Key Numbers To Watch In Your Restaurant Business

restaurant-businessTo build and maintain a successful restaurant business, you need to constantly keep your thumb on its pulse and know how fast its heart is beating. You need to be checking the key numbers.

Obviously, your cash registers and your accounting system will provide you with some very important information. That’s the good news. The bad news is, knowing how you did last week or last month may not be a very good indicator of where your restaurant sales will be next week or next month.

Any type of financial data that you can get from the accounting system is known as “lagging” indicators. These indicators tell you what happened. They won’t tell you much about what is about to happen. However, they are still important.

Here are the most important numbers you need to monitor:

  • Weekly sales, total per week/day and also by the hour (you can then create a simple Excel chart and see weekly and daily peaks and valley and also be able to identify over-staffing & capacity issues)
  • Weekly profit (Many restaurant owners mistaken “gross” for “net” and assume that the more gross you have the more money you make. Well, as the song goes, “it ain’t necessarily so.”)
  • Weekly payroll
  • Product group contributions (the percentages of your total sales attributed to drinks, entrees, appetizers, and desserts)

If you manage your restaurant business by relying just on the lagging indicators, you could be looking for trouble. It’s akin to driving a car by looking in the rear mirror all the time.

If you want to have a way of predicting how your restaurant business is going to do in the near future, you need to implement and track a few “leading” indicators.

  • The total number of VIP Club members
  • The number of new VIP Club members added to the list over the last period
  • The number of Birthday Club members on the list
  • The number of catering sales calls made (if you do catering)

Some of the leading indicators are much harder to measure. They tend to be “soft” and qualitative, rather than “hard” and quantitative like the lagging indicators. After all, how do you measure the morale of your staff and how much they enjoy working at your restaurant? How can you confidently know that this week they were greeting guests more cheerfully than a week ago?

Well, these are certainly harder but not impossible to measure:

  • You can use comment cards and evaluation forms that customers fill out at the request of your staff.
  • You can hire a mystery shopping company or — better yet — turn you best customers into mystery shoppers.
  • You can talk to the staff regularly and fill out a simple form at the end of the day, and then tabulate the results weekly and monthly.

There you have it.

Now, let’s get to work and start keeping track of the important things in your business.

The list of indicators above is very short. However, if you implement just half of these indicators in your restaurant business and consistently track them, you will be in the top 5% of the most successful restaurants.

READY TO TAKE YOUR RESTAURANT BUSINESS SERIOUSLY?

Say "enough's enough" to half-empty dining rooms, humdrum shifts, and wondering which half of your marketing budget was wasted.

73% of teenagers and adults are walking around with a smartphone (iPhone, Android, or Blackberry) in their back pocket. They use is for everything: Playing games, checking emails, texting their friends and ... googling your restaurant's website. If your website is not mobile ready, you're missing out on a lot of walk-ins. Download our Restaurant Commando's Mobile Readiness Checklist.

Watch this quick video about how to set up a Birthday Club that practically runs on an auto-pilot. This is going to be the easiest, fastest money you will ever create in you restaurant business.

About Chief Commando

Well, actually, Chief Commando is two people, Troy Authement and Alex Makarski. Troy and Alex combined their knowledge and experience to help independent restaurant owners and emerging chains create more growth and more profits in their businesses. Together, they provide a unique blend of expertise not available anywhere else in the industry.

Restaurant Business, Restaurant Manager, Restaurant Owner, Restaurant Sales

4 Responses to Key Numbers To Watch In Your Restaurant Business

  1. peta lloyd December 19, 2009 at 8:28 AM #

    good web site I would like to subscribe to newsletter

  2. Tish February 19, 2010 at 3:04 PM #

    Are there any templates out there for download of these excel sales reports you mentioned? – Tish

  3. cliff April 21, 2010 at 4:49 PM #

    Very good website with lots of good suggestions and ideas.
    I am in the process of building an interactive website with Profit Chef which specializes in restaurants and food industries.

  4. Loe March 7, 2011 at 1:02 AM #

    As a new resto owner, i found that thsi article is very inspirative… I can’t wait to implement this ASAP… thanks a lot!

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