If you’re running an independent restaurant, you understand the importance of continuous improvement. Food service operators are always looking for ways to offer the best possible food, ambience and customer service while reducing waste and cutting back on unnecessary spending. Profit isn’t the only thing that matters, but it’s a major thing—and it’s an element of your business that you should always be assessing and refining.
Understanding and utilizing Key Performance Indicators (KPIs) within your business is critical to your success. Here are some of the KPIs you should be measuring in order to make the most of your time, money and energy. For personalized advice, please reach out to your local Morton rep or contact us to connect with someone in your area. We’d be pleased to help you assess and redesign your KPI strategy.
What are KPIs?
If you’re relatively new to owning a business, you may not think or speak in the same lingo as a seasoned operator. Simply put, the term Key Performance Indicator (KPI) refers to any quantifiable measure that can be used to track performance. They may be strategic, financial, operational or a combination of these factors. Business owners use KPIs to measure success, identify problems, make improvements and better train their staff. You can also use them to compare your profitability with similar establishments in your region, should that information be available to you.
What should my independent restaurant be measuring?
There are a lot of different Key Performance Indicators you can measure, but they should all connect to the same goal: driving the profitability, marketing and success of your brand. To determine the best KPIs for your restaurant, start by identifying your goals. We recommend meeting with your team to hear their thoughts and share your objectives in an actionable way. This will help your staff better understand your expectations and give them clear goals to work towards. Here are a few areas to pay specific attention to:
- Operational costs. As an operator, you should know exactly what it costs you to be open every day (rent, utilities, minimum staffing requirements, etc). All of your fixed costs are incredibly important and serve as a framework for your KPIs.
- Staffing. It’s easy to get caught up in little things, like wanting to save $0.50 on a package of bacon, but if you’re scheduling three dishwashers on a Tuesday afternoon or consistently have an extra server on the floor, you’re losing money. You don’t want anyone to be overextended (this includes the front and back of house)
- Food waste. You may know how much money you’re spending on food for your restaurant, but how much is being thrown away? That’s a double loss as you spent the money but didn’t make any profit on the ingredients.
Restaurant owners are faced with a big task: knowing how much money they need to make in a given day or week in order to break even (and then profit). In addition to supporting large, overarching goals, KPIs can be used to improve upon individual shifts and services. For example, you may tell your team the following: We have X reservations tonight and expect approximately Y walk-ins. Knowing this, our goal is a turnover rate of 1.5 hours. Let’s work together to achieve that.
After a service, have a quick huddle and review your goals/results with your team. How many people were served? What were food and beverage sales like? Then ask yourself additional questions: what were labour costs, food costs and miscellaneous expenses? Did we profit or ultimately lose money?
Once you’ve figured out exactly what’s happening in a single shift, a week and a month at your restaurant, you can make critical adjustments to improve operations and maximize profits.
Train your staff to meet KPIs
Your management style should be geared towards making improvements based on your KPIs, and having transparency with your staff is always a benefit. Don’t expect them to know what your expectations are—communicate them clearly and explain why you have that expectation in the first place (to reduce food waste, to increase customer satisfaction, to encourage spending, to get more walk-ins, to sell more gift cards, to have customers make social media posts about their meal, etc). One challenge in your restaurant may be related to several different KPIs, but when you identify areas for improvement, everyone can start working towards a common goal.
A few more tips
Identifying and strategizing around KPIs is a big job, but Morton is here to help. If you’d like personalized guidance, just ask—our team would be pleased to help you make an improvement plan with clear, actionable direction. Here are a few final notes we’d like to leave with you. Thanks for reading and again, please feel free to reach out with any questions or requests to meet. That’s why we’re here!
- Know your numbers. What is your average cheque per table? How much is food vs beverage, and how does that impact your profit on a given night? For every dollar in sales you’re making, do you know what you’re spending to be open? These specifics matter and have a significant impact on your monthly income as well as your long-term success.
- Review, review, review. Look at your daily numbers, weekly and monthly numbers, fixed costs, discretionary expenses and every other piece of the financial puzzle. This knowledge will empower you to see which KPIs matter and how to utilize them for improvement. You don’t need a month’s worth of data to make an improvement—if you see a problem, fix it immediately. Daily goals are ideal.
- Pay attention. How many meals are being sent back to the kitchen, and how has this impacted profitability? How much food is in your compost bin, and could those scraps have been used in another preparation? How much are your customers spending on non-alcoholic drinks, cocktails, appetizers, upgrades, desserts and other elements of a meal? This information tells a story.
- Get feedback from staff and customers. They often see things you might not notice right away, and this information can be invaluable. Consider offering a comment card or incentive for feedback (a discount, for example, or a free dessert if they’ll fill out a survey after their meal). Encourage Google Reviews and remember that QR codes can be effective in obtaining feedback quickly and conveniently.
- Track everything. Whether it’s purchases, waste, complaints, compliments or something else, data is always useful. Create processes and maintain them! Your POS system is a great tool for this.
- Use our calculator. It’s a free resource designed specifically for operators like you, so make the most of it!
A KPI is something consistent, and it can be broken down into even smaller pieces for detailed information. Don’t be afraid to go deep—your success depends on these kinds of efforts. For example, if you’re throwing out a lot of tomatoes, why is that? Are you ordering too many, are they spoiling quickly, should they be used differently? (We recommend maintaining a food waste of less than 3%—around 1% is ideal and achievable.)
Every problem in your kitchen or dining room is unique, but every problem has a solution. You may find yourself needing to cut back on purchasing, booking fewer (or more) staff on certain nights, or simply providing additional training to prevent mistakes leading to profit loss. It’s complex and again, this is why personalized guidance from our team may be beneficial. Thanks for reading and please contact us if you have any questions. We look forward to hearing from you!