hot) back office while you work your numbers. You can access the data anywhere, from your living room or the coffee shop on the corner. Many systems nowadays offer free trials or even free baseline subscriptions so you can try before you buy.
Record a Daily Managers’ Log
Figuring out why your numbers look a certain way is the trickiest part of metrics management. Having a manager log to refer to will help you see patterns that you might otherwise have missed. I like a daily log that is recorded on a cloud-based spreadsheet like Google Sheets or one that is housed within the POS system. These systems keep your managers’ notes secure and also make it easier to gather the data in them for calculations. I always tracked basic data like daily cover counts, check averages, labor percentages and comps, voids, and discounts.
Leave space for adding notes about weather, breakage, large parties, and any customer or staff issues. These tend to be the most important, in my experience. These seemingly random details, like the weather, can help you see patterns. For example, at one Los Angeles restaurant I managed, we learned that our sales and covers were higher when it rained, and we had to close the patio. It seemed counterintuitive—rain closed half of our seating area!—but nearby office dwellers didn’t want to venture far from work on rainy days, so they funneled into our dining room.
Restaurant Metrics Frequently Asked Questions (FAQs)
Expand the sections below for answers to some of your most common restaurant metrics questions.
Last Bite
It is important to figure your restaurant metrics so you can gauge the health of your business. A lot of small restaurant owners get anxious about figuring these metrics. So, if the idea of measuring your business performance makes your heart race, you are not alone. But in my experience, it is so much better to know your metrics that operate in the dark. If you know your numbers, you have a chance to make changes that can positively impact your bottom line.
So take a deep breath, have a glass of cold water, and pull some reports. In the end, you’ll be glad that you did.
