In today’s competitive restaurant landscape, staying on top of your numbers is just as important as serving great food. Key performance indicators (KPIs) help you make data-driven decisions that improve efficiency, control costs, and drive profitability.
Understanding and leveraging key performance indicators (KPIs) can be the difference between a thriving restaurant and one that struggles to keep its doors open.
At SynergySuite, we believe that the right data—delivered at the right time—can transform operations. So we’ve rounded up 10 critical KPIs that every restaurant operator should be tracking and how restaurant technology can make this easier than ever.
What are KPIs in Restaurants?
KPIs are measurable values that show how well your restaurant is performing in key areas like food costs, labor, guest satisfaction, and more. These measurable values track diverse aspects such as sales, customer satisfaction, and food costs. When tracked consistently, these metrics reveal what’s working, what’s not, and where you can make impactful changes.
By focusing on key metrics like, for example, food cost percentages, customer retention rates, and customer satisfaction scores, restaurant owners can gauge their establishment’s financial performance and sustainability.
Think of KPIs as your operational health check—helping you keep labor costs in line, reduce food waste, boost table turns, and more. The real power comes when these metrics are connected in one place, giving you a real-time snapshot of your performance.
Why do KPIs matter?
Key performance indicators (KPIs) in the restaurant industry are vital tools that provide quantifiable insights into a restaurant’s performance and health.
Industry averages related to profit, labor, and other operational costs can be critical. Your restaurant’s continued success depends on exploiting every advantage you can get.
By focusing on financial stability, customer satisfaction, and employee productivity, restaurant owners can make informed decisions to enhance their business.
Monitoring KPIs like sales, profit margins, and customer satisfaction scores gives insights into financial health and operational efficiency.
For instance, by evaluating food cost percentages, restaurant operators can set appropriate pricing for menu items, ensuring that the selling price adequately covers food and labor costs.
Additionally, incorporating metrics such as average order value and customer retention rates allows for a better understanding of spending patterns. Restaurant owners can then refine marketing strategies to optimize revenue streams.
Furthermore, by analyzing KPIs related to customer experiences, like service speed and order accuracy, restaurants can enhance the dining experience, resulting in higher customer satisfaction and retention rates. By utilizing these data points, restaurants can drive continuous business growth and improve overall financial performance.
In short, restaurant KPIs are integral for guiding data-driven decisions that bolster a successful restaurant’s financial and operational ground.
A Few Key Performance Indicators
In restaurants, key performance indicators (KPIs) are vital metrics that help restaurant owners track performance and make informed decisions regarding operational and financial health.
By focusing on specific KPIs, restaurant operators can create a comprehensive view of their business performance, identifying areas for improvement and opportunities for revenue growth.
KPIs in the restaurant industry are essential to link operational practices with financial outcomes, thereby optimizing overall restaurant efficiency and success.
There are a lot of KPIs out there. We’ve selected 10 that are of special importance.
Gross Profit
Formula: Total Revenue – Cost of Goods Sold (COGS)
This KPI tells you how much money is left after covering the cost of ingredients. A healthy gross profit margin (typically around 70%) suggests efficient inventory management and smart menu pricing.
For instance, if a restaurant generates $10,000 in total revenue with a COGS of $3,500, the gross profit is $6,500 for that period.
Cost of Goods Sold
Formula: Beginning Inventory + Purchases – Ending Inventory
COGS helps you monitor ingredient spending and manage fluctuating food prices. Keeping this number in check is key to maintaining profitability.
Fluctuating ingredient prices present challenges in managing COGS, but using restaurant management software can provide better control over these costs.
Food Wasted
Food waste eats into margins—literally. The U.S. restaurant industry wastes as much as 10% of its food inventory before it even touches a plate. From spoilage to over-prep, identifying where waste happens helps reduce costs. Smart inventory tools can alert you when items are nearing expiration or track over-portioning.
Food waste presents a significant opportunity for restaurants to reduce costs and improve profitability.
Net Profit Margin
Formula: (Net Profit ÷ Total Revenue) x 100
This is your restaurant’s bottom line. It includes all expenses—labor, rent, utilities, and more. A strong margin gives you room to reinvest and grow.
The net profit margin indicates a restaurant’s financial stability, measuring the percentage of revenue remaining as profit after all expenses are deducted.
Moreover, it offers a comprehensive picture of financial performance and operational efficiency beyond mere sales figures.
Labor Turnover Rate
Formula: (Employees Who Leave ÷ Average Number of Employees) x 100
With industry turnover averaging 70%+, this metric helps you assess your staffing strategy. High turnover often signals poor morale or misaligned training.
Analyzing labor costs alongside turnover data provides insights to improve retention, reduce costs, and enhance overall efficiency.
High turnover necessitates strategies focused on boosting employee retention.
Labor Cost Ratio
Formula: Total Labor Costs ÷ Total Sales
Labor is one of your biggest costs. Keep it in the 28–35% range to stay profitable. Tracking this daily helps right-size schedules and reduce overstaffing.
The costs of labor are considerable. Operational profitability depends on managing them. Constant monitoring helps manage staffing needs and adjust budgets in real-time.
A higher labor cost percentage may indicate overstaffing or inefficiencies, requiring attention to training and management practices.
Average Table Occupancy
Formula: Number of Parties Served ÷ Number of Tables
Fast, efficient service means more guests served. Use this KPI to understand peak hours, adjust staffing, and improve flow.
This KPI helps identify peak hours, guiding management in staffing adjustments to meet demand. High occupancy rates show good seating utilization, while consistently low rates suggest seating arrangement or reservation system improvements are necessary.
Increasing table turnover reflects efficient service and can boost occupancy, making room for new customers to enhance the dining experience.
Revenue per Available Seat Hour
Formula: Total Revenue ÷ (Available Seats x Opening Hours)
A strong RevPASH score ($10–$15/hour is a common target) means you’re maximizing space during operating hours.
RevPASH helps optimize table turnover and maximize sales, with an optimal range identified as $10-$15 for healthy revenue generation per seat hour. Tracking this KPI enhances service delivery and improves customer experience by maximizing seating capacity use.
It also aids in streamlining operations, managing customer flow, and identifying areas of resource improvement.
Number of Guests Served
Formula: Total Guests ÷ Total Labor Hours
This helps measure staff efficiency. Use this metric alongside customer feedback to balance speed and service quality.
The number of guests served per server per hour is a key indicator of staff efficiency, calculated by dividing the total number of guests served by service hours worked.
Monitoring this KPI aids in recognizing servers who drive the highest sales and assists in calculating the per-person average (PPA) for evaluating sales performance.
Repeat Customer Percentage
Are guest experiences good ones? Understanding customer loyalty and satisfaction is crucial, and the customer retention rate provides this insight.
Your most profitable guests are your regulars. This KPI reveals loyalty trends and how well your guest experience strategies are working. Increasing retention just 5% can increase profits by up to 25%.
Attracting new potential customers is good, but maintaining a high retention rate boosts revenue and ensures continuous business success.
Which KPIs Matter the Most?
Not every KPI will matter equally to every restaurant. Not all KPIs are necessary for every establishment; focus on the ones that align with your business goals—whether that’s growing revenue, cutting costs, or scaling operations. Start with the basics (like sales, labor, and food cost) and build from there.
And don’t forget to check in regularly:
- Daily: Labor costs, COGS, sales
- Weekly: Customer feedback, table turnover
- Monthly: Net profit, RevPASH, retention
Implementing these KPIs allows for quick problem identification, leading to timely interventions that enhance areas needing improvement, such as staffing or marketing.
By choosing and monitoring these key metrics, restaurant owners can ensure a successful restaurant, improve financial performance, and adapt to the dynamic restaurant industry.
Exploiting KPIs Requires Good Technology
Tracking KPIs across spreadsheets and disconnected systems slows you down. SynergySuite’s all-in-one restaurant management platform brings your sales, labor, inventory, and reporting data into one place—so you can make decisions faster, with confidence.
Our software helps:
- Reduce food waste through real-time inventory tracking
- Improve labor efficiency with predictive scheduling tools
- Uncover sales trends and performance insights
- Streamline reporting for multi-unit operations
With the right tools, restaurant data becomes more than numbers—it becomes your roadmap to success.
Good technology is fundamental for achieving operational and financial excellence in a successful restaurant. Contact us today for a free, personalized demo so we can show you how!
