How would you set KPIs in restaurant business ?
The most commonly used KPI in restaurant and F&B industry is the monthly P&L /Income statement , hotel F&B , corporate F&B and standalone restaurants that are owned by single owner are using this KPI to measure their business success ! but the question is " is that KPI enough to measure business success ? well , i have worked with a successful CEO who used to say we cannot improve what we cannot measure , to answer the question if it is enough to only consider the financial part to measure business success i will elaborate and name below how many KPI's can a restaurant owner / Corporate management use to measure their business performance .
To list down these KPIs let's name the different aspects involved in restaurant business : People/ staff , clients , Marketing & advertising ,purchasing , maintenance , ,housekeeping /cleaning , finance, I would elaborate on these even if few more aspects could be added .
1- People/ Staff
A KPI to measure staff performance is important , as business owners / management it is important to use to measure staff's efficiency ! i am not talking here about the staff performance reviews that is conducted mostly in hotel F&B and corporate F&B companies where a manager sits once or twice a year with their staff and rate their performance in order to assess if they can be promoted or if they need any training to improve their performance , in restaurant business there is a KPI called REVPASH which is revenue generated per available seat per hour , how this is related to staff ? definitely this KPI will show us the revenues generated in any particular hour and Manager/ owner have a schedule of staff who have worked in any particular hour , they have to compare both data to get conclusion of each staff performance and efficiency , so when we talk about staff we talk about "Efficiency " and this what has to be measured and actions taken when a business owner finds out that certain staff do perform less efficiently than others , action can be training , shadow system coaching or sometimes termination in case of discovering that staff inefficiency is simply due to lack of interest and commitment !
2- A KPI for clients ?
well yes , we are not talking here about measuring client's performance as such ! but we are talking about measuring client's loyalty , client's repeated business , client's average spend and so on , a business owner should be very much interested to get such details and find ways to get such statistics and ask the following questions " how often each client is coming back to dine in our outlet ? " ," what is the difference in average spend between a non-loyal and loyal customer ?" , "how do guests discover about us ?" , "what is the age of our clients? " what is the mix ? where they come from ? all these have to be answered for an owner to know later where to focus and spend their marketing budgets on. i recall working in one restaurant where hostesses would welcome clients and would ask clients how did they hear about us and later fill up a checklist form that is on hostess desk and they tick different boxes such as Nationality of clients (European , Asian , Middle Eastern ... , age , number of guests , female/male and add how they heard about us , this form goes later to marketing department for their use and action .
3- Marketing & Advertising
We can refer to the previous point , where a KPI for marketing and advertising would be to measure an advertising that has been actioned, "How many guests came to us s results of our action ? " how much incremental revenues did we make as result of this advertising ?" , are we targeting the right clients / markets ? or need to change to target other clients / locations ? just to name few of questions that has to be answered each time we spend money on marketing & advertising , it is easy to measure number of views and clicks and impressions for online social media , but do we measure how many of these actually came to the outlet and how much money did they spend ?
4-Purchasing / receiving /storekeeping
All these responsibilities fall under the purchasing department that itself fall under accounting / finance department .
Many KPI's can be introduced , starting by purchasing , measure performance depending on management /owner vision , do we purchase quality or what is cheapest ? as per my experience most of the companies set KPI to consider collecting 3 quotes and go for the cheapest quote , yet majority end up purchasing and replacing the same products at least twice a year , so focus is no more on long term and on purchasing spend over a year or more instead of short term spend ? better to buy an item that comes with a warranty and after purchase service and that is durable for years instead of saving few bucks and end up re-invest after only few months !
Receiving KPI is to check incoming products Vs LPOs but the question is that , do these receiving clerks have a quality audit checklist or are well trained and empowered by the chefs / managers to be able to make decisions when a products is not conforming to the standard quality set by the organization so they can reject certain deliveries ? this can be measure also by the amount of wastage and food cost calculations .
Storekeepers simple performance indicator can be by checking if they are following FIFO , having bin recording labels on shelves for each products in order to check par levels and reorder points in order to ensure products availability .
Do we change the same lamps over and over ? do we have same reoccurring maintenance problems with the same machines / HVAC and other areas ? do we quantify how much we spend on maintenance Vs considering a proactive well planned preventive maintenance program ? are we buying the original parts or again low cost parts to save but end up paying more ? all are questions to consider in measuring this area of our business .
Do we ever consider setting a measurement of performance for the cleanliness of our restaurant ? how often is cleaning task performed ? how about deep cleaning schedules ? how many times do we conduct swab checks by passing our fingers over different areas of kitchen or restaurant to check dust levels ? how often do we visit bathrooms and check the status ? if we find bad results each time we do such a check , what actions and plans shall we consider to avoid this happening at all ? our whole restaurant reputation is counting on the cleanliness and hygiene status of our business especially in our days with the effect of the current Covid Pandemic , so let's not forget to set KPIs for this area .
This might be the biggest area where normally KPIs are set , we can measure performance by following many reports in our business P&L , Balance sheets , cash flow reports , productivity reports etc.... yes many of the finance tools can be used to measure different areas of our business but it is also critical to consider all of the above aspects of business and set KPIs and measure performance for all those areas if we want to ensure business continuity and good reputation for our business .
Now that we can measure all of the above areas and quantify them in numbers and view them on spread sheets and charts , we can start compare trends Year over year , month over month , week over week , this way we can improve the business and see where we can close gaps as soon as possible .