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Restaurant Financial Benchmarks
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Flashcards
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Prime Cost
Purpose: To measure the combined cost of sales and labor. Industry Standard Values: Typically 60%-65% of total sales for a profitable restaurant.
Food Cost Percentage
Purpose: To assess the cost of ingredients against sales. Industry Standard Values: Generally ranges between 28%-32% of food sales.
Labor Cost Percentage
Purpose: To understand the proportion of labor costs to total sales. Industry Standard Values: Aims to be less than 30% of sales.
Rent to Sales Ratio
Purpose: To determine the affordability of a location based on sales. Industry Standard Values: Ideally, it should be under 6% of total sales.
Average Revenue per Seat
Purpose: To calculate the revenue generated per seat over a given period. Industry Standard Values: Varies greatly depending on restaurant type and location.
Gross Profit Margin
Purpose: To understand the profitability before operating expenses. Industry Standard Values: A strong gross profit margin is above 70% for most restaurants.
Break-Even Point
Purpose: To identify the amount of sales needed to cover total costs. Industry Standard Values: Specific to each restaurant; important for financial planning.
Table Turnover Rate
Purpose: To track the number of times a table is served over a period. Industry Standard Values: Dependent on restaurant concept; fast-casual restaurants aim for higher rates.
Beverage Cost Percentage
Purpose: To monitor the cost of beverages sold against beverage sales. Industry Standard Values: Typically between 18%-24% for liquor, 30%-40% for bottled beer, and 20%-30% for wine.
Net Profit Margin
Purpose: To determine the percentage of profit after all expenses. Industry Standard Values: Fine dining may range from 4%-6%, while fast food might be higher around 6%-9%.
Operating Margin
Purpose: To measure profitability from core business operations. Industry Standard Values: Ranges can vary widely with full-service restaurants aiming for around 15%-20%.
Pre-Tax Profit
Purpose: To show earnings before tax deductions. Industry Standard Values: Can be benchmarked against similar restaurants to assess performance.
Revenue Per Available Seat Hour (RevPASH)
Purpose: To evaluate the revenue effectiveness of restaurant space during operating hours. Industry Standard Values: Specific to restaurant type, location, and operating hours.
Cost of Labor to Revenue Ratio
Purpose: To gauge labor cost control relative to revenue. Industry Standard Values: A ratio below 30% of revenue is standard for well-operated restaurants.
Customer Satisfaction Score
Purpose: To quantify guest contentment and experience. Industry Standard Values: Can vary but high-performing establishments often aim for scores above 80% satisfaction.
Yield Rate
Purpose: To measure the actual amount of product used versus what was expected to be used. Industry Standard Values: Yield rates should be close to 100%, but will vary by ingredient due to waste and preparation loss.
Menu Item Profitability
Purpose: To determine individual menu item contributions to overall profit. Industry Standard Values: Focus is to have a well-balanced menu where items meet targeted profitability margins.
Employee Turnover Rate
Purpose: To track the rate at which staff leave and are replaced. Industry Standard Values: The restaurant industry average can be high; lower rates often indicate better workplace culture and management.
Employee Productivity
Purpose: To assess the efficiency of staff in generating revenue. Industry Standard Values: Specific to restaurant type and style, but high productivity is always sought after.
Online Review Scores
Purpose: To gauge the online reputation and guest perceptions. Industry Standard Values: A score of 4 or higher on major review platforms is generally considered good.
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