6 Tips to Increase Your Restaurant Revenue

Running a successful restaurant business in 2021 and beyond requires leveraging all of the technology available to you.

But with more data than ever before, how can you ensure you’re increasing efficiency and driving revenue?

“If you want to stay in business, you better care about the numbers,” says Jeff Williams, Vice President of Restaurant Analytics at Border Foods, a 183-unit Taco Bell franchise. “Your data can reflect the health of your business in different areas.”

In the restaurant industry, he notes, margins can be very small.

“Finding and applying specific data trends can save an operator 2% or 3%, and that’s a big deal.” 

6 restaurant metrics you should be monitoring

Cost of goods sold (COGS)/food cost percentage

It’s wise to be aware of your restaurant’s cost of goods sold (COGS). For restaurants, cost of goods sold includes the cost of food, beverage, and paper supplies. You can find this number using this equation:

Beginning Inventory + Purchased Inventory – Final Inventory = COGS.

Identifying ways to reduce your COGS will directly impact your restaurant’s profit.

Food cost can account for as much as 94% of COGS, depending on the brand, so some operators focus on food cost percentage, which compares food cost to food sales. To calculate food cost, use the same equation as COGS, but remove any non-food inventory (your beverage and paper supplies):Beginning Food Inventory + Purchased Food Inventory – Final Food Inventory = Food Cost.Then, take your Food cost / Food sales x 100

A profitable restaurant should spend 20-23% of total sales on food cost. For a benchmark, factoring in 4.5% for beverage, 2.5% for paper, and 20% food adds up to 27% total COGS on the low end, and 30% on the high end. Even if you’re already in this range, analyzing your current percentage can help you optimize your system and increase profits.

In addition to food cost percentage, it’s wise to be aware of your ideal food cost. This is the amount of food your restaurants are using compared to the ideal amount for your restaurant type:Total Cost per Item / Total Sales per Item.

Prime cost

Your prime cost is calculated by taking your. Typically, a restaurant’s prime cost should be about 55-60% of the total sales. Why is this number important?

It represents a giant portion of expenses you can control. If you’re going to find room to reduce expenses, it will most likely be within the prime cost.

Employee productivity

Keeping employees’ production high is essential to running a successful restaurant business. If employees are doing a good job, it will not only increase sales but will also increase customer satisfaction and repeat customers.

There are many metrics you can measure, including transactions per labor hour, sales per labor hour, and actual hours compared to allowed and forecasted hours. The important thing is that you choose what’s important to your company’s success, and focus your attention there.