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7 KPIs every hospitality business should monitor

Tracking Key Performance Indicators (KPIs) is vital to understanding how your hospitality business is performing and what areas need attention.


But with so many variables in running a bar or restaurant, it’s difficult to know which performance metrics to focus on that will make a difference to your business.


You’re constantly making decisions that impact your bottom line.


  • What menu items should you add or remove?

  • How much staff do you need on the schedule this week?

  • Should you invest in that new kitchen equipment?


Making the right decision comes down to closely monitoring your business performance. 

We’ve worked with restaurants and bars for years and these are the 7 KPIs that all owners should track.


These numbers will enable data-driven management of your business.

 

1.       Revenue per available seat (RevPAS)

This metric looks at total revenue divided by the total seating capacity for a given period. It shows how well you’re driving sales based on the physical size of your venue. A low RevPAS indicates empty tables that need filling.


2.       Food and Drink gross profitability (GPs)

GPs refers to the direct profit you are making on your food and drink ingredients. Monitor this as a percentage of total revenue. If your GPs creeps below the industry standard of 68-75%, look for ways to trim costs or increase prices.


3.       Staffing cost percentage

Payroll is a huge line item, so track it closely. Divide total staffing costs by total revenue to see if you’re over or understaffed. Aim for 30-40% for restaurants and 20-25% for bars.


4.       Customer traffic and covers 

Count the number of guests served over a certain timeframe. More covers mean more revenue opportunities. Traffic trends can reveal slower days where you could introduce new incentives such as set menus to increase footfall or reduce staffing levels to save on costs.


5.       Average spend per head (SPH)

Total sales divided by covers shows the average spend per head. If yours declines, diners may be ordering less, and you may want to add new offers to incentivise them to stay longer and spend more.


6.       Food/Drink sales ratio

On average our clients see a split of 63/37 on food and drink sales. Are your food sales higher than this? Is there room to push drink sales to increase overall revenue? 


7.       Voids and comps 

Monitor menu items voided or comped to guests. Excessive voids can signal issues with food or service. High comps could mean unhappy customers. Both directly hurt revenue.

 

Running a restaurant or bar usually means being hands on in the running of the business which leaves little time for stepping back and assessing performance.


These key metrics provide the critical financial insights you need to drive decisions and increase your bottom line.


Contact us today if you need help monitoring your restaurant or bar’s performance metrics.

 

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