The 5 Key Metrics Every Restaurant Manager Must Track

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9/15/20252 min read

1. Prime Cost

What it is: The sum of your two largest and most controllable expenses: Cost of Goods Sold (COGS) and Total Labor Costs. It is the single best indicator of a restaurant's operational efficiency.

  • Formula: Direct costs + direct labor cost = Prime Cost.

  • Target Benchmark: Successful restaurants typically aim to keep their Prime Cost under 55%-65% of total revenue.

  • Why it's key: If you control this number, you control your profitability. It forces you to look at the two largest "profit leaks" at once.

2. Food Cost Percentage (or Liquor/Beverage Cost Percentage)

What it is: The cost of the ingredients/inventory that go into a dish or drink, expressed as a percentage of the revenue generated from that item.

  • Formula: Cost of Food Sold / Total Food Sales x 100 = Food Cost Percentage.

  • Target Benchmark: Typically ranges from 28% to 35% for food, and often lower for liquor (e.g., 15%-22%).

  • Why it's key: This metric helps you set menu prices, identify waste (spoilage, over-portioning), and determine which items are actually profitable versus just popular.

3. Labor Cost Percentage

What it is: The total cost of all employee wages, payroll taxes, and benefits, expressed as a percentage of your total sales.

  • Formula: Total Labor Costs / Total Sales x 100.

  • Target Benchmark: Generally ranges from 25% to 35%, but this varies by service type (quick-service is often lower than fine dining).

  • Why it's key: It shows if you are over- or under-staffed for the volume of business you are doing. Monitoring this daily or weekly allows managers to adjust schedules proactively to match sales forecasts.

4. Revenue Per Available Seat Hour (RevPASH)

What it is: A metric that measures how effectively you are utilizing your physical space and time. It tells you the revenue generated for each seat, for every hour the restaurant is open.

  • Formula: Total Revenue / Available Seats x Opening Hours.

  • Why it's key: This is a crucial operational metric for maximizing profits during peak hours. If your RevPASH is low during your busiest times, it indicates a problem with table turn time (see below) or server efficiency.

5. Table Turn Time (or Table Turnover Rate)

What it is: The average time a party occupies a table, from seating to departure.

  • Formula : Total Parties Served / Number of Available Tables.

  • Why it's key: This directly impacts the maximum number of covers you can serve, particularly during the rush. A manager tracks this to streamline service, identify bottlenecks (slow kitchen, slow clearing, slow payment), and make sure they are maximizing the revenue potential of every seat.