What are restaurant KPIs?
Restaurant KPIs (Key Performance Indicators) are the numbers that show you how well your restaurant is really doing. Monitoring KPIs like break even point, cost of sales, and gross profit can offer valuable insights that show you where you might need to focus your energy.
Tracking your KPIs isn’t just about monitoring the numbers for the sake of it; it’s about seeing the impact of your decisions over time, and improving efficiency based on this understanding. KPIs can help you to spot important trends and patterns, which then allows you to make data driven decisions that will help you deliver consistent growth.
From optimising your menu to streamlining staffing, tracking the right KPIs in your restaurant can make all the difference to your long term success.
Which KPIs should I be tracking in my restaurant?
Keeping a restaurant on track takes more than experience and intuition; it’s about knowing which numbers matter most and keeping a close eye on them. To make that easier, we’ve summarised seven of the best indicators of a restaurant’s financial health and efficiency.
By keeping an eye on these KPIs, you’ll be able to spot issues before they become problems and find new ways to improve your operations. Tracking your numbers helps you move from reactive to proactive management and keep your restaurant growing steadily. And to make it even simpler, we’ve put together a free template you can download and start using right away.
1 - Break even point
Your break even point is when your restaurant’s revenue covers all its expenses - where the action of running your restaurant stops costing you money, and starts making a profit. Knowing this number gives you a clear target, helping you understand exactly how much you need to sell to avoid losing money.
Calculation
To calculate your break even point, divide your fixed costs by what’s left over from each sale after you’ve covered your variable costs.
break even point = fixed costs/sales price - variable costs
How to track it
First, add up all your fixed costs - the expenses that stay steady each month, like rent, insurance, and full-time salaries. Then, look at variable costs, which vary depending on sales, like food and hourly wages. Divide your fixed costs by the amount left from each sale after paying variable costs, and you’ll know how many sales you need to make in order to break even.
What it tells you
Tracking your break even point lets you know whether your current sales are enough to cover costs. If your sales are consistently comfortably above the break even point, that’s great, but if you're regularly falling short, it’s probably time to look at ways to reduce your costs, or increase prices.
Tracking your break even point throughout the year also helps you to be prepared for seasonal shifts, so you can set realistic targets during both busy and slower times.
2 - Cost of Goods Sold (COGS)
Your Cost of Goods Sold (COGS) is what you spend on the ingredients and consumables that are needed to make the dishes and drinks you sell. Tracking COGS is important because it helps you understand how much of your revenue is going straight into the food you serve. When you know this number, you can make more informed choices about how much you can afford to spend on ingredients, and what you need to charge for menu items.
Calculation
To work out your COGS, start with the value of your inventory at the beginning of a period, add any new inventory purchases, then subtract the inventory value at the end of the period.
COGS= starting inventory+purchases during the period−ending inventory
How to track it
Tracking COGS means keeping an eye on what you spend on ingredients and stock. You’ll want to check your inventory levels regularly, updating purchases as you go. This then tells you exactly what you’ve spent to produce the food you sold in a given period.
What it tells you
COGS gives you insight into how efficiently you’re managing your ingredient costs. If it’s consistently high, it might be time to review your suppliers, remove certain items from your menu, or adjust portion sizes. The lower your COGS, the better your profit margins, but keep in mind that reducing costs at the expense of quality will inevitably lead to lost customers and lower sales. So, we’re back to that balancing act we mentioned earlier.
3 - Gross & net profit
Gross profit and net profit are both key indicators of your restaurant’s financial health, but they tell you different things. Gross profit shows how much you’re making after covering the cost of goods sold (COGS), while net profit tells you what’s left after all expenses are paid, from operating costs to taxes. Together, they give you a fuller picture of your overall profitability.
Calculations
gross profit= total sales - COGS
net profit= total revenue - (COGS + operating expenses)
How to track it
Calculate your gross profit by subtracting COGS from your total sales. This gives you an idea of what’s left to cover your operating expenses.
To find your net profit, take your total revenue and subtract everything - from COGS to rent, utilities, and marketing costs. Net profit is your “bottom line,” showing if your restaurant is truly profitable after all costs are accounted for.
What it tells you
Gross profit helps you see if your pricing covers food costs effectively, while net profit shows if you’re profitable overall. A low net profit could mean it’s time to review operating expenses or adjust menu prices. Strong net profits indicate a healthy business, but remember that growth is about steady, manageable gains rather than quick wins that could compromise quality.
4 - Inventory turnover
Inventory turnover shows how often you use and restock your ingredients over a certain period. It’s a key metric for managing stock efficiently, helping you keep fresh ingredients on hand while reducing waste. High inventory turnover often means you’re using your stock efficiently, while low turnover could suggest over-ordering or spoilage.
Calculation
To calculate inventory turnover, divide the cost of goods sold (COGS) by your average inventory value for the period.
inventory turnover= COGS/average inventory
How to track it
Start by calculating your average inventory for the period (you can find this by adding your beginning and ending inventory, then dividing by two). Then, divide your COGS by this average. Tracking this regularly can help you adjust purchasing to avoid stockouts or overstocking.
What it tells you
A higher turnover rate typically means you’re keeping inventory fresh and reducing the risk of waste. If turnover is low, it may be worth reviewing order sizes or re-evaluating menu items. As your restaurant grows, using procurement software can make tracking inventory simpler and give you more accurate insights, helping you stay ahead of stock management.
5 - Food cost percentage
Food cost percentage tells you what proportion of each sale is being spent on ingredients. Understanding and benchmarking this number helps you set fair prices that keep you profitable, while staying accessible to your target customers.
Calculation
To work out your food cost percentage, divide your total food costs by total food sales, then multiply by 100 to get a percentage.
food cost percentage= total food costs/ total food sales × 100
How to track it
Start by adding up the cost of all ingredients used over a set period, then divide this by your total food sales for the same time. This gives you a straightforward measure of how much you’re spending on ingredients, compared to what you’re earning from food sales.
What it tells you
A good food cost percentage generally falls between 25% and 35%, depending on your restaurant type. If your percentage is regularly above this range, it could mean it’s time to review your supplier costs, adjust portion sizes, or rethink your pricing. On the other hand, a very low food cost percentage may boost profits in the short term, but it can lead to quality issues if you’re not careful. Keeping this number balanced is key to maintaining both quality and profitability.
6 - Prime cost/cost of sales
Prime cost, or cost of sales, is the combined total of your food, beverage, and labour costs. It’s one of the most important KPIs to watch because these are often the biggest expenses for a restaurant. By keeping prime costs in check, you can maintain a healthy profit margin without cutting corners on quality or service.
Calculation
To calculate prime cost, simply add up your food and beverage costs, then add your labour costs.
prime cost= food & beverage costs + labour costs
How to track it
Add up your total food, beverage, and labour costs over a given period, typically weekly or monthly. Tracking this regularly gives you a solid understanding of how much of your revenue goes towards delivering the experience your customers are looking for.
What it tells you
You would generally expect prime cost to fall somewhere between 55% and 65% of total sales, depending on your restaurant type. If your prime cost is consistently above this range, it might help to look at ways to streamline labour or optimise food costs. A lower prime cost means more money is left over for profit, but going too low could risk quality or impact the customer experience. Striking the right balance is key to long-term success.
7 - Percentage of a strategic category
The title of this one is a little wordy, but percentage of a strategic category is a KPI that helps you to understand how much certain items are contributing to your total sales. You might decide to monitor high-margin items like cocktails, signature dishes, or seasonal specials - anything you consider a priority for your business.
Tracking this KPI helps you understand how well your top performers are doing and where you might want to focus your marketing efforts, or where you might be able to boost profits by making changes to your menu.
Calculation
To find the percentage of a strategic category, take the total sales from your chosen category and divide it by your total restaurant sales, then multiply by 100.
percentage of strategic category = category sales/ total sales × 100
How to track it
Choose a strategic category - like drinks, a bestselling dish, or even a daily special - and keep a record of its sales over time. By tracking this number, you’ll see if your strategic items are contributing as expected, or if there’s room to increase their visibility or appeal.
What it tells you
A strong performance in a strategic category means these items are resonating with customers, which can have a real impact on your overall revenue. If sales are lower than expected, it may be worth revisiting your marketing approach, tweaking recipes, or considering promotions to give these items more attention. Keeping track of your strategic categories helps you stay flexible, allowing you to adjust based on what your customers are really enjoying.
How can I track my restaurant KPIs?
Tracking your KPIs doesn’t have to be complicated, especially when you’re just getting started. For smaller or newer restaurants, a simple spreadsheet might be all you need. By manually entering data like food costs, sales, and inventory, you can still keep a close eye on the essential metrics without needing specialised software. To help you with this, we’ve created a free downloadable template, so you have an easy way to start tracking your KPIs straight away.
Using a manual approach also lets you get hands-on with your numbers, which can be valuable for understanding each KPI in depth. Just remember to be consistent by regularly updating your spreadsheets; it can be easy to forget about when you’re busy with other tasks, and then it can become a huge job to catch up. And don’t forget that tracking KPIs isn’t just the process of recording your numbers, you need to actually do something with them. So, make sure you’re reviewing any trends that show up, and optimising where possible.
It can be helpful to set some time aside each week or month to review each KPI, see how it’s changed, and look for opportunities to make the relevant improvements in your restaurant.
When should you think about introducing software?
As your restaurant grows and operations become more complex, manually tracking KPIs can start to feel like a full-time job. At that stage, you may want to consider using a software solution like a hospitality purchase to pay system. The right system will be able to track data from sales, inventory, and staffing records in real-time, giving you instant insights without having to manually input the data. This makes it easier to spot trends quickly, and frees up your time to actually take action based on what your KPIs are telling you.
Whether you’re sticking with a spreadsheet for now, or looking ahead to a tech-based solution, keeping KPIs front and centre can make a real difference in guiding your restaurant to success.
Ready to make your KPIs count?
In this article, we’ve taken a close look at the key KPIs every restaurant should track, from cost of goods sold to prime cost. We’ve showed you how to calculate them, and what they tell you about your restaurant’s performance. If you’re ready to get started, download our free KPI tracking template now, to help you stay organised and focused.
If you’re ready to take KPI tracking to the next level, Access Procure Wizard offers powerful tools to streamline your data management. With real-time reporting and automated processes, Procure Wizard gives you complete visibility over your inventory, costs, and supplier relationships. By cutting down on admin time and giving you accurate, up-to-date insights, our purchase-to-pay system lets you respond quickly to what your KPIs are telling you. That means more time to focus on running your restaurant and finding new ways to boost profitability.
To find out more about how we can make tracking your KPIs easier, check out our video on the flash reporting feature, or get in touch to speak to our friendly team.