How You Can Use Data to Improve Your Restaurant’s Sales & Efficiency
There’s the saying that you should always be working on your business, and not in it. That means that if you are spending all your time cooking, you aren’t spending time improving your restaurant. You can't focus on front-of-house service or ensuring your labour scheduling was efficient. You don’t have time.
But, if you are spread too thin the next best thing is to use your restaurant data to make small meaningful changes. Use that data to explore what you’re doing well, and double down on those efforts. Find out what’s not performing well, and make changes.
Often, as a restaurant owner, you’re looking at lagging performance indicators, like sales numbers and bank account balance. But the right information can help you make changes long before your numbers turn red.
You want to always be working on your business, even when you have to work in it too.
Gather the Right Information
Before you can dig through your business’s data and start making changes, you need to start collecting it. And there’s lots to collect.
Every interaction with your customers is a source of data. If your customers place an order, and your team enters the order into your POS, information gets collected. When a customer orders through your online ordering site, mobile app, or in-store kiosk, that same data is sent to your POS.
But, not all channels are equal. If you accept orders through third-party delivery services, you won't receive customer information. You'll only receive the order itself, the order time, and payment. Read why third-party delivery information isn't collected in this article.
Your inventory, sales, and scheduling information are important too, so make sure it is connected as well.
How to Slice & Dice the Data
The key is being able to access and use that data. The more data from more places you have connected the more insights you can glean. But, it needs to be integrated together. To best understand the data you’ve collected, you need to be able to connect different interactions to the same entity.
For instance, say Joe comes in every week. He orders in-person on Wednesday and then orders online the following Wednesday. Can you trace both of those orders back to Joe in your system? If so, you know that Joe orders every Wednesday.
If you use a mobile app, loyalty program, or email marketing, then that’s useful information. You can use it to market to Joe. You can send Joe a reminder push notification to order dinner if he hasn’t ordered his regular by a certain time. Or, you can offer him a coupon to order on a Monday night, encouraging him to order more often.
You also need a clear view of each channel. You want to be able to see if order frequency is higher, or order sizes are larger in one channel than another. If online order sizes are larger than in-person orders, it might be an indicator that your staff needs more training.
How to Use Your Data to Improve Your Restaurant Operations
Data by itself doesn't do anything. A large database of numbers won’t solve all your restaurant's problems. But, it does hold the answers to your questions.
The key to making the most of your restaurant data is to ask the right questions. Below are a few examples of areas you can ask questions about your data, and get actionable answers.
Example #1: Designing Your Menu
Do you know which menu items are the most profitable in your restaurant? How many pepperoni pizzas do you need to sell to make a profit? What’s the most profitable drink on your menu? What side should you be featuring during the upselling process?
Calculate the profitability of each menu item, and then compare revenue numbers. That's how you find your most profitable menu item. Read more about calculating the profitability and food costs in this article by Toast.
Once you know your most profitable menu item, you can feature it on your menus, online ordering site, and kiosk. You can tell staff to suggest it, and run competitions to see which staff member sells the most of it.
Example #2: Marketing Spend
Many businesses have a hard time spending money on marketing because they don’t know how to do it effectively. Marketing is often a series of experiments, with some campaigns working well, and others falling flat.
The right data can take some of the risks out of your marketing plan.
By determining which order channel is the most profitable, you can decide where your marketing efforts should be focused. If most of your orders through your app are more profitable, then you should promote your app more heavily than your online ordering site.
You can also use this information to target your messaging. You can create segments of your customers that have (things) in common. For instance, if you have 100 customers that only ever order a single coffee, you can create a segment of people that order coffee. Then, send push notifications with promotions to those customers. Use your mobile ordering app and give them a discount on a muffin, or a croissant. That will encourage them to order food with their next coffee, increasing the order size.
Example # 3: Labour & Scheduling
Do you know, empirically, when your restaurant is the busiest? Which times of day, days of the week, months or seasons? If you are working in your restaurant, then you have a general idea, but having a definitive answer can help you with your scheduling.
If you know that your lunch rush ends at around 2:03 pm each day, then you know you need to keep staff on until 2:15 pm. And, combined with information on when, on average, your dinner rush starts, you know when to schedule shifts. This cuts down on your labour costs when sales are low but also ensures you’re adequately staffed during the rush.
If you find that you aren’t able to cut staff, you can use that information to try and bring in more customers at the right times. If you’re overwhelmed from 5 pm to 7 pm, but slow from 8 pm to 9 pm, you can run a happy hour promotion to bring people in.
Benchmark Your Restaurant to Better Understand How Well You Are Performing
Another use for your restaurant data is to compare yourself to your market, competition, industry and yourself. How well are you doing in comparison to the restaurants in your city, or state? Are you performing better or worse than you were last year?
Benchmark Against Your Industry
In comparison to other restaurants with business models like your own, how successful are you? What are other businesses doing well that you can copy? How profitable is your business in comparison to those around you?
Benchmarking your metrics against other restaurants allows you to see how well you are doing in each area. But, it’s not easy getting competitor information to use for comparison.
If you have a large corporate competitor, often they will have quarterly investor updates that are publicly available. For instance, if you have a local coffee chain, using Starbucks to benchmark yourself against makes sense. It’s a large company with regular financial updates where they detail the performance metrics that they, as a company, track. You can use those metrics to measure your own success.
You can also measure yourself against industry benchmark lists. Often, businesses use benchmarks released by local business groups, governments, and industry associations. Check with your local associations to find out if they offer industry information for you to use.
Benchmark Against Yourself
You should also be benchmarking your restaurant historically. Look at the metrics that you track, and compare them to performance a year ago, a month ago, and a week ago. Going as far back as a year removes seasonality from your sales numbers, and allows you to look at macros trends in your performance. Comparisons to the week or month before permit you to watch for changes or red flags.
Metrics to Track in Your Restaurant
Ready to start making changes, but not sure what metrics you should be looking at? Below is a list of metrics to get you started.
- New vs. Repeat Customer percentages
- Week over week repeat customer frequencies
- Yelp review ratings
- Your mobile ordering app review ratings on the App Store & Google Play
- Top-performing location for revenue
- Top-performing location for profitability
- Average order size
- Top-performing order channel (online orders, in-person orders, mobile app orders, third-party delivery orders)
- Table turnover rate
- Food cost percentage
- Menu item profitability
- Average sales per location/day of the week/daypart
The right information will improve your business’s efficiency. Small incremental improvements over time will ensure your business’s success.
Written by Amin Yazdani