The Top Restaurant Analytics Tips By Experts In The Industry
Data-driven restaurants have a 23% higher survival rate. Therefore in such a competitive industry, more restaurant operators are turning to data analytics to optimize operations and enhance profitability. There are many different metrics restaurants can track. From identifying peak hours to understanding popular dishes, analytics empower restaurateurs to tailor their strategies. In essence, integrating analytics into restaurant operations is a crucial step toward achieving long-term success.
In this article, we’ll share valuable tips from experts who have immense knowledge of restaurant analytics best practices today. From hiring bookkeeping services to understanding guest engagement, these tips are the key ingredients for restaurant success in 2024.
Read on to learn 5 new restaurant analytic tips.
What are restaurant analytics?
Many operators mix up restaurant reporting and restaurant analytics. ChartMogul draws the distinction like this, “Reporting provides you with information; analytics gives you insights. Reporting raises questions; analytics attempts to answer them.” Let’s break down the difference between the two, and define restaurant analytics.
Restaurant reporting involves looking at your data for a short and specific period of time. Reporting might be used to compare sales and profits between this week and last week, or yesterday and today. In other words – it’s simply a data readout of the day’s happenings with no major consideration to what insight could be derived.
Restaurant analytics goes a bit deeper than that and forces you to ask questions like “Why?”, “So what?”, and “What does this mean?” Restaurant analytics often combines multiple sets of data to answer deeper questions about your restaurant’s performance. If you want to know why a certain day of the week – in general – drives profit, look to your restaurant analytics. From here, you can draw insights on how to improve your restaurant's operations as a whole.
Now that we’ve made that distinction, let’s review why you should be using analytics in the first place.
Why should you use restaurant analytics?
Let’s face it, you’re busy. Running a restaurant requires making many decisions every single day. However, the data you gain from analytics can help make some of those decisions for you. By leveraging restaurant analytics, you can gain valuable insights that can significantly impact your business' success. From understanding customer preferences to optimizing inventory management, analytics empowers you to make informed choices.
By tapping into data-driven solutions, you can identify which menu items are popular, assess peak hours of customer traffic, and even predict seasonal fluctuations in demand. This knowledge allows you to allocate resources more efficiently and ultimately increase profitability. In a competitive industry where margins matter, restaurant analytics are powerful tools to stay ahead of the curve, helping you thrive not just survive.
5 restaurant analytic tips by experts
1. Hire industry-specific bookkeeping services
“When choosing to hire a bookkeeping service it's important to choose one specifically geared towards restaurants. While the fundamental accounting practices are generally the same, the reporting and analytics provided are very different. Having the proper insights to your restaurant's performance is vital to the business. At minimum, a restaurant-specific chart of accounts and a P&L formatted specifically for restaurants can be a game changer.”
- Alexia Fimmano, Product Manager, xtraCHEF by Toast
With so many different moving parts, handling bookkeeping for a restaurant is complicated. But with the breakdown of all the different elements of restaurant bookkeeping in this article, you can master every detail with accuracy.
Restaurant Marketing Plan
2. Guest purchasing behaviors are crucial data for decision-making
“The most honest way a guest can give feedback on your brand is through the way they purchase your menu items. Being able to pull in details of every transaction, including payment, to understand the frequency of each customer, provides a wealth of data around shifts in guest behavior. That is Machine Learning Data Analytics.
To understand the impact of any brand event (marketing, price change, competitor intrusion, etc.), one must first project what would happen absent that event. Only then can you measure what happened outside the projected data to determine the event's impact. Did they trade down from something more profitable to your new limited-time offer? Did they increase their frequency and spending on the goods? Once you understand the causation and correlation of any event down to each guest, you can then understand impact on a per-location basis which can be utilized by field staff as a crystal ball towards solutions.
Even from a distance, you’ll know more about what’s going on in a store than those running it. Why? because you see the results of every transaction... not a select few. You see the response (shifts in purchase activity) by every guest compared to how they shopped previously. This data illuminates opportunities around your menu, pricing, employee performance, and more. Most importantly, you will now understand the why behind the what. Why is one store more profitable than another? Which menu item drives repeat business? Which menu items drive the highest guest ticket average? Without processing the data found within every transaction, you can rarely get to an answer fast enough to make a difference. The answers to all problems are in the data.”
- Ward Olgreen, Chief Operating Officer, Red Onion ai
The bottom line is the more feedback, the better. A good experience may cause someone to come back to your restaurant, but a bad experience will likely mean that not only will the customer not return, but they could write a bad review, deterring others from giving your restaurant a shot. How do you combat this? Make sure that you’re getting public feedback about the good experiences, too. For more information check out this article and our restaurant survey template.
3. Analytics are essential for multi-unit restaurants
“There are few ways analytics can’t help you improve your restaurant. As the renowned Peter Drucker once wisely said, ‘You can’t manage what you can’t measure.’ A precise and timely grasp of your business operations is a pivotal factor in determining profitability. This becomes even more critical in the context of multi-unit restaurants, where evaluating individual stores, regions, and overall brand performance is paramount.
The ability to delve into granular data enables you to uncover specific issues, like a solitary store experiencing a 40% surge in chicken and steak consumption compared to others, potentially signaling theft. Simultaneously, it allows you to discern broader trends across your brand, such as a surprising 18% uptick in produce usage, which may point to training deficiencies in portion control. Strong restaurant analytics help you better manage your business because you can identify variances that could use extra attention.
Data also plays a pivotal role in helping to maximize efficiency and output for labor. Balancing the staff needed to deliver on your brand promise while minimizing superfluous costs requires precise forecasting, trend data, and monitoring of key metrics.”
- Cristal Ghitman, Director of Strategic Partnerships, SynergySuite
Restaurant analytics aren’t just for gaining data on your sales. You can also gain insights into your staff and labor overall. You want to run your restaurant as efficiently as possible. To do this, it’s important to track labor costs. In addition, restaurants can analyze historical data on customer traffic patterns, peak hours, and seasonal variations. This information enables you to optimize staff scheduling, ensuring that there are enough employees during busy times and avoiding overstaffing during slower periods.
4. Use modern restaurant technology
“Now more than ever, restaurants are accumulating unprecedented amounts of data. As a result, more operators are turning toward integrated and consolidated restaurant management software solutions to gain access to critical information across all levels and functions of the business. Unified, real-time views of what's happening in stores, across regions, and throughout the entire operation give operators the ability to quickly evolve and adapt important operations initiatives.
There is little time to waste in a fast-paced restaurant environment—managers need to understand data in real-time and act on insights quickly. In many cases, the answers you seek are buried in complex spreadsheets or a database that isn’t easily searchable. While the data may be available, finding it and using it to understand what is happening across your business is quite impractical. Using different restaurant management software systems to handle food, labor, learning, and operations execution makes it extremely difficult to move crucial information around the business and access it exactly where and when it is needed.
A comprehensive restaurant management software platform puts all of the details about all of your restaurants at your fingertips allowing for more informed and strategic decision-making. This means no more chasing spreadsheets or manually transferring data between solutions, with less room for error, too. Integrating your sales data with your cost data holistically ensures you’re making the smartest decisions to increase profitability by optimizing your food and labor operations. As the command center for the back-of-house, dashboard information should be displayed in an easy-to-interpret format for restaurant professionals.”
- Dana Farese, Sr. Mgr. Content Marketing, Crunchtime
The use of restaurant technology is not just for convenience, it’s imperative. The reliance on spreadsheets and databases has become impractical in this industry where swift decisions can make all the difference. Busy spreadsheets leave too much room for human error. Embracing the power of restaurant management software is not merely a technological upgrade—it is a pivotal step.
5. Restaurant analytics exist to help you make informed decisions
“Restaurant analytics is a force multiplier on how operators and marketers understand and engage with their guests. By harnessing various data sources—from WiFi, websites, online ordering, POS, reservations to online reviews and loyalty programs—restaurants can compile a complete picture of their guests. This centralized customer data platform offers a unique view, unveiling valuable insights previously challenging to access.
These insights translate into actionable metrics like overall guest churn rate, identifying lost customers, or understanding guest behavior—frequency, recency, and spending habits. Advanced tools, such as AI sentiment analysis, gauge guest opinions on crucial aspects like food, cleanliness, service, and speed, aiding in pinpointing areas for improvement.
The beauty lies in using these insights effectively. Automated responses, offers to win back lost guests, or crafting automated targeted messaging and rewards for specific guest segments become possible. The result? A streamlined approach where teams spend less time on manual tasks and more on delivering exceptional guest experiences.
Restaurant analytics isn't just about data; it's about leveraging tools and automation to make informed decisions that drive results and enhance the health of your restaurants.”
- William Wilson, CEO, Bloom Intelligence
In essence, restaurant analytics is the key to unlocking a new era of data-driven decision-making.
How to use data analytics to increase your restaurant revenue
Utilizing data analytics to boost restaurant revenue involves a strategic approach. First, collect and analyze customer data to understand preferences, peak hours, and popular menu items. You can find this data through your restaurant management software. This information can guide menu optimization and pricing strategies, ensuring offerings align with customer demand.
Implementing a customer relationship management (CRM) system helps in personalized marketing, fostering customer loyalty and repeat business. Additionally, tracking sales trends and inventory aids in efficient supply chain management while minimizing wastage. By leveraging data to make informed decisions, your restaurant can enhance operational efficiency, create targeted marketing campaigns, and ultimately increase revenue by delivering a better dining experience for customers.
Is this article helpful?
DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. Toast does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Toast does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.