If you want to improve your management skills, you need more than intuition—you need data.
Tracking Key Performance Indicators (KPIs) helps you make informed decisions, maximize profits, and spot issues before they spiral out of control.
In this post, we’ll discuss the top 8 KPIs every restaurant manager must track and, most importantly, how to calculate them so you can take control of your restaurant's success.
1. Food Cost Percentage
Why It Matters: Your food cost percentage tells you how much of your sales revenue is spent on food. Keeping it low means better margins, but too low might hurt food quality.
How to Calculate:
Food Cost Percentage = (Cost of Goods Sold ÷ Total Sales) × 100
Example: If your food cost for the month was $25,000 and your sales were $80,000: (25,000 ÷ 80,000) × 100 = 31.25%
Ideal Range: Aim for 20- 32%, depending on your concept. Anything higher means you’re overspending on food, while anything lower might suggest portions are too small or food quality is slipping.
2. Labor Cost Percentage
Why It Matters: Labor is one of the biggest expenses in any restaurant. This KPI shows how much of your revenue is eaten up by staff costs. Too high? Your profitability takes a hit.
How to Calculate:
Labor Cost Percentage = (Labor Costs ÷ Total Sales) × 100
Example: If your total labor cost for the month is $20,000 and your sales were $80,000: (20,000 ÷ 80,000) × 100 = 25%
Ideal Range: 20-30%, depending on your service style. Fast-casual might be lower, while fine dining could be higher.
3. Table Turnover Rate
Why It Matters: The faster you turn tables, the more sales you generate. A high turnover rate is crucial during peak times but needs to be balanced with guest satisfaction.
How to Calculate:
Table Turnover Rate = Total Number of Guests ÷ Number of Seats
Example: If you served 400 guests and have 50 seats: 400 ÷ 50 = 8 turns per day
Ideal Range: This depends on your restaurant type. Casual dining should aim for 3-4 turns per table per night, while fine dining might aim for 1-2.
4. Average Check Size
Why It Matters: This KPI measures how much each guest is spending. It’s a great metric for understanding the effectiveness of your upselling strategies.
How to Calculate:
Average Check Size = Total Sales ÷ Number of Guests
Example: If your sales for the day were $10,000 and you served 400 guests: 10,000 ÷ 400 = $25 average check size
Ideal Range: There is no set “ideal” here—it’s about improving over time. Regularly review this KPI to find opportunities to increase spending per guest.
5. Revenue per Available Seat Hour (RevPASH)
Why It Matters: RevPASH measures the revenue you generate for every seat per hour of operation. This information is crucial for optimizing seating efficiency during peak hours.
How to Calculate:
RevPASH = Total Sales ÷ (Available Seats × Hours of Operation)
Example: If your sales for a 5-hour dinner service were $10,000, and you have 50 seats:
10,000 ÷ (50 × 5) = $40 RevPASH
Ideal Range: This varies based on concept, but aim to increase this number by improving seating efficiency or boosting sales during slower hours.
6. Customer Retention Rate
Why It Matters: Retaining customers is much cheaper than acquiring new ones. A high retention rate means your guests are happy and loyal, which is good for business.
How to Calculate:
Customer Retention Rate = [(Number of Returning Customers ÷ Total Number of Customers) × 100]
Example: If you had 200 returning customers out of 1,000 total customers in a month:
(200 ÷ 1,000) × 100 = 20% retention rate
Ideal Range: The higher, the better. Aim for above 40%, but this will depend on your specific restaurant type and market.
7. Employee Turnover Rate
Why It Matters: High employee turnover is costly in time and money. This KPI helps you gauge how well you retain staff and identify potential management issues.
How to Calculate:
Employee Turnover Rate = (Number of Employees Who Left ÷ Average Number of Employees) × 100
Example: If 5 employees left in a month and you had an average of 50 employees:
(5 ÷ 50) × 100 = 10% turnover rate
Ideal Range: Aim for less than 10%. High turnover is a red flag that could indicate more profound issues with your work environment or leadership style.
8. Gross Profit Margin
Why It Matters: This KPI measures the profitability of your sales after covering your cost of goods sold (COGS). It’s a clear indicator of your pricing and cost management strategies.
How to Calculate:
Gross Profit Margin = [(Total Sales – COGS) ÷ Total Sales] × 100
Example: If your sales were $80,000 and your COGS was $25,000:
[(80,000 – 25,000) ÷ 80,000] × 100 = 68.75%
Ideal Range: Aim for 65-70% for a healthy gross margin.
Bottom Line: Know the Numbers, Lead with Data
Tracking these 8 KPIs will give you the information you need to make smart, strategic decisions in your restaurant.
By understanding and regularly monitoring these metrics, you can drive profitability, boost efficiency, and avoid the traps that leave others guessing.
These aren’t just numbers—they’re the blueprint to running a successful restaurant that thrives.