For many restaurant owners and managers, analyzing data about their restaurant is daunting, to say the least. If you aren’t particularly tech- or math-savvy, it may feel like learning a completely different language. But it’s critically important to understand and consistently evaluate your restaurant data.
Restaurant data helps guide your decisions, from short-term things like weekly ordering to long-term financial planning and investments. Using your restaurant data, you can identify trends in revenue per shift, ordering, and guest checks. It’s how you better understand your customer base and your employees’ work output, ultimately driving more profit.
Data evaluation helps you identify not only the ongoing challenges of your restaurant, but also your opportunities. What’s working? What isn’t? And from there you can make smart choices for your business.
But what restaurant data points should you be checking? And what does that data actually mean for your business?
Point-of-sale (POS) Data
Using your POS system’s data tools, evaluate the volume of orders for each of your menu items. You should be able to see what is currently performing well with your customers and what hasn’t been quite as enticing. Then, look at how much profit you make on those items.
If an item is popular and highly profitable, that’s what the restaurant industry calls a star. As a restaurateur, you should strive to have several stars on your menu. You will want to promote stars in your advertising, and encourage your servers to upsell them during service.
If an item is popular but brings in little-to-no profit, that’s what’s called a plow horse. Lots of plow horses on your menu could mean you’re pricing your best sellers too low or your portions are way off.
Analyzing your POS data also allows you to see what’s really not working on your menu. Those items are called puzzles and dogs.
Puzzles are dishes that are tough for your servers to sell, but make you a good profit. There’s a chance they’re not selling because you’ve simply priced the item too high and that’s turning customers off. It could also be that you need to adjust the recipe to make it more appealing to your customers. But if you do change the recipe, make sure to recalculate the food cost in order to properly price the item.
Dogs are items that are not popular and do not make you much profit. You might want to take those off the menu entirely, but some dogs (for instance, kid’s menu items or low-sodium dishes that specific smaller demographics might order) may need to stay no matter what. Just de-emphasize them on the menu and make sure your product ordering reflects how much of those ingredients you actually use.
Once you’ve looked at your POS system data to compare item popularity to profit, it could be time to reevaluate your food cost for each menu item. Look at your vendor invoices and make sure you understand the true cost of each ingredient and how much of each you’re using for any one item (plus factoring in labor and overhead). This can help you decide which of your plow horses should have their prices increased to reflect the item’s true worth.
Employee Scheduling Data
When it comes to scheduling data, identify your peak revenue time and leverage that against who your best performers are. Do the numbers fluctuate based on who you have on your shift? Have you noticed faster table turns with certain people on certain shifts?
This doesn’t mean the only variable to these numbers is the employee; you also need to take into account which shifts are busier and if time of day changes the table turns. If dinner guests take more time to eat compared to lunch guests who have to go back to work, that has little to do with who is staffed when.
But if you’re seeing clear trends in these numbers over time and it follows the employee no matter what shift they’re in, it can be a sign that an employee is performing well, or needs training. You can check in with your managers to see if the numbers reflect what they see on the floor.
Revenue by Shift
Are there certain shifts that don’t do as well, no matter who is working them? Every restaurant will have peaks and valleys when it comes to shifts, but you should know which shifts are your best-sellers and which need improvement.
For instance, if your weekday lunch shifts underperform, you might want to offer a special weekday lunch menu (smaller portions with lower prices) to attract more diners. Or maybe start a happy hour drink special if your evening shifts slow down. Could expanding your breakfast menu drive more revenue?
Comparisons to Your Local Market
You should also look at the ratings and market data of the competition in your local market. From there you can identify areas of improvement for your own restaurant. If your competitors (especially ones with similar guest demographics) seem to be doing better in certain areas of the business, what’s causing you to lose to your competition? How do you adjust and rise to the occasion?
On the flip side, if you are outperforming the majority of your competitors, try to figure out what you’re doing differently. It could be your defining trait. That way, you can dive into the areas where you’re excelling and maximize your strengths.
If you’re having difficulty tracking how your competitors are really doing, it might be time to invest in a pay-for-performance loyalty program like Rewards Network that provides that kind of data in addition to marketing.
Distance Traveled by Customers
Knowing how far your guests travel can help identify potential diners outside your immediate area to target for future marketing.
Some loyalty marketing programs can provide data to help expand your reach to out-of-town customers. Rewards Network, for example, offers reports that tell you exactly where your customers are coming from. Whether you want to retarget those individuals based on that demographic or whether you want to reach beyond that area, data can help you do that.
You might decide you should be investing in billboard marketing for surrounding communities or on expressways that lead toward your restaurant. While local traffic may be heavily dependent on your building’s outdoor signage, people traveling from farther away will need additional help, which is where a strong online listing can come in as well.
Return on Ad Spend
Return on Ad Spend (ROAS) is a fairly simple calculation: the revenue of the ad campaign divided by the cost of the ad campaign multiplied by 100.
ROAS gives you a sense of how much a specific ad campaign benefited your business. From there, you can make decisions on future marketing campaigns, taking the most successful elements of your advertising and continuing them down the line.
But be warned, you’ll have to keep an eye on some other factors beyond this calculation. For instance, ROAS only takes revenue into account, not profit. So, if you severely discount a menu item as part of the ad campaign, you might have made more revenue, but the actual profit could be very slim.
When designing your campaigns, aim for advertising that encourages customers to spend more, not less. That’s one of the big incentives about Rewards Network — the more money our members spend at participating restaurants, the more rewards they earn, encouraging them to spend more.
Yes, customer feedback is qualitative restaurant data — not numbers, but subjective opinions. But this anecdotal evidence is still extremely useful for you as a restaurant owner.
After all, raw numbers can’t tell you how your customers felt during their dining experience, but a review provides you with deeper insights into what stands out about your business. It’s not just positive reviews that are important to you; if your data shows numbers are down, bad reviews might give you invaluable insight into what you need to fix.
With Rewards Network, member reviews are verified so you can have confidence that these are real customers who recently visited and are sharing their feedback with you. Take advantage of the opportunity to learn what you’re doing well and what areas might need some work. For example, if the reviews consistently criticize your salads, that’s a sign you need to improve them.
Making Decisions with Restaurant Data
Analyzing your restaurant data really comes down to understanding your opportunities as well as your challenges. You want to determine how to most effectively improve your business, and data can help guide those very important decisions.
When there’s reasoning and logic behind your business choices, your staff will feel more confident in your decisions — and you will too. And when you start implementing new changes based on recent data, make sure you continue to monitor new data to ensure that you’re steering the ship where it needs to go. At the end of the day, those informed choices can help grow your business and make you more money.
Want to know more about how data and numbers can help you better understand the health of your business? Download our free e-tool “10 Numbers for Restaurant Success” today!