Table of contents

• Introduction

• Financial KPIs

• Operational KPIs

• Marketing KPIs

• Customer Service KPIs

• Conclusion

Introduction

Welcome to the world of restaurants in India- where every dish is delightful and has a unique story to tell. However, running a restaurant is not an easy task. 

To run a successful restaurant, owners need a strong strategy. This is where KPIs- Key Performance Indicators come into play. KPIs help restaurant owners to keep track of the essential aspects of their business, ensure growth, and help improve customer experience. 

In this blog post, we will discuss the importance of KPIs for restaurants in India and the key indicators that every restaurant should track. 

Ready to learn more? Let’s dive in!

Financial KPIs

The financial health of a restaurant is the most important KPI that every restaurant owner should track. If you’re not making money, then you’re not in business. Financial KPIs give you a snapshot of the restaurant’s profitability, efficiency, and stability. 

Cost of Goods Sold (COGS) and Gross Profit Margin:

The COGS and gross profit margin are two critical financial metrics to track. COGS is the total cost of all the ingredients used to make a particular dish, while the gross profit margin is the total revenue minus the cost of goods sold expressed as a percentage of the revenue. 

For instance, if the COGS of a dish is INR 100 and the selling price is INR 150, then the gross profit margin is 33%. Knowing your COGS and gross profit margin helps you adjust the dish’s selling price and/or lower the cost of ingredients to improve profitability.

Labour Costs and Employee Turnover Rate:

Labour costs include the salaries, wages, and benefits paid to employees. Labour is one of the highest costs in the restaurant industry, and monitoring it is crucial. Employee turnover rate indicates the percentage of employees who leave the restaurant during a period. High turnover rates can affect the restaurant’s performance and lead to higher costs, including recruitment, training, and lost productivity.

Inventory Turnover:

Inventory turnover is the number of times a restaurant sells and replaces its inventory during a particular period. High inventory turnover indicates that the restaurant is selling products quickly and efficiently, thus reducing the need for storage and waste. On the other hand, a low inventory turnover would mean that selling a dish is taking more time, leading to spoilage and increased storage costs.

Food Cost Percentage:

Food cost percentage is a restaurant’s total food costs divided by total revenue expressed as a percentage. A low food cost percentage indicates that the restaurant is using ingredients efficiently, reducing food waste and spoilage, and maximising its profits.

Break-even Point:

The break-even point is the minimum amount of revenue required to cover all the restaurant’s expenses and make zero profits. Knowing the break-even point helps the restaurant owner determine their pricing strategy, cost structure, and profit margins.

Customer Lifetime Value (CLTV):

The CLTV is the total revenue that a customer generates for the restaurant throughout their lifetime. It’s calculated by multiplying the average purchase value by the number of times the customer returns to the restaurant. Understanding the CLTV helps restaurants identify and nurture their loyal customers, improve customer experience, and increase revenue.

In the end, financial KPIs hold the key to the restaurant’s growth and success, and effectively tracking and utilising them will enable restaurant owners to make informed decisions, maximise profitability, and improve customer experience.

Operational KPIs

Operational KPIs are vital for restaurant owners to monitor, as they provide insights into the day-to-day operations. Table Turnover Time is one such KPI that helps track the time customers spend at a table before leaving. Occupancy Rate, on the other hand, helps measure the capacity utilisation of the restaurant.

Order Error Rate is another crucial operational KPI that ensures accurate order placement and improves customer satisfaction. Online reviews and ratings serve as a useful metric to measure customer feedback and judge the restaurant’s online reputation.

It’s essential to keep track of these operational KPIs to ensure restaurant operations are running efficiently. The last thing a restaurant wants is a customer leaving due to a long table turnover time or an incorrect order. And let’s not forget, the power of online reviews can make or break a restaurant.

So, if you’re a restaurant owner in India, keep an eye on these operational KPIs. They may seem small, but they can have a massive impact on your restaurant’s overall success.

Marketing KPIs

Marketing KPIs are essential for any restaurant’s growth, and rightfully so. They help in determining the effectiveness of marketing strategies and campaigns. Social media engagement is one of the best ways to increase customer engagement and attract prospective customers. By actively responding to customer queries and complaints, you can create your brand identity that attracts more feedback and engagement.

Website traffic, conversion rate, and bounce rate are some of the key factors that determine your online success. Google analytics can be used to track them and study your website’s performance. Regular updates on the website with creative menu items and blog posts can increase website traffic and improve conversion rates. On the other hand, a high bounce rate is a sign of unsatisfied customers or an unfriendly website UI. A few layout tweaks and optimisation can get rid of the bounce rate.

The cost of customer acquisition is an idiosyncratic metric, and it varies significantly from restaurant to restaurant. It is the amount spent on a customer before they make a purchase. By reducing it, your business will see significant cost savings. There is no one size fits all formula for customer acquisition, and it differs from restaurant to restaurant. 

The customer retention rate is the percentage of customers who returned to your restaurant more than once. It’s based on regular customers and depending on how much they spend per month. Happy and satisfied customers are essential for an eatery’s success, and it’s arguably the most important marketing KPI. Keeping them pleased can help you retain regular business and even earn new customers through positive word of mouth. 

Last but not least, return on investment (ROI) is a metric that reflects the amount of revenue generated from a particular investment. Marketing strategies and campaigns often require an ample amount of investment. ROI is a dependable metric to determine whether the restaurant’s marketing efforts are any good or not. By tracking it regularly, you can make informed decisions for your business.

Customer Service KPIs

When it comes to restaurant customer service, it’s important to track KPIs that measure how happy your customers are with their experience. 

The Customer Satisfaction Score (CSAT) can give you a general idea of how satisfied customers were with their visit. 

The Net Promoter Score (NPS) measures how likely customers are to recommend your restaurant to others. 

The Customer Churn Rate reveals how many customers are not returning after their initial visit. Feedback Response Time measures how quickly you respond to customer feedback, which can impact customer retention. 

Finally, the Employee Overall Satisfaction KPI can give insight into employee morale, which can impact the customer experience. Keep in mind that happy employees are more likely to provide great service, so it’s important to prioritize employee satisfaction when tracking customer service KPIs.

Conclusion

So there you have it, folks! Tracking KPIs is essential to success in the restaurant industry. Don’t ignore the numbers – they can make or break your business. By keeping a close eye on your financial, operational, marketing, and customer service metrics, you’ll be able to identify areas for improvement and take action before it’s too late. So go ahead, implement some KPI tracking tools, and watch your restaurant soar to new heights!

It cannot be stressed enough how vital it is to track key performance indicators (KPIs) in the restaurant industry. By paying attention to the numbers, you can gain valuable insights into the financial, operational, marketing, and customer service aspects of your business. These insights, in turn, provide you with the means to identify areas of opportunity and address them proactively. 

Without tracking your KPIs, you run the risk of being caught off guard by potential setbacks that could significantly impact your restaurant’s bottom line. Therefore, it’s crucial to invest in reliable KPI tracking tools that empower you to stay ahead of the curve and keep a firm grip on your restaurant’s trajectory. With some effort and dedication, your restaurant can reach new enviable heights and leave your competition in the dust.

Got questions or need expert food consultancy advice? Drop us a message at email@insiya.co.in – we’re here to help you bring your food innovation to life!