For many restaurant owners and managers, contemplating data about their restaurant is daunting, to say the least. If you aren’t particularly tech- or math-savvy, it could feel like learning a completely different language! But it’s more important than you think to understand and consistently evaluate your restaurant data.
Restaurant data helps guide your decisions, from the short-term weekly ordering to the long-term financial planning and investments. Using your restaurant data, you can also look for trends in revenue per shift, your ordering, the orders of your guests. It’s how you better understand your customer base and your employee’s 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 item. You should be able to see what is most popular with your customers at the moment and what hasn’t been quite as enticing. Then, look at how much profit you make on those popular items.
If an item is popular and highly profitable, that’s what the restaurant industry calls a star. Every restaurateur hopes to have several stars on your menu. Not only will you want to promote stars in your advertising, but those are the items you should encourage your servers to upsell during service.
If an item is popular but only makes you small or 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 they make you a high profit. There’s a chance you’ve simply priced the item too high that’s what’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, kids menu items or low sodium dishes that specific smaller demographics do 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 are actually using.
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. Turn to your vendor invoices and make sure you understand the true cost of each ingredient and how much of that ingredient 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 raised 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, that’s a sign that certain employees are going above and beyond. 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 ones 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 entice people in. Or maybe starting 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 be looking 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 at certain areas of the business, what’s causing you to lose to your competition? How do you adjust your choices to rise to the occasion?
On the other side of the coin, you might be doing better than the majority of your competitors. Look at what you’re doing differently. It could be your defining trait. That way, you can dive into where you’re excelling and see it as a real strength to your business.
If you’re having difficulty tracking how your competitors are really doing, it might be time to engage a pay-for-performance loyalty program like Rewards Network that provides that data automatically with its marketing.
Distance Traveled by Customers
Rewards Network’s analytics also include the distance between our member’s home and the location they dined at. Knowing how far your guests travel can be useful as you plan your future marketing efforts. This can help you identify certain markets outside your immediate area.
Ryan Dorchak of New Jersey’s Cloverfield Tavern explains, “Rewards Network helps expand our reach to out of town customers, because from our reports we know exactly where our customers are coming from. Whether we want to retarget those individuals based on that demographic or whether we want to reach beyond that area, we can 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 out 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, there are extenuating factors beyond this calculation you’ll have to keep an eye out for. For instance, ROAS only factors in revenue, 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 left could be very slim.
When deciding on your advertising campaigns, aim for advertising that encourages customers to spend more, not less. That’s one of the big incentives about Rewards Network — our members get more rewards the more money they spend at our participating restaurants, so they want to order 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 is showing numbers are down, even bad reviews can give you invaluable insight into what you need to fix.
And because Rewards Network’s member reviews are completely verified, you can have confidence that these are real customers who recently visited and sharing their feedback with you. Take advantage of that opportunity to learn what you’re doing well and what needs work. If the reviews consistently criticize your salads, that’s a sign you need to improve them. Look for trends in what your customers are saying and take advantage of that opportunity to learn what you’re doing well and what needs work.
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 more effectively improve your business, and data should help guide those very important decisions. At the end of the day, those informed choices are supposed to grow your business and make you more money.
So, don’t be scared of the data! It’s better for you to have that information laid out in front of you than make uneducated guesses about your business decisions. As Dorchak puts it, “Just like if you’re watching a sports game and you don’t know the score, then it’s not going to benefit you. But if you’re watching the score and you know where you’re at, you can make adjustments based on those numbers.”
When there’s reasoning behind your business development and choices, your staff is more confident in restaurant decisions and you’ll be more confident, too. And when you start implementing new changes based on the data, you still get to look at current restaurant data as you go to ensure you’re steering the ship where it needs to go.
Wonder where to start figuring out how you compare to the competition? Download our free worksheet “5 Numbers Every Restaurant Must Know About Its Competitors” today!
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