Tuesday, May 16, 2017

7 Restaurant Performance Metrics and How to Calculate Them

..Increasing a business's efficiency and profitability doesn't happen overnight. There are so many moving parts involved in operating a restaurant - so many different costs and revenue channels and factors that ultimately influence net profit or loss - that you cannot simply expect to make one change and see all operations and margins improve.
1) Break-Even Point
Your break-even point is one of the first numbers you should calculate. This number lets you pinpoint how much you must do in sales to earn back an investment.. Total Fixed Costs ÷ ( (Total Sales - Total Variable Costs) / Total Sales) = Break-Even Point
2) Cost of Goods Sold (COGS)
Cost of Goods Sold refers to the cost required to create each of the food and beverage items that you sell to guests. In this way, COGS is really just a representation of your restaurant’s inventory during a specific time period. In order to calculate COGS, you need to record inventory levels at the beginning and end of a given period of time, and any additional inventory purchases. 
Beginning Inventory + Purchased Inventory - Final Inventory = Cost of Goods Sold (COGS) 
3) Overhead Rate: Total Indirect (Fixed) Costs / Total Amount of Hours Open = Overhead Rate
4) Prime Cost: Labor + COGS = Prime Cost..
A restaurant’s prime cost is the sum of all of its labor costs (salaried, hourly, benefits, etc.) and its COGS. 
5) Food Cost Percentage..
6) Gross Profit..
7) Employee Turnover Rate..   Read more here 

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