Introduction 

Gone are the days, when restaurant businesses are only tracking the sales, profits, and expenses metrics. There are so many crucial metrics that shape businesses.

In these competitive times to ensure end-to-end customer satisfaction, achieve an edge among competitors, and constantly aim for growth – as a restaurant business owner, you need to rise above the basics metrics.

Data is the power of businesses today. So, keep an eye on your data, leverage the right data tools, track it, analyze the restaurant KPI(Key performance indicators), and make informed data decisions to take your business to new heights of success while satisfying your customers and employees as well.

By now, you are probably wondering which key restaurant metrics I should track and how to do it – well, don’t worry. We’ll be covering the 15 KPIs that every restaurant business should keep an eye on. Let’s get to it. 

Also Read: How to Setup Key Performance Indicators for Your Business

What Are Restaurant KPIs?

Restaurant Key Performance Indicators (KPIs) are measurable metrics that help restaurant owners and managers evaluate their business performance across various aspects, including sales, operational efficiency, customer satisfaction, financial stability, and a lot more. 

Understanding and regularly tracking these KPIs enables restaurant owners to optimize costs, improve service, and boost profitability. By making data-driven decisions, restaurants can adapt to market trends and ensure long-term success.

Also Read: How Data Analytics Can Help Restaurants Optimize Menus

15 Key Metrics that Every Restaurant Business Should be Tracking!

Running a successful restaurant isn’t just about great food and service—it’s also about making smart, data-driven decisions. Tracking key performance indicators (KPIs) helps restaurant owners and managers understand their financial health, operational efficiency, and customer satisfaction. Let’s keep reading to learn 15 crucial restaurant KPIs that every restaurant business should track.

Also Read: Benefits of Data-Driven Decision Making

1. Cost-of-Goods Sold(COGS):

The cost of goods sold, or CoGS, is the cost of producing each menu item you sell. This figure shows the total amount of inventory and supplies required to make food and beverage (F&B) sales over a given time period.

COGS: CoGS for the period = (Beginning Inventory of F&B) + (Purchases) – (Ending Inventory). 

It helps you determine:

• Menu items are priced appropriately or too 
• inventory controls are effective or not
• food expenses are too high or are priced appropriately

According to industry norms, restaurant COGS typically range from 20% to 40%, with food costs often being higher and bar costs lower. By calculating COGS every week, you may order inventory more correctly and take steps to manage inventory costs before they eat away at your profit margin.

Also Read: AI for Retail Inventory Management

2. Gross Profit:

Gross profit margin is the percentage of total sales revenue retained by your restaurant after deducting direct production costs (such as food and labor). It indicates the remaining amount of capital that you can use to cover overhead costs like labor and rent. Monitoring gross profit margin allows you to evaluate pricing strategies, monitor expenses, and make changes to increase profitability while preserving quality.

Gross profit margin = (Gross profit / Total sales revenue) * 100.

Gross profit margin is the percentage of total sales revenue retained by your restaurant after deducting direct production costs (such as food and labor). A higher gross profit margin reflects a more financially effective operation. Most restaurants strive for a gross profit margin of roughly 70%.

Also Read: AI for Restaurant Marketing for Maximum Conversions

3. Net Profit:

Your restaurant’s net profit margin indicates how much of each dollar generated is transformed into profit after all expenses, such as COGS, labor, and overhead, have been removed.

It provides you with a more thorough understanding of the operational effectiveness and financial performance of your business than just gross profit. This restaurant KPI is crucial for figuring out your actual bottom line because it accounts for all operational expenses, not just labor and food prices.

Net profit margin is calculated as (net profit / total sales revenue) * 100. 

Net income is calculated as total revenue less total expenses, which include taxes, interest, and other non operating expenses. Revenue is the total amount of money made from sales before any deductions. 

Restaurants’ net profit margins typically range from 3% to 6%, depending on the type of eatery.

Also Read: How to Increase Restaurant Sales Without Advertising

4. Cash Flow:

Cash flow is the lifeblood of any restaurant business. Cash flow is the net amount of money that enters and exits your restaurant. It is computed by subtracting total cash outflows from total cash inflows during a certain period. 

A positive cash flow shows that your restaurant is making enough money to pay its bills, invest in expansion, and keep up with operations. While a negative cash flow indicates potential financial trouble. However, even profitable restaurants can struggle if they don’t have enough cash on hand to cover short-term obligations.

Cash Flow = Total Cash Inflows – Total Cash Outflows

Healthy cash flow varies by restaurant type, but ideally, businesses should have at least 3-6 months of operating expenses in reserves.

Example: A casual dining restaurant has:

• Total Sales Revenue: $120,000
• Operating Expenses (COGS, rent, payroll, utilities, marketing): $95,000

Cash Flow = $120,000 – $95,000 = $25,000 (Positive Cash Flow)

Also Read: How Livelytics Helps Retailers to reduce Operational Cost

5. Average Revenue Per Customer:

Average revenue per customer, simply means how much each customer is spending in your restaurant(on average). Increasing the average check size can considerably enhance your bottom line without adding additional clients. Upselling high-margin items, introducing specials, and creating combo deals can all help to boost the average check size.

Per-person average = Total server/ Total number of guests served

Monitoring average revenue per customer allows you to evaluate the efficiency of your clients’ upselling skills, menu pricing strategies, and promotional offers in improving revenue per customer.

Let’s analyze two different restaurant locations to understand how various factors impact average revenue per customer.

• Location A had $12,000 in total sales and served 300 guests.
• Location B had $10,500 in total sales but served 200 guests.

Location A’s Average Check Size: $12,000 ÷ 300 = $40.00 per guest

Location B’s Average Check Size: $10,500 ÷ 200 = $52.50 per guest

Even though Location A had higher total sales, Location B generated more revenue per customer. This could be due to factors like stronger upselling, a well-optimized menu, better promotions, or higher beverage sales. So, by analyzing these factors – managers can tweak the strategies to maximize revenue per guest while maintaining a steady flow of customers.

Also Read: How Restaurants can Predict Trends with Analytics 

6. RevPASH (Revenue Per Available Seat Hour):

RevPASH calculates how much money your business makes from each seat. If a seat is empty, you’re losing out on a chance to make money.

Tracking RevPASH makes it simple to analyze your efficiency in turning tables and maximizing seat utilization, allowing you to increase revenue, improve service delivery, and improve the customer experience.

RevPASH = Total Revenue/(Number of Total Seats x Opening Hours).

Here’s an example: Assuming your restaurant has 50 seats, was open for 10 hours, and generated $20,000 in total revenue on a single day, then: $20,000 / (50 seats x 10 hours) = $40 is RevPASH. This indicates that on that particular day, each seat in your restaurant brought in an average of $40 per hour.

Remember that these figures will typically be higher on Saturdays than on Tuesdays or Wednesdays.

Also Read: How AI revolutionize Customer Experience in the Restaurant Industry

7. Table Turnover Rate:

Turn time, also known as table turnover, is the average amount of time an individual spends at a table from the moment they sit down until they leave.

This KPI is critical for understanding how your restaurant manages seating capacity. A quick turnover implies more money in your pocket as you can accommodate more guests (provided you’re busy).

By understanding your typical table turnover, you can: 

• Assist employees in turning tables more quickly
• Set up your kitchen for effective service.
• Give hosts additional details about wait times and reservation scheduling.

There isn’t one solution that works for everyone, but generally speaking, you want to switch tables frequently but comfortably throughout. Here are some General Table Turnover Benchmarks:

• Fast food & quick service restaurants (QSRs): 3–6 turns per hour
• Casual dining restaurants: 2–3 turns per hour
• Upscale/fine dining restaurants: 1–2 turns per hour

Turn Time = All Parties’ Total Dining Time / Total Number of Parties

As an example, if you had 20 parties eat at your restaurant on a single evening and the total amount of time spent dining was 40 hours, then:

Turn Time: 40 hours divided by 20 parties is 2 hours. This means that each table is flipped over once every two hours.

Also Read: How AI is Improving Table Turnover Rate in Restaurants

8. Labor Cost Percentage:

Labor costs account for one of the biggest expenses in the restaurant business, which includes employee wages, benefits, payroll taxes, training, etc. As it is one of the prime costs for restaurants, tracking labor cost percentages ensures the restaurant isn’t overspending on staffing while maintaining good service quality. 

High labor costs may indicate overstaffing, inefficiency, or excessive overtime, while low labor costs may suggest understaffing, which could hurt service quality. So, it is important to compare your labor cost percentage with the industry averages and make efforts to keep around the averages. 

The ideal costing percentage depends significantly on restaurant type and location – but generally, it would be around 30-40%. 

Labor Cost Percentage = (Total Labor Cost ÷ Total Sales) × 100

Here’s how to calculate it. 

A casual dining restaurant with $80,000 in revenue spends around $26,000 in labor costs. 

Labor Cost Percentage = ($26,000 ÷ $80,000) × 100 = 32.5%

This falls within the ideal range (30-35%), ensuring staffing efficiency.

Also Read: How can Data analytics improve the measurement of employee performance

9. Customer Retention Rate:

The customer retention rate measures how many guests return after their first visit. This is a metric, that is not just important for restaurant businesses – but for all the businesses. Because repeat customers spend more and it usually cost way less to retain existing customers than to acquire new customers. 

A low retention rate suggests poor service, lack of loyalty programs, or inconsistent food quality and vice versa. 

Customer Retention Rate = ((Customers at End of Period – New Customers) ÷ Customers at Start of Period) × 100

For example, if a casual dining restaurant had:

• 1000 customers at the start of the month
• 300 new customers
• 900 total customers at the end of the month

Customer Retention Rate = ((900 – 300) ÷ 1000) × 100 = 60%

Also Read: AI for Expanding Customer Base

10. Customer Acquisition Cost (CAC):

Customer Acquisition Cost (CAC) is the cost that you spend to acquire new customers to your restaurant, through marketing and advertising expenses. If CAC is too high, it can cut into profit margins, making it harder to sustain long-term growth.  A healthy Customer Lifetime Value (CLV) to CAC ratio is at least 3:1 (meaning you earn 3 times more from a customer than what you spent to acquire them). 

Quick-Tip: CAC varies widely, but a restaurant should aim for repeat customers to reduce acquisition costs over time.

CAC = Total Marketing & Advertising Costs / Number of New Customers Acquired 

For example, if a new pizzeria spends $5,000 on digital ads and gains 500 new customers from the campaign.

CAC = $5,000 / 500 = $10 per customer

If the average customer spends $30 per visit and returns 3 times per year, the Customer Lifetime Value (CLV) is $90, making the CLV to CAC ratio 9:1—a great return on investment!

Also Read: Leveraging AI to Collect Customer insights

11. Inventory Turnover Ratio:

The inventory turnover ratio measures how frequently your restaurant has sold out of all of its stock over a given time period. A high turnover rate implies that food is sold quickly, lowering the risk of spoiling and waste, and you need to stock up appropriately to keep consumers satisfied. On the other hand, a low turnover rate suggests slow-moving inventory, which can result in cash flow problems, higher storage expenses, and food waste.

Most restaurants with fresh foods seek to turn over their inventory in shorter than seven days, or four to eight times a month.

Inventory turnover = CoGs/((Beginning Inventory + Ending Inventory) / 2). Assume your monthly cost of goods sold is $30,000. 

You began with $6,000 of inventory and finished with $3,000.

Inventory turnover = $30,000 divided by (($6,000 + $3,000) / 2).

$30,000/(9,000/2) 

= $30,000/$4,500 = 6.

This indicates that you rotate your stock six times a month on average.

Also Read: AI for Restaurant Inventory 

12. Food Cost Percentage:

Food cost percentage is the proportion of sales revenue that goes toward purchasing food ingredients. Keeping food cost percentages low by monitoring food waste, portion sizes, and ingredient costs helps keep food costs under control and is essential for keeping a healthy profit margin. So, continue to monitor food waste, portion sizes, and ingredient costs to keep food costs under control. 

Most successful restaurants have a food cost percentage ranging from 28% to 35%.

Monitoring your food cost percentage on a continual basis allows you to identify rising supplier costs as well as difficulties with portioning, spoiling, and shrinkage before they affect prime costs and profits.

Percentage of Food Cost = Item Cost/Selling Price

Let’s assume your house burger and fries are $13 and cost $4 to make.

Food Cost Percentage: $4/$13 = 31%.

Also Read: How AI helps in boosting Restaurant Revenue and Profit

13. Break-Even Point:

Another metric that we will be considering is Break-Even Point. The break-even indicator is important for restaurants because it helps define the point at which total revenue equals total costs, indicating that the firm is neither making nor losing money. It helps you figure out when you’ve paid your expenses and when you may start making money. And if it’s less than that, you’re losing money.

Understanding this metric you to make informed judgments about sales targets, pricing, cost control, and profitability. Regularly tracking the break-even point can help you determine how much you must sell to pay your expenses. 

Break-even Point = Total Fixed Cost / [(Total Sales – Total Variable Cost) / Total Sales].

Assume your fixed cost for the month is $1,500 and your variable cost is $1,200. With a sales figure of $35,000, you should calculate:

Break-even point = $1,500 / [($35,000 – $1,200) / $35,000].

33,800 / $35,000 = $1,500 is the break-even point.

Point of Break-Even = $1,500 / 0.97

14. Employee Turnover Rate:

Employee turnover rate measures the percentage of employees leaving the restaurant within a given time frame. Since the restaurant industry is known for high turnover rates, tracking this metric helps businesses understand whether the employee turnover rate is high, low or just right. 

If it’s high, then you can talk with the employees, address their problems, and solve them before they leave. Keep them satisfied, happy, and productive. By keeping turnover low, restaurants can maintain efficiency, reduce hiring and training costs, and improve customer experience. 

Employee Turnover Rate = (Number of Employees Who Left / Average Number of Employees) × 100

Industry Averages:

• Fast-food and QSR chains: 100%–150% annually
• Casual dining restaurants: 75%–100% annually
• Fine dining restaurants: 50%–75% annually

For example, if a restaurant had 40 employees at the start, hired 10, and lost 15 employees during the year, the turnover rate would be:

Turnover Rate = (15 / 45) × 100 = 33.3%

15. Food Wastage: 

Food wastage in restaurants refers to the amount of food that is discarded due to spoilage, overproduction, preparation waste, or uneaten leftovers from customers. It negatively impacts profit margins, sustainability, and overall efficiency.

Wasted food means wasted money on ingredients, labor, and disposal. And, high food wastage raises the Cost of Goods Sold (COGS) and reduces revenue. So, reducing food waste is important as it not only improves profit margins but also contributes to a more sustainable and efficient restaurant operation.

Industry Standards for Food Waste in Restaurants:

• Full-service restaurants: 4%–10% of total food purchased is wasted.
• Fast-food & QSR chains: 2%–5% due to pre-portioned and standardized processes.
• Buffets & all-you-can-eat services: Can exceed 30%, making portion control crucial.

Food Wastage Rate = (Total Food Waste / Total Food Purchased) × 100

For example, if a restaurant purchases $10,000 worth of food in a month and records $800 in food waste, the food wastage rate is:

📌 Food Wastage Rate = ($800 / $10,000) × 100 = 8%

This means 8% of the restaurant’s food purchases were wasted, which is on the higher side for a full-service restaurant.

Also Read: AI Solutions for Reducing Restaurant Waste

Automate the Process of Tracking & Analyzing Metrics with Livelytics! 

In the restaurant business, there are so many different metrics to track. Tracking all the metrics and analyzing them in real time is not a piece of cake. It takes a lot of manpower and other crucial business resources. Still, it is prone to human errors, time-consuming, resource-intensive, and not done in real-time(most of the time).

But, if we tell you that – you can track all the data, and metrics and analyze the data in real-time without any manpower resources or time-consuming process.

Automate all this – while your employees can focus on strategic business operations with Livelytics.

Livelytics is a one-of-a-kind AI tool curated especially for Restaurant Business. It helps restaurant businesses collect and analyze all the data and metrics on the go without any human intervention. Plus, it even offers data-backed suggestions and recommendations powered by Machine Learning and Artificial Intelligence.

And the best part. Restaurant businesses don’t have to spend a bomb on getting Livelytics. It is a cost-efficient subscription-based that you can scale up and down as your business requirements.

To know more about Livelytics, how it can help you, and everything in between – book a free demo right away. 

To Wrap it Up! 

These days, data is the key to restaurant success. However, not all data is important, and in this article, we’ve included 15 critical KPIs that we feel every restaurateur should track.

We want you to leave with a full toolkit to better analyze and enhance the operation of your business. Although there are other KPIs available, any restaurant owner hoping to succeed must routinely monitor the ones we’ve outlined here.

With this knowledge, you can optimize your operations for increased revenues and a healthy bottom line, ensuring that your restaurant weathers the ups and downs of the restaurant industry.

So, choose the right data platform, focus on the crucial measures, take data-driven decisions seamlessly, and take your restaurant to new heights of success.

To make your search easier, you can try out Livelytics – a one-of-a-kind AI data platform curated for restaurant businesses. Book a free demo now.