Learn how to analyze and improve your restaurant's sales numbers.

How to Measure and Increase Restaurant Sales

About this Guide

This guide about restaurant sales will teach you how to assess your current restaurant sales performance, ways to increase revenue, and which restaurant sales KPIs you should be tracking to assess the success of your efforts. You’ll learn the metrics you need to understand the financial health of your restaurant and get tons of great sales and marketing ideas to improve your business. 

Use this free, interactive restaurant profit & loss statement template to gain detailed insight into how your restaurant is performing.

Introduction

The Current State of Restaurant Sales

The health of an industry is largely determined by the amount of revenue generated during a fiscal year. In this regard, the restaurant industry is very healthy. In 2019, The National Restaurant Association projects collective restaurant sales to surpass $863 billion. Check out the graphic below outlining the restaurant industry’s sales growth between 1970 to 2019. 

This astronomical growth can be attributed to many things, but one big contributor is the fact that our culture has shifted towards valuing experiences — like eating in restaurants — over material goods. 

By staying on top of trends and statistics in the industry, you can harness that knowledge and make your restaurant business stronger. Check out the following statistics about sales in the restaurant industry today. 

The Restaurant Sales Statistics You Need to Know

  • The U.S. restaurant industry is projected to do $863 billion in sales in 2019 – that’s 4% of the country’s gross domestic product. (Source)

  • According to The National Restaurant Association, there are over one million restaurant locations in the United States. (Source)

  • In 2015, for the first time on record, Americans spent more money at restaurants than at grocery stores. (Source)

  • 91% of restaurateurs expect their profits to increase in 2019. (Source)

  • While 62% of restaurants saw an increase in profit in 2018, 13% of restaurants saw profit remain steady, and 12% of restaurants saw profits decrease. (Source)

  • The range for average restaurant profit margin can span between 0–15%. Most restaurants fall between a 3–5% average restaurant profit margin. (Source)

  • A whopping 45% of diners go out to eat multiple times a week, with another 20% going out to eat once a week. (Source)

  • In 2018, 83% of sales made in full-service restaurants were on-premise, while 15% were carry-out. (Source)

  • American quick-service restaurant guests spent approximately $299.6 billion in 2018. (Source)

  • In 2018, these were the top 10 American quick-service, fast-casual, and fast food chains in terms of sales: McDonalds ($38.52 billion), Starbucks ($19.66 billion), Subway ($10.41 billion), Taco Bell ($10.36 billion), Chick-fil-A ($10.18 billion), Burger King ($9.94 billion), Wendy’s ($9.4 billion), Dunkin’ Donuts ($8.79 billion), Domino’s ($6.59 billion), Domino’s ($6.59 billion), Panera Bread ($5.76 billion) (Source)

  • Roughly 6 in 10 dollars spent in the fast-casual and quick-service segments come from repeat customers, according to operators. (Source)

  • Americans are spending 48% of their total food budget on restaurants, as opposed to 25% in 1955. (Source)

  • Restaurant food delivery is projected to grow at more than 3x the rate of on-premise sales over the next five years; the majority of delivery orders will be placed digitally rather than over the phone. (Source)

  • Restaurant guests demand online ordering and delivery. By 2020, restaurant patrons aged 21 to 36 years old will make up 70% of the population using at-home delivery services. However, only 37% of restaurants currently offer online ordering for delivery or takeout, and only 32% of restaurants accept mobile payments. This means nearly 70% of restaurants are leaving valuable revenue on the table. (Source 1, 2)

  • As a result of minimum wage increases, 65% of restaurants have increased menu prices. (Source)

  • 78% of millennials say they would rather spend money on an experience, such as a restaurant or other activity, compared to purchasing an item from a store. (Source

  • One effective way to increase restaurant sales is by incorporating menu trends into your offerings. According to Grubhub, here are the top 10 menu items that saw the biggest growth in popularity in 2018: Bean burritos, poke, chicken sliders, baby-back pork ribs, chicken burritos, chicken sandwiches, cauliflower rice bowls, chicken and waffle sliders, chicken parmesan, and buffalo cauliflower. (Source)

To learn more about restaurant sales in your state, check out this interactive map from The National Restaurant Association.

Free Resource: Download the 2019 Restaurant Success Report 

Chapter 1

Analyzing Your Restaurant's Financial Health

According to Toast's 2019 Restaurant Success Report, 68% of restaurant professionals regularly review sales reports, 45% regularly review labor reports, and 32% regularly review menu reports. 20% of restaurant operators check sales reports multiple times a day.

To keep your business afloat and to make sure it’s not just surviving but thriving, you’ve got to do periodic financial health checkups. Considering 17% of restaurants fail after the first year, the more often you do these checkups, the better. 

According to Toast's 2019 Restaurant Success Report, 68% of restaurant professionals regularly review sales reports, 45% regularly review labor reports, and 32% regularly review menu reports. 20% of restaurant operators check sales reports multiple times a day.

How often should you be conducting these restaurant financial health check ups? That depends a lot on your restaurant's short term and long term goals. Many businesses do them quarterly, but doing it monthly, bi-weekly, or weekly will help you get ahead of problems before they grow. 

To do a proper restaurant financial checkup, you will need to calculate a number of metrics and KPIs based on the data available from the sales report in your restaurant point of sale system. Now, let's dive into which sales KPIs  — more on the power of comparing sales reports in Chapter 3. 

Restaurant Financial Health KPIs 

What is a KPI? 

KPIs, or key performance indicators, are measurable values that demonstrate how well your restaurant is performing against your goals. The best restaurants track dozens of KPIs for restaurant sales and restaurant marketing to keep everything running smoothly. Key performance indicators can reflect a restaurant’s financial health, customer satisfaction, marketing efforts, management effectiveness, and operating costs. By tracking KPIs monthly, weekly or even daily, you can quickly identify any problems, benchmark locations or revenue streams against each other, and identify what’s performing well.

Calculating Restaurant Profit Margin

The main aim of a restaurant’s financial health checkup to find out how profitable your business is. Profit is the money that’s left over once you’ve paid for everything needed to keep your restaurant running — inventory, labor, POS fees, equipment repairs, advertising budget, credit card fees, utilities, linens, laundry, cleaning supplies, equipment replacement, etc.

What does profit margin mean? Profit margin refers to your profit as a percentage of your sales. Typically, restaurants have a profit margin between 0–15%, with most falling in the 3–5% range. That’s why you’re constantly hearing that the restaurant industry has razor-thin margins. The higher your profit margin, the better, because it means you’ll have more cash flow to deal with any inevitable disasters.

To calculate your profit margin, you’ll need to know about every dollar you spend to keep your restaurant running, which categories of expenditures are controllable, and which are not. 

In this section, we’ve compiled some of the most important sales metrics to track before and after you've put a new sales-boosting effort into place. 

If you still enjoy working in spreadsheets, the Restaurant Metrics Calculator and Profit & Loss Statement Template can help. Otherwise, run these metrics with restaurant reporting and analytics in your point of sale system.

Here’s a big list of metrics that you can use to calculate your profit margin and understand ways you can improve your restaurant’s financial health. 

We’ve divided the below list into operational metrics and sales metrics. It's a smart idea to calculate all of the metrics on this list as some are needed to calculate others. Once you know all of these numbers, you can set benchmarks for how you want to improve in every area of your restaurant’s financial health. 

Free Resource: Download Your Restaurant Income Statement Template (P&L) 

Operational Metrics 

Fixed (or Indirect) Costs

Your fixed costs are all of your regular bills that don’t shift — all the money you spend to keep the lights on, regardless of how much you sell or produce. Fixed costs include rent, insurance payments, property taxes, fixed salaries, regular advertising budget, and some utilities, like internet. It’s shown as a dollar amount.

FORMULA: Rent + Salaries + Fixed Utilities like Internet + Property Taxes + Advertising Cost + ... 

Variable Costs

Variable costs, as their name implies, are costs that shift depending on how much you produce or sell. Variable costs include food and beverage inventory, fees on third-party delivery, disposables like napkins, toilet paper, and straws, cleaning supplies, labor cost of hourly workers, and variable utilities like electric bills.

FORMULA: Hourly Wages + Food and Beverage Inventory + Disposables + Electric Bills + Cleaning Supplies + ...

Overhead Rate

Overhead rate shows how much it costs to keep your restaurant open in a given time frame. Overhead rate is reflected in a dollar amount per hour.

FORMULA: Total Fixed (Indirect) Costs / Total Amount of Hours Open

If your monthly fixed costs are $8000, and in one month, your restaurant was open for 240 hours, your overhead rate is $33.33 per hour. 

Labor Cost

Labor cost, which has been rising steadily in the past few years, encompasses all the money you pay employees, plus bonuses, overtime, payroll taxes, health care, and sick and vacation days.

FORMULA: All Hourly Wages + All Salaries + Cost of Benefits + Payroll Taxes + ….

Restaurant Sales Metrics

Total Revenue

Total revenue is all the money that comes in through any revenue stream — food, beverage, merchandise, gift cards, etc. It’s shown in a dollar amount. Chances are your POS system can easily tell you this number, but if you’re calculating it by hand, here’s the formula. 

FORMULA: [Average Ticket Size x # of Daily Covers x Number of Days in Month] + [Monthly Catering or Merch Revenue] = Total Monthly Revenue

Break-Even Point

Break-even point shows how much you’ll need to sell to start making a profit. It’s basically showing the balance between the cost of operating your restaurant and how much money you can bring in.

FORMULA: Total Fixed Costs ÷ ( (Total Sales - Total Variable Costs) / Total Sales)

COGS (Cost of Goods Sold)

Cost of goods sold, or COGS, is how much you spent on producing items that you then sold in a given time frame. It’s calculated by keeping a close eye on your inventory. Your restaurant's COGS will change over time, and you will see a completely different number when comparing your COGS for one shift to your COGS for one year.

COGS ties directly into your menu engineering efforts, profit margin, revenue, and inventory. Many restaurants attempt to lower COGS by buying in bulk, purchasing cheaper products, and monitoring inventory variance closely. 

FORMULA: Beginning Inventory + Purchased Inventory - Final Inventory = Cost of Goods Sold

Food Cost Percentage

You can calculate your total food cost percentage by using the following formula. As a guideline, ideal food cost percentage for a restaurant falls between 28% and 35%.

FORMULA: Food Cost (COGS) / Total Sales

Gross Profit

This calculation is crucial to understanding your restaurant’s financial health. It’s how much money you’ve ended up with after accounting for your cost of goods sold. 

FORMULA: Total Revenue - COGS

Net Profit

Net profit is what you’re actually left with once you’ve accounted for all your expenses. This is the money that can go towards paying for expansion to a new location, replacing equipment, or other growth expenses. 

FORMULA: Total Revenue - COGS - Fixed Expenses - Variable Expenses

Prime Cost

Prime cost refers is labor cost plus cost of goods sold — which together make up most of the controllable costs in your restaurant. Controlling costs is a path to a more successful business. That's why focusing on lowering prime cost is an important move for every restaurant operator.

Prime cost is the combined costs of your food (COGS) and your labor expenses. Total labor refers to your labor expenses plus taxes, benefits, food discounts, and insurance.

Generally speaking, prime cost for restaurant should be below 60% of sales. 

Set a target prime cost percentage you want to hit by the end of the year and hold yourself accountable when it comes to meeting that goal. Then, track your restaurant's COGS and labor costs regularly - at least monthly - and make decisions such as changing menu prices or scheduling employees for fewer hours based on the data you’re seeing.

FORMULA: Labor + COGS

Where would you say most businesses are spending their money? That's a good question. I think it's largely updating their understanding of prime costs. It used to be that people thought that 30% cost of goods, and 30% direct labor, and 30% overhead, would get the 10% operating profit – the 30, 30, 30, 10 rule. I actually had that mantra myself years ago. I can't do that anymore because direct labor, that’s really a lot closer to 40%, and that’s just to give people a shot at livability, right? If you still keep primes – which is costly because it's direct labor combined under 60, you can't price your menu at three times cost of goods if COGS isn’t in the low twenties. You can't pay people what you need to pay them and still have your primes come in under 60 so that you get a bottom line.

Henry Patterson

Founder, ReThink Restaurants

Year-Over-Year Growth (YOY Growth)

This is an important metric to track because it’ll show you exactly how your restaurant is doing financially compared to last year. Monthly metrics fluctuate because of seasonal factors, but when you look at yearly progress, you’ll get a great snapshot of how your business is doing as a whole. You can use the following calculation with any metric to track its change. We’ve used Gross Profit. 

FORMULA: [(January Gross Profit This Year – January Gross Profit Last Year) / January Gross Profit Last Year] x 100

RevPASH

RevPASH stands for Revenue Per Available Seat Hour during a given time period. Developed by Sheryl E. Kimes at Cornell University, RevPASH is used to optimize labor scheduling, plan food purchasing, and to improve table turn times.

FORMULA: Total Revenue / (Available Seats x Opening Hours) 

RevPASH is a good measurement because it uses time and capacity in addition to average check to paint a clearer picture than just margins or average checks do on their own. 

Customer Lifetime Value

Customer lifetime value (or CLV) is a calculation every business must do. Basically, it tells you what the monetary return will be on the average guest in your restaurant. 

Before you do the calculation, you will need to gather some data from the previous year’s sales. Make sure it’s a full year’s worth of data you’re working with.

First, you’ll need to find the average order value and purchase frequency. 

  • Average Order Value = Total Revenue ÷ Total Number of Orders (over 365 days)

  • Purchase Frequency = Total Number of Orders ÷ Total Number of Unique Customers (over 365 days)

  • Customer Value = Average Order Value x Purchase Frequency 

  • Customer Lifetime Value = Average Lifespan of a Customer (in years) * Customer Value

By establishing a CLV for different guest types, you can more effectively tailor your marketing efforts by maximizing where you invest your time and energy. If you can play to your strengths and really invest in attracting loyal customers, you can drive up your restaurant’s CLV.

Table Turnover Rate

Your table turnover rate tells you how many parties are able to be fed in your restaurant in a given period. The higher number of parties served, the higher your revenue. 

FORMULA: Number of parties served / number of tables

If you serve 20 parties at five tables during dinner service, your table turn rate is 4 turns per table for that time period.

Retention or Repeat Visitor Rate

A restaurant is only as strong as its loyal customers. Some experts argue that all other metrics are moot points if the customer experience isn’t up to par. If acquiring a new customer is six to seven times more expensive than keeping an existing customer, this might be the best way to measure the success of the business.

FORMULA: ((Number of customers at end of period - Number of new customers acquired during that period) ÷ number of customers at start of period)) x 100

Note: The most difficult thing about calculating Retention Rate is finding the data to plug into that formula. Check out systems with built-in customer relationship management to track customer history.

Need More Help? Download Your Restaurant Numbers and Metrics Calculator

Sales Percentages

  • What percentage of sales should payroll be in a restaurant for hourly employees? Payroll cost as a percentage of sales includes the cost of both salaried and hourly employees plus employee benefits, which includes payroll taxes, group, life and disability insurance premiums, workers' compensation insurance premiums, education expenses, employee meals, parties, transportation and other such benefits. Total payroll cost should not exceed 30-35%of total sales for full-service operations, and 25-30% of sales for limited-service restaurants.
  • What percentage of sales should rent be in a restaurant? Rent is the ongoing payments made by an operator to the lessor for the use of premises. Rent payments may be fixed or based on a percentage of sales. Generally, the goal is to limit rent expense to 6% of sales or less.

Free Resource: Everything You Need to Know About Restaurant Payroll

Chapter 2

How to Increase Restaurant Sales

Now that you have an understanding of your business’s benchmarks, you can start planning your sales-boosting strategies. 

Restaurant sales can be unpredictable, fluctuating depending upon factors like seasonality, competition, the economy, and many more. In this section, we’ll cover specific ways you can effectively boost restaurant sales, from tried-and-true techniques to more innovative approaches.

1. Train your restaurant staff on upselling

Upselling is the process of influencing guest purchases by enticing them with more expensive or higher margin items and add-ons. It’s a common strategy for boosting restaurant sales, and an easy way to increase average check size and get more out of every order.

Upselling requires your staff to be perceptive and customer-minded. How many times have you felt pestered by a server who continually blasts you with question after question in an obvious attempt to get another few dollars out of you? It’s important that your employees avoid too much upselling and maintain subtlety.

Talk to your staff about the importance of upselling and coach them on how to do it gracefully. When done effectively, it should feel like great customer service. Your servers will build positive rapport with guests while improving your bottom line. One way for servers to upsell effectively is to ask discovery questions that will teach them about the guest and allow them to respond with a relevant recommendation.

Here are some upselling techniques to train your servers on:

  • Suggest upgrades and add-ons. Servers can start increasing check sizes with enticing questions. The more specific and descriptive, the better. Here are three examples:

“The Malbec would pair perfectly with your steak. Should I bring a glass out with your meal, or would you like me to bring you a little taste now?”

“I ordered the roasted tomato soup for lunch today, and it was delicious. It’s a great way to start a meal. Not too filling. Can I interest you in a bowl?”

“Can I offer you coffee and dessert tonight? Our key lime pie is a personal favorite of mine. And if you’re feeling full after dinner, we offer takeout options.”

  • Promote higher margin menu items. When a guest asks a server what menu items they recommend, servers can recommend menu items with higher profit margins, or they can suggest them outright at the start.

  • Be enthusiastic. Showing enthusiasm for the menu items they’re talking about will only help your servers create more genuine connections with guests and help them avoid coming across as too “sales-y.”

Talk to your staff about the importance of upselling and coach them on how to do it gracefully. When done effectively, it should feel like great customer service. Your servers will build positive rapport with guests while improving your bottom line.

2. Maximize table turnover rates

Table turnover rate is a key factor in your restaurant’s sales. The faster you seat and serve your guests — getting them in and out — the more profit you’ll rake in. 

Here are just a few techniques you can train your restaurant staff on to decrease table turn time and increase profits:

  • Ask about time constraints. Start with a simple question: “What brings you folks in today?” This opener gives your guests the opportunity to share why they're here and for you to tailor your service accordingly. If they’re off to the movies, for example, you can keep everything as quick as possible.

  • Don’t seat incomplete parties. Incomplete parties can cause table turn times to increase, causing a bottleneck in your restaurant's meal service. A table sat with an incomplete party won’t turn as quickly as others, making it difficult to seat waiting parties and costing both the server and the restaurant money.

  • Don’t be afraid to get “campers” off the table. If guests have paid and are lost in conversation, don’t be afraid to tactfully take action. Slowly clear the table over the course of multiple visits, and continue to engage with them. If that doesn’t work, politely ask if they’d be interested in sitting at the bar, if you have one.

  • Consolidate table visits. Don’t take two trips when you could have easily accomplished both in one. For example, bring the table glasses of water at the start rather than introducing yourself empty-handed. This will help shave minutes off of service time.

  • Use a handheld POS system. With a handheld POS system you can take and instantly send orders to the kitchen from anywhere in the restaurant, allowing you to serve more guests and increase revenue.

For more ideas on how to improve your restaurant’s table turnover rate, check out this post.

3. Host events at your restaurant

Hosting events like live music, readings, or trivia nights is a great way to drive people into your restaurant and drive sales. When hosting an event, it’s likely that guests will stay longer — meaning slower table turns — but it also increases the likelihood of them buying more food and drinks. If you’re worried about table turn issues, schedule an event for a slow night in hopes of bringing in more customers than you would normally expect.

One important reminder: Make sure you have the appropriate licenses and permits. In some cases, you might need a permit for live entertainment. 

4. Pay to advertise your restaurant

Paying to advertise your business on social media or elsewhere can provide excellent ROI when done correctly. Restaurant advertising options vary in cost and effectiveness. According to the 2019 Restaurant Success Report, the three most popular advertising channels are social media ads, community/event/charity sponsorship, and Google/search engine ads.

Where and how you advertise will depend upon a number of factors, from your restaurant concept and brand to your customers and location. Think through what you think will have the most impact and drive customers into your restaurant.

Free Resource: The Only Restaurant Marketing Plan You'll Ever Need

5. Connect with your local community

By tapping into your local community, you can get the word out about your restaurant, create long-lasting customer relationships, and give your sales an added boost.

There are a few ways you can leverage your local community to help drive sales:

  • Plan a promotion around a big event nearby. By planning a promotion around a local sporting event, concert, or festival, you will help drive business and generate awareness of your restaurant to a larger audience. You’ll essentially be making use of the larger event’s marketing.

  • Participate in your town or city’s Restaurant Week. If your city or town does a Restaurant Week, it can be a great way to boost exposure, increasing traffic and sales. 

  • Host community events. Promotions that address a community challenge or point of excitement are always a helpful way to generate business. Allowing local organizations to use your space taps into their network, plus, they’ll do all the promoting for you.

  • Sponsor local sports teams and groups. Local sports teams and other groups are always looking for sponsorships, which usually require a small investment on your end and can be a great means of gaining exposure. It’s also a great way to build your restaurant up as a community leader, which will only send more customers your way.

Related Post: 10 Restaurant Promotion Ideas You'll Wish You Had Thought of Earlier

6. Engineer your menu for maximum profitability

What if the key to increasing sales at your restaurant was your menu? Enter menu engineering: an empirical way to evaluate current and future restaurant menu pricing, using your restaurant data to influence design and content decisions.

By knowing each item’s food cost percentage and popularity, you can use menu engineering to guide guest choices towards your most profitable menu items. Menu engineering allows you to continually improve your restaurant’s profitability and the effectiveness of your menu’s design.

You can engineer your menu for maximum profitability by completing this five-step analysis:

  1. Choose a timeframe. Determine how often you will be able to do menu engineering and update your menu.

  2. Measure profitability. Look at menu item food cost, food cost percentage, and gross profit to measure profitability.

  3. Measure popularity. Make measuring popularity easy by plotting your menu items on a menu engineering matrix.

  4. Design with careful consideration. Consider visual cues, dollar signs, and menu descriptions when designing your menu.

  5. Determine your new menu’s success. Train your staff on your new menu and complete a food cost analysis once you’ve begun using your new menu.

For a deep dive into this five-step menu engineering analysis, check out this post.

Free Resource: Increase Restaurant Sales with Menu Engineering Bootcamp

7. Make the most of lunchtime and off-hours

Lunch is known to be a slower time for restaurants, particularly those that are full-service. But increasing lunch sales is key to greater profitability. In full-service restaurants, most of the costs associated with preparing for the dinner rush happen during the daytime. So, if you think about it, you’re paying for labor, rent and utilities whether you’re generating sales or not, and you front labor costs to get all the prep done to have a successful dinner shift. If you can generate enough sales to at least cover the daytime expenses, the next shift becomes pure profit. You can boil it down to this: The busier your lunch, the sooner you start making money.

One way to make the most of lunchtime is to use a set lunch menu designed to get diners in and out quickly. You can also offer lunch specials that drive customers in with lower cost menu item pairings.

You can apply a similar mindset to slow nights and other off-hours. Run promotions like drink specials or host events on off-peak nights like Mondays and Tuesdays to bring more customers in when your restaurant is usually near-empty and your staff is under-utilized.

8. Use best-in-class restaurant technology

Unreliable technology that can’t match your restaurant’s pace will only put a damper on your efficiency — and your restaurant sales. Clunky computers, slow-moving POS systems, and handwritten orders can clog up your lines, cause mistakes, and frustrate staff and customers.

Best-in-class restaurant technology — from POS to team management to kitchen display systems — will help you drive sales by streamlining operations so you can focus on what really matters: spending time with your guests, food, and team. 

According to the 2019 Restaurant Success Report:

  • Restaurants use an average of three technology vendors for back-office operations.

  • 50% of restaurant professionals say accounting, payroll, and business intelligence software are extremely important to their restaurants.

Great strides are being made every day in software, technology, and services for restaurateurs. For a look at the latest and greatest restaurant tech that can help you boost sales, read our post 35 Restaurant Management Tools and Apps to Help Supercharge Productivity.

Free Resource: The Future of the Restaurant Industry

9. Stand out on social media

Great food and service aren’t always enough to stand out and grab attention anymore. You have to use social media to promote your restaurant, extend its brand outside the walls, and connect with new and existing customers to help drive sales.

According to the 2019 Restaurant Success Report, 91% of restaurants use Facebook for marketing. Instagram is the second-most popular option this year, used by 78% of surveyed restaurateurs.

With so many restaurants now utilizing social media to engage with guests, how will you make your restaurant stand out? Here are a few best practices to apply to your restaurant social media strategy:

  • Use consistent messaging and imagery.

  • Share great photos that show off your menu items.

  • Put out exclusive offers for your social media followers.

  • Share customer testimonials and encourage guest feedback.

  • Share customer-generated content.

  • Put your restaurant staff in the spotlight.

Social media helps increase awareness for your restaurant in an oversaturated market and, in turn, can help you boost sales. For more ideas on how to stand out on social media, check out this post.

Free Resource: The Social Media Guide For Restaurants

10. Offer different ways for customers to buy

Want customers to buy more? Offer them more ways for them to do it. Here are a few different revenue streams you should consider implementing at your restaurant:

  • Takeout options. Add a takeout menu so your guests can still be served when your dining room is full or when they’d rather spend the night in.

  • Online ordering. Consider offering online ordering to allow your customers to order food from your website using their computers and phones. Third-party online ordering and delivery services like GrubHub and DoorDash charge commission fees on every order and can limit your ability to manage the online order experience. By hosting online ordering on your own website, you’ll give customers the ability to order food from your restaurant without having to pay a commission fee.

  • Gift cards. In addition to encouraging repeat business and being relatively inexpensive to offer, gift cards are a great way to encourage guests to buy more. According to a 2018 study, the average consumer spends $59 more than the original value of the gift card they receive. Because of this, a robust gift card program offers a revenue stream beyond gift card sales alone. Be sure to offer physical and digital gift cards, in-store and online.

  • Catering. If you can handle the volume, also consider offering catering services. Tools like ezCater can help market your menu and manage your orders online.

11. Use customer loyalty programs

Getting customers into your restaurant is the first step in the sales process, but you also need to keep customers coming back. One of the best ways to increase customer retention (and drive repeat sales) is to create a customer loyalty program with points, tiers, and rewards.

According to the 2019 Restaurant Success Report, 25% of guests surveyed said loyalty programs are extremely important to their guest experience. Not only are they important to guests, but they’re important to your restaurant’s profit:

If you don’t already have a customer loyalty program in place, you should consider starting one. To get the most out of your customer loyalty program, remove any roadblocks: Provide simple enrollment options and make it easy for guests to earn points, track progress, and redeem rewards.

Related Post: 5 Ways To Breed Customer Loyalty With Restaurant Loyalty Programs

Chapter 3

Measuring Success in Restaurant Sales

Now you know about the health of the industry, the health of your restaurant’s finances, and hopefully, you’re planning on implementing a few of our tips to increase sales. Once your new strategy has run for a determined time period, it’s time to check in again and see if they’ve moved the needle. To do so, you’ll need to check on the KPIs of your sales initiative.

Tracking KPIs before and after a new sales-boosting initiative is the best way to find out if your plan worked, and to set up your next steps forward. 

KPIs for Restaurant Sales and Marketing

The #1 Restaurant Sales KPI to Track: Sales Growth

How do you calculate restaurant sales? First, run a report for a specific time period using your point-of-sale software, including bar sales, online orders, and takeout sales all in one. Take the bottom-line billed amount for each check during the time period. This will be total sales. 

You can then run reports by revenue center, including seated, bar, patio, counter, online, and more, to track sales per revenue center. You can also track sales per server to see average sales per server and pinpoint who on your staff is a star player and who could benefit from more training. 

How do restaurants forecast sales? Many restaurants set KPIs for monthly sales growth, as mentioned in Chapter 1, depending on the type of restaurant, table count, seats, average ticket size, and average table turn rate.

To gather a useful data set, you must also apply the same process to quieter evenings. Determine your sales – per guest and per check – for nights when the restaurant is half-full, or when one seating is busier than the other. You can use this method to forecast restaurant sales for any time period from an evening shift to a year. 

By looking at the estimated highs and lows, you’ll establish your restaurant’s monthly baseline, and get a clear vision of what your best-case and worst-case scenarios could be on a daily, weekly, and monthly basis.

In addition to checking on your sales reports, be sure to compare your profit margin, revPASH, COGS, and prime cost before and after every sales initiative. 

Restaurant Marketing KPIs to Track 

One of the key findings from our 2019 Restaurant Success Report was that in order for a restaurant to thrive, the product needs to be as good as the marketing behind it. Knowing what marketing performance indicators to track will help you understand how your marketing efforts affect your overall profit, as well as give you an understanding of why customers are walking in the door. 

A good digital marketing strategy for restaurants should include a website, social media, email marketing, and review website management — because all of these things influence the decision of where to eat.

Tracking KPIs from all these different channels may seem a little daunting at first, which is why we’ve compiled some of the most important performance indicators and exactly how to track/calculate them. 

Bookings

Out of all the restaurant marketing KPIs, bookings and reservations is one of the most important -- because it tells you that your marketing is working, and you’re going to have customers at your restaurant. Yes, people can show up without a reservation (or not show up when they make one) but it’s a good indicator of what to expect, and an easy one to pull from your POS system. Try comparing your bookings per month before and after running a marketing campaign. If you had a high increase in reservations, you’re probably on the right track. 

Related Post: How to Calculate ROI in Restaurant Marketing

Average review scores 

An average review score will keep you updated on what your customers are actually thinking about your food and service. Review sites are where your customers go to be completely honest about their food and experience. An average review score takes all of these review websites into account. 

To calculate this, you’ll try to find all the review website your restaurant is on. Then add the scores together (assuming they’re on the same scale) and divide by the number of sites. 

Review sites to check: Yelp, OpenTable, Google Search, Facebook, TripAdvisor, Eat24, Zomato, Zagat, Door Dash, and Grubhub.

Related Post: 4 Simple Hacks to Grow Your Restaurant Reviews

Number of Engagements 

Social media engagement measures the shares, likes, comments, retweets, or any interactions on a social media profile. Engagement has historically been a common metric for evaluating social media performance but doesn't necessarily translate to sales. The easiest way to track engagement over time is with a social media tool like Sprout Social or Hootsuite. These tools allow you to write captions and schedule posts in advance, so you don’t have to spend time on social media every day. They also monitor engagement for you

Brand Awareness: Social Media Following and Press Mentions 

Some other social media KPIs to look out for are your followers and mentions. While followers don’t directly translate to sales, it’s always a good feeling to see that your followers are growing over time. To make this process a bit quicker, try reaching out to food influencers or photographers in your area, and test out local hashtags with each post. Mentions are when another account creates and publishes content about your restaurant on social media or through a press outlet. Tracking mentions on social is somewhat easy if this person or media account remembers to use your handle or username in the post because you’ll get a notification for it. However, sometimes customers and press outlets might not be using your handle. This is where social listening and social listening tools can help. 

By searching your restaurant’s name and location in Twitter, you’ll be able to see all of the tweets that include those things. On Instagram, you can search to see if customers are posting photos to your location instead of directly tagging you in the post. 

For those who don’t want to spend their time searching for posts about their business, you can utilize a social listening tool like Hypefactors, Mention, or Prowly. 

Related Post: 10 Awesome Examples of Restaurant Social Media Marketing

Customer Acquisition Cost (CAC)

When it comes to online advertising costs when running Google Adwords, Facebook, or Instagram ads, it’s important to track cost per acquisition, or CAC. 

CAC factors in the money allotted in your restaurant marketing budget aimed at acquiring new customers.

FORMULA: Marketing Expenses / Total New Customers

CAC is important to track because it proves the effectiveness of specific marketing initiatives. Whether you're opening a brand new restaurant or trying a new marketing idea, it's imperative to understand what's working and what isn't so you can alter your restaurant marketing strategy accordingly.

Keeping track of your customer acquisition cost is also a way to identify which channels give the biggest bang for your buck when it comes to attracting new customers. Maybe your social media ads are a cheaper way of acquiring customers, but if you tap that market quickly and discover search engine ads or ads on Yelp bring in more new guests at a slightly higher cost, you might want to switch your approach.

Conclusion

Deciding to shake things up in your restaurant operations to improve your sales can be daunting, but if you go in with a well-thought-out plan, it can make all the difference. Check on your restaurant’s financial health, plot a path forward where you’ll change one or two things to try to improve sales, and follow up with another checkup to see what works. Make sure to not run too many promotions at once so that you’re clear on which one had the most impact. You’re now armed with everything you need to increase your restaurant’s sales, so go get it.

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