5 KPIs that every multi-location restaurant owner should watch
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Running a restaurant chain in various locations is no small feat. However, if managed successfully, doing so may prove highly rewarding. One of the many challenges you need to overcome is ensuring a strong and reliable cash flow from each one of your branches which will help to maintain day-to-day operations, reinforce growth and support your ongoing financial obligations. Of course, this will be difficult to achieve, but knowing where to focus your attention can help. After all, nothing worth doing is ever easy. So, regardless of whether you’ve already opened another branch or are planning on doing so, here are 5 KPIs you need to consider in order to successfully run a restaurant in multiple locations.
How much revenue are you earning per hour?
In order to run efficient operations and maximize cash flow from each of your branches, keeping a close watch on your staff is essential. Although you don’t want to micromanage each member of your front and back of house staff, you’ll want to ensure that each hour passes productively and earns sufficient revenue. This is why you and your managers should implement an hourly work schedule. If you already have, here’s a useful formula that you can use to measure your restaurant’s sales per labour hour.
Sales Per Labour Hour = Total Sales Per Day / Hours Worked
A working example of this might be if your restaurant earns £3,000 a day and your total schedule for each staff member amounts to 45 hours. This means that for every planned hour of work scheduled you aim to generate at least £75 for the branch in question.
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How much are you earning per customer?
You should also make certain that you and your managers are tracking Sales Per Head, especially during different times of the day. However, it’s also worth comparing what your Sales Per Head look like on a weekly and monthly basis - doing so will enable you to set targets and keep track of customer spending patterns, which could prove useful in determining when to offer promotions and special discounts in order to encourage more sales during slow trading periods, for example. If you’re looking for a way to calculate Sales Per Head, you can use the below formula:
SPH = Total Sales/Number Of Customers
Revenue Per Available Seat Hour
Yet another way of assessing the performance of each your restaurant branches is to work out their Revenue Per Available Seat Hour (RevPASH). This is a useful measurement for your business because it takes into account Time and Seating Capacity, helping you to gain a clear understanding of the earning potential of each seat in your restaurant. How this works is by using the two formulas below:
RevPash = Total revenue / Seat Hours
Seat Hours = Number of Seats/Hours Open
A working example would be if you own a branch which is open for 12 hours and has a total of 50 seats. This would give you a total of 600 Seat Hours Per Day. Next, add your total revenue for that day, which might stand at £5000. Then you divide the £5000 revenue by the 600 Seat Hours Per Day, giving you a RevPASH of £8.33.
When running any business, you want to make your seating arrangements are as efficient as possible. However, that isn’t always easy to achieve. Whilst you may believe that your restaurant is at capacity, it might not be as full as what it could be. A reason for this could be that a party of 2 is sitting at a table which could seat 4 people, meaning that you have two seats that currently aren’t earning you any money. Naturally, you can’t always avoid this from happening but if it becomes a regular occurrence, then something is going wrong. Your front of house staff should be looking to find each party a suitably-sized table, boosting your bottom line and adding to each customer’s dining experience. So how do you measure Seating Efficiency?
Simply count the total number of seats that are filled before dividing this figure by the total number of seats, for all of your branches. For example, if you have 4 branches that each have a seating capacity 50, this gives you a total of 200 seats for any given hour. So, if for one particular hour, you have a total of 173 diners, you have 27 seats that aren’t in use. Dividing 200 by 173 gives you an efficiency rate of 86.5% across all your branches for that particular hour.
Table Turn Time
Finally, you can also measure your restaurant’s performance by Table Turn Time, which simply looks at the estimated amount of time each customer spends at your establishment. Naturally, you’ll want to have a relatively fast table turn time since this allows you to accommodate more customers and generate higher revenue each day. However, this doesn’t mean that you should start pushing customers out of the door once they’re finished or if a certain amount of time has lapsed. Instead, try to get them to spend more. When calculating your average Table Turn Time, you should take a look at what factors are at play and how you can boost efficiency, for example, customer payments and cooking time. So, in order to calculate Table Turn Time, begin by selecting a specific period before counting the total number of parties that were served in that time. Divide the total number of Parties Served by the total number of tables that were in use - or, for simplicity, you could use a guest management tool that will automatically work this out for you.
Are your restaurants working as efficiently as they could be?
Although running your own restaurant can be exciting, there are many hurdles that you’ll need to overcome in order for your venture to be successful. As well as ensuring fresh supplies and customer satisfaction, you also need to ensure you’re earning a reliable revenue. But with so many different factors to consider, that can be easier said than done. However, if revenue isn’t as strong as it could be, there are a number of ways in which it could be improved, including more or better equipment, refurbishing your dining or kitchen areas, training additional staff or even overhauling your menus. All you need to do is acquire the necessary funds to make it happen. Yet rather than dip into your own funds, why not explore what the Alternative Finance Industry has to offer?
At Rangewell, we are an Access to Finance specialist working with over 350 lenders to offer restaurant owners an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide you through the entire application process. We’re with you every step of the way. So if you’re looking to support your bottom line and boost efficiency, but lack the necessary funds to do so, apply for Business Finance today or find out more with Rangewell.