guestXM – by Black Box Intelligence

Hit Your Performance Goals in 2024: Important Restaurant KPIs to Track

Learn how restaurant operators can create successful strategies for 2024. Discover the importance of establishing internal alignment on key metrics and tracking the right KPIs for hitting performance goals.

Understand, Track, and Improve Your Restaurant KPIs

As the new year approaches, restaurant operators are working hard to create strategies for success in 2024. However, developing a robust new-year strategy is a significant undertaking that demands collective effort. The key is to establish internal alignment on the metrics that matter most so you and your team can make educated decisions with confidence.

To hit your performance goals in 2024, start by tracking and measuring the right Key Performance Indicators (KPIs).

KPIs are metrics used to assess the performance and success of various aspects of a business. Common KPIs include:

Financial Metrics

  • Comparable Restaurant Sales

  • Comparable Restaurant Foot Traffic

  • Average Check

Comparable restaurant sales data helps business owners evaluate the performance of a restaurant or a chain of restaurants over a specific period. This metric compares the sales of established or existing restaurants during a certain time frame, excluding the impact of new restaurant openings or closures.

The purpose of looking at comparable restaurant sales is to assess the organic growth or decline in sales for locations that have been in operation for a consistent period. This is important because it provides insight into a restaurant’s ability to attract and retain customers, increase pricing, and improve operational efficiency.

To evaluate the effectiveness of your marketing strategies, changes in consumer behavior, and the overall appeal of your restaurant’s offerings, turn to comparable restaurant foot traffic. This metric is used to assess the performance of restaurants based on the number of customers they attract. It focuses specifically on comparing the volume of foot traffic or the number of visitors between different periods, typically year over year.

Analyzing both comparable sales and foot traffic together provides a more comprehensive understanding of your brand’s overall performance and customer engagement.

Average check value is a key financial metric used to measure the average amount of money spent by a customer in a single transaction.

This is a critical metric for businesses because it helps assess the efficiency of pricing strategies, marketing promotions, and overall customer spending patterns.

To increase average check values, find ways to encourage guests to spend more on higher-priced entrees or add non-entree choices like drinks, appetizers, or alcohol.

Of course, raising prices can also increase average check value, but only in the short term. Our research has shown that restaurant brands that increased menu prices in the past few quarters benefitted from short-term financial gains. However, over three years, restaurants with the lowest check growth had better traffic, guest sentiment, and customer retention.

In 2024, restaurant brands must prioritize customer experiences that captivate, as customers increasingly demand value for their time and money. As we highlighted in our latest ebook Getting Back to Basics: 2024 CX Outlook, consumer behavior has shifted from purchasing goods to indulging in experiences like dining out.

65% of customers are willing to pay higher restaurant prices when they know there will be exceptional service, according to a survey study by Lisa W. Miller & Associates.

Elevate your focus beyond mere transactions and aim to deliver experiences that resonate and justify increased spending, ensuring sustained growth in sales, traffic, and average check values. After all, 65% of customers are willing to pay higher restaurant prices when they know there will be exceptional service, according to a survey study by Lisa W. Miller & Associates.

Learn the specific financial metrics every restaurateur should track about comp sales, comp foot traffic, and average check value.

Customer Satisfaction

  • Customer Feedback Scores

  • Online Reviews and Ratings

Utilizing customer feedback surveys allows you to obtain direct input from your customers.

Restaurants can monitor core indicators of brand and location health through Net Promoter Scores (NPSs), which identify a guest’s willingness to recommend your restaurant; Customer Satisfaction (CSAT) Scores, which indicate how satisfied diners are with a restaurant’s food, service, and overall experiences; and Customer Effort Scores (CESs), which indicates how easy or difficult it is to dine at or order from a restaurant.

An NPS can also be combined with a Net Sentiment Score (NSS) to provide a more comprehensive view of customer satisfaction. An NSS combines both qualitative and quantitative information by analyzing the emotional tone (qualitative) of textual data from sources like social media and customer surveys and converting it into a numerical metric (quantitative) to assess the overall sentiment.

These metrics are only valuable if you use the data to validate or improve your operational processes. Find out how to harness the power of customer feedback to boost restaurant operations here.

When it comes to maintaining an excellent brand reputation, brands need to stay on top of online customer reviews. GuestXM research has shown that the volume of online customer feedback a restaurant receives has a great influence on how positive or negative a brand is perceived.

During the first nine months of 2023, those restaurant locations with very high ratings (over 4.5 stars) received 3.5 times more online reviews than restaurants rated between 3.5 and 4.0 stars.

Encourage customers to share their opinions, whether they’re positive or negative. Actively engage with reviews (businesses that respond are perceived as 1.7 times more trustworthy, according to Google). And extract insights from the feedback to make the necessary improvements and better meet customer demands.

Operational Efficiency

  • Table Turnover Rate

  • Inventory Turnover

  • Employee Productivity

A higher table turnover rate generally indicates that a restaurant is serving more customers and making more efficient use of the dining space. This can be advantageous for increasing revenue, especially during peak hours. On the other hand, a lower turnover rate may suggest slower service or longer dining times, which could potentially impact revenue.

Restaurants can increase table turnover by improving reservation systems, optimizing seating, streamlining orders and payments, etc. Efficient service, staff training, and technology integration also play crucial roles in enhancing overall dining experiences and encouraging quicker turnovers.

Inventory turnover is a financial metric that measures how many times a company’s inventory is sold and replaced over a specific period. It is a key indicator of a business’s operational efficiency and how well they manage inventory levels.

To help streamline the process of tracking and managing inventory, brands should consider investing in automated inventory management software that provides real-time tracking of stock levels, automatic updates based on sales and purchases, alerts for low stock levels, and analytics to identify trends and make informed purchasing decisions.

Employees have a direct influence on the customer experience. Brands must monitor productivity to identify any issues such as staffing shortages and operational/service bottlenecks.

Restaurants can measure employee productivity through sales performance, customer feedback, table turnover rates, order accuracy, attendance, task completion times, etc. Employee satisfaction surveys can also pinpoint areas for improvement.

Setting clear performance expectations and regularly reviewing them with employees ensures alignment with organizational goals, contributing to a more efficient and productive restaurant environment.

According to a survey conducted during GuestXM’s “Turning Customers into Raving Fans: Lessons from Cult Fast Casual & QSR Brands” webinar in collaboration with Schoox, all respondents agreed that the main HR challenge in 2024 will be boosting employee engagement and morale.

Regarding their focus for 2024, all respondents unanimously prioritize implementing effective employee training and development programs.

Reservations and Seating

  • Reservation No-Show Rate

  • Table Occupancy Rate

A high reservation no-show rate can result in financial losses, disrupt a restaurant’s workflow, and create dissatisfaction among both staff and other customers. It undermines the restaurant’s ability to optimize seating arrangements and can lead to wasted resources and decreased customer satisfaction.

Convenience is key for diners. Simplifying the reservation-modification process encourages them to make changes well in advance.

Consider implementing a system to confirm reservations with customers a day or a few hours before their scheduled time. This serves as a reminder and allows customers to confirm or cancel.

Also, use online reservation systems like OpenTable that allow customers to easily modify or cancel their reservations.

Table occupancy rate is a metric used to measure the efficiency of a restaurant in utilizing its available seating capacity. It represents the percentage of time that tables are occupied by diners during a specific period, typically measured in hours or shifts.

To enhance occupancy, brands should analyze peak hours, table turnover rates, and average guest counts to discern patterns and make strategic decisions. Utilizing a reservation system that offers real-time data can assist in efficiently managing and assigning tables.

Menu Performance

  • Menu Item Sales

  • Profitability per Menu Item

Menu item sales refers to the revenue generated by specific items listed on a restaurant’s menu during a specific period. It is a critical metric for restaurants as it helps assess the popularity and profitability of individual menu items.

To calculate the sales for a specific menu item, use the following formula:

Menu Item Sales = Quantity Sold × Selling Price per Unit

Profitability per menu item is a metric that measures the profit generated by individual items on a restaurant’s menu. It helps assess the financial performance of each menu item by considering the revenue generated and the costs associated with producing or purchasing the ingredients for that item.

The formula for calculating profitability per menu item is:

Profitability per Menu Item = Revenue per Menu Item − Cost per Menu Item

Employee Performance

  • Labor Cost Percentage

  • Employee Turnover Rate

Labor cost percentage is a financial metric that represents the percentage of a company’s total revenue that is spent on employee wages and related labor costs. It is used to assess and manage labor expenses about overall revenue.

The formula for calculating labor cost percentage is:

Labor Cost Percentage = (Total Labor Costs ÷ Total Revenue) × 100

Key considerations when evaluating labor cost percentage include:

  • Industry Benchmarks: Compare the labor cost percentage to industry benchmarks to assess how your brand performs relative to peers.

  • Seasonal Variations: Consider any seasonal variations that may impact labor costs, such as peak periods that require additional staffing.

  • Productivity and Efficiency: Evaluate employee productivity and efficiency to ensure that labor resources are utilized effectively.

  • Employee Training: Invest in employee training to improve skills and efficiency, potentially reducing the need for excessive staffing.

Employee turnover rate is a measure that indicates the proportion of employees who leave a company over a specific period. It can be calculated using the following formula:

Employee Turnover Rate = (Number of Employees Departed during the Period ÷ Average Number of Employees during the Period) × 100

In response to the persistent labor shortage, brands are recognizing the urgent need to provide outstanding employee experiences to cultivate a resilient and motivated workforce. As we approach 2024, make a concerted effort to enhance your employees’ satisfaction.

Marketing Effectiveness

  • ROI for Marketing Campaigns

  • New Customer Acquisition Rate

By measuring the financial outcomes relative to the resources invested, you can pinpoint specific strategies or channels that contribute most effectively to your business objectives. This will empower you to make data-driven decisions, optimize your marketing efforts, and allocate resources strategically for future campaigns.

According to our latest research, influencer marketing will continue to gain traction in 2024. A survey study by Matter Communications revealed that 69% of respondents trust recommendations from friends, family, or influencers more than information directly from a brand.

As per a HubSpot survey study, influencer marketers continue to favor Instagram due to its high ROI. 20% of marketers said that they get the biggest ROI from Facebook and YouTube, and only 14% said they get the biggest ROI from TikTok.

A study by the American Marketing Association revealed a clear link between influencer marketing spending and increased engagement rates. Even a 1% rise in spending resulted in almost a 0.5% boost in engagement.

The new customer acquisition rate is a metric that quantifies the pace at which a business is gaining new customers over a specific period. It is typically calculated by dividing the number of new customers acquired within a given time frame by the total number of existing customers, multiplied by 100 to express it as a percentage.

This metric is crucial for businesses to assess the effectiveness of their marketing and outreach efforts in attracting and converting new customers.

Online Presence

  • Website and Social Media Engagement

  • Online Order Conversion Rate

Track your website and social media engagement to evaluate the impact of your online presence and marketing strategies.

Monitoring website analytics can reveal valuable insights into user behavior, popular content, and conversion rates, helping optimize your site for a better user experience.

Social media engagement metrics, such as likes, shares, and comments, provide real-time feedback on the effectiveness of marketing campaigns, customer preferences, and overall brand perception. By analyzing these data points, you can tailor your digital content, promotions, engagement strategies, and more to better connect with your audience and attract new customers.

How can you enhance your website and social media engagement? Ensure that you are consistently sharing high-quality and visually appealing content that resonates with your target audience. This includes showcasing enticing food imagery, user-generated content, and so forth.

Additionally, actively responding to comments, messages, and reviews on social media platforms demonstrates that you care about the opinions of your customers.

Online order conversion rate is a KPI that measures the percentage of website or app visitors who complete a purchase or place an online order. It can be calculated by dividing the number of completed orders by the total number of visitors and then multiplying by 100 to express the result as a percentage.

A higher conversion rate indicates a more successful and user-friendly ordering system, while a lower rate may prompt businesses to assess and optimize their online platforms to improve the conversion process.

Waste and Sustainability

  • Food Waste Percentage

  • Environmental Impact Metrics

The formula for calculating food waste percentage is:

Food Waste Percentage = Total Amount of Food Purchased/Produced/Served ÷ Amount of Food Wasted) × 100

Monitoring and actively managing food waste, implementing portion control, and promoting sustainable practices can help reduce the percentage of food waste in your restaurant operations.

Moreover, according to a study by Specright, 71% of consumers plan to make more sustainable purchasing decisions next year. So as sustainability concerns grow and consumers shift toward becoming more environmentally conscious, restaurants must pursue eco-friendly practices to reduce their environmental impact and gain the trust of customers.

Defining Your 2024 Restaurant KPIs
In 2024, make it a priority to focus on specific restaurant KPIs that directly impact your bottom line. These should include metrics such as average customer spend, table turnover rate, customer satisfaction scores, online reviews and ratings, employee productivity, and food cost percentage. By monitoring these key indicators, you can effectively gauge the health of your business, identify trends, and enable your team to deliver standout experiences in a crowded market.

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