Boost Your Chinese Restaurant's Success with These 7 Must-Track KPIs

As a seasoned entrepreneur, I've launched countless ventures in the food industry. And let me tell you - there's nothing more satisfying than seeing your Chinese restaurant thrive. But how do you know if your business is truly thriving? By tracking the right key performance indicators (KPIs).

• Average order value - this crucial KPI measures how much each customer spends on average. It's a quick way to identify which menu items are most popular (and profitable!)
• Repeat customer rate - loyal customers are the lifeblood of any business, and this KPI keeps track of how many customers return for multiple visits.
• Table turnover rate - in an industry where time is money, it's essential to know how quickly your tables are turning over. This KPI will help you identify any bottlenecks in your operation.

There are many other KPIs that are critical to the success of your Chinese restaurant, from online ordering rate to employee turnover rate. In this article, we'll take a closer look at the top seven KPIs you need to track and calculate in order to stay ahead of the competition.

Ready to take your Chinese restaurant to the next level? Let's dive in!

Average Order Value

As a restaurant owner, one of the most important metrics that you should keep an eye on is the average order value (AOV). This metric refers to the average amount of money that a customer spends each time they dine in your restaurant, order takeout, or use your delivery service.

Definition

The average order value is a metric that allows you to gain insights into the spending habits of your customers. By tracking this metric, you can identify trends, spot potential problems, and make data-driven decisions to improve your restaurant's profitability.

Use Case

For example, let's say that you notice a decline in your average order value. This could be an indicator that customers are finding your prices too high or that they are not satisfied with the food quality. By taking corrective action, such as introducing a new menu item, running promotions, or improving food quality, you can increase the average order value and boost your revenue.

How To Calculate KPI

Calculating the average order value is relatively straightforward. Simply divide the total revenue by the number of orders:

Calculation Example

Let's assume that your restaurant generated $10,000 in revenue from 500 orders during a specific period. To calculate the average order value, use the following formula:

This means that the average amount spent by a customer per order is $20.

KPI Advantages

• The average order value is a simple and easy-to-calculate metric that provides valuable insights into your business's financial health.
• Tracking the average order value can help you increase revenue by making informed decisions about pricing, menu items, and promotions.
• By improving the average order value, you can increase profitability and grow your business.

KPI Disadvantages

• The average order value does not take into account the number of people in a party. For example, if a family of four spends $80 on a meal, the average order value would be $20, even though the actual spend per person was $20.
• The average order value may be affected by external factors such as seasonal changes, competition, or economic conditions.
• The metric does not reflect customer satisfaction or loyalty, which may also impact profitability in the long run.

KPI Industry Benchmarks

The average order value can vary widely depending on the restaurant's type, location, cuisine, and target audience. However, here are some industry benchmarks to provide you with a general idea:

• Fast food restaurants: $5-$7
• Casual dining restaurants: $15-$20
• Fine dining restaurants: $50-$100+
• Delivery services: $25-$35

Repeat customer rate

One of the most significant key performance indicators (KPIs) for Chinese restaurants is the repeat customer rate. This represents the percentage of customers who come back to the restaurant after their first visit.

Definition

The repeat customer rate KPI measures the percentage of customers who come back and dine at the restaurant more than once.

Use Case

The repeat customer rate is an essential metric for measuring customer loyalty. It indicates how satisfied customers are with the restaurant’s food, service, and overall experience. A high repeat customer rate suggests that customers enjoy the restaurant’s offerings and are likely to recommend it to others.

How To Calculate KPI

The formula for calculating the repeat customer rate is:

Calculation Example

Suppose a Chinese restaurant had 500 customers in a month, and 100 of those customers returned to the restaurant the following month. The restaurant’s repeat customer rate would be:

KPI Advantages

• Measures customer loyalty and satisfaction.
• Indicates the restaurant's overall popularity and success rate.

KPI Disadvantages

• Does not account for new customers who have yet to make a return visit.
• May not be as useful for newer restaurants with a limited customer base.

KPI Industry Benchmarks

The average repeat customer rate for Chinese restaurants is approximately 20%. However, top-performing restaurants can have rates as high as 50%.

Online Ordering Rate

In today's digital world, online ordering has become an important part of the restaurant industry. Online ordering rate is the percentage of all orders that are placed through the restaurant's website or mobile app. Tracking and analyzing this KPI can help you determine the effectiveness of your online ordering system and identify areas for improvement.

Definition

The online ordering rate is the percentage of all orders that are placed online through the restaurant's website or mobile app.

Use Case

The online ordering rate KPI can help you determine the effectiveness of your online ordering system and identify areas for improvement. For example, if the online ordering rate is low, you can analyze your website or app's checkout process and identify if there are any areas that need improvement to make the process more user-friendly.

How to Calculate KPI

The formula for calculating the online ordering rate KPI is:

For example, if your restaurant received 200 orders in a day, and 50 of them were placed online, then the online ordering rate would be:

Calculation Example

Let's take another example where a restaurant receives 300 orders in a week and out of them, 120 orders are received online, then the online ordering rate for that week would be:

KPI Advantages

• Helps restaurant owners determine the effectiveness of their online ordering system.
• Identifies areas for improvement in the online ordering process.
• Allows benchmarking against industry standards and competition.

KPI Disadvantages

• Does not account for in-store or phone orders.
• May not be applicable to restaurants with no online ordering system in place.

KPI Industry Benchmarks

According to industry benchmarks, the average online ordering rate for restaurants is around 30-40%. However, this may vary based on the restaurant's location, size, and cuisine.

Table Turnover Rate

As a restaurant owner, keeping track of your business's performance is crucial to ensuring its success. One way to do this is by monitoring your Key Performance Indicators (KPIs). One important KPI to measure is the Table Turnover Rate, which can help you determine how efficiently your restaurant is serving customers and maximizing your revenue.

Definition:

The Table Turnover Rate is a KPI that measures how quickly tables are being filled and emptied in your restaurant. It is calculated by dividing the number of tables turned over in a given time period by the total number of tables available in your restaurant.

Use Case:

Tracking the Table Turnover Rate can help you identify potential bottlenecks in your restaurant's service flow, and make adjustments to improve efficiency. You can also use it to evaluate the effectiveness of your marketing and promotions by comparing the Table Turnover Rate before and after a campaign.

How To Calculate KPI:

To calculate the Table Turnover Rate, you will need to know the number of tables turned over in a given time period and the total number of tables available in your restaurant. You can use the following formula:

Calculation Example:

Let's say your restaurant has 20 tables, and during a lunch period, 15 tables are turned over. Using the formula above, we can calculate your Table Turnover Rate as follows:

This means that during the lunch period, your restaurant turned over 75% of its available tables.

KPI Advantages:

• Helps you evaluate the efficiency of your restaurant's service flow
• Allows you to identify bottlenecks and make adjustments to improve efficiency
• Enables you to evaluate the effectiveness of marketing and promotional campaigns on table turnover rates
• Provides an insight into how competition performs

KPI Disadvantages:

• The Table Turnover Rate does not take into account the quality of service, satisfaction and speed of order delivery
• The metric could send mixed signals if combined with a marketing campaign as newcomers might slow down table turnover rates: some KPI metrics need each other to draw meaningful conclusions

KPI Industry Benchmarks:

• On average, full-service restaurants have a Table Turnover Rate between 50% and 85%, depending on the size of the establishment and time of the day
• Fast-casual restaurants often have Table Turnover Rates over 100%, where the average dining experience lasts up to 30 minutes.

Food quality satisfaction rate

As the food industry continues to boom, Chinese restaurants must measure customer satisfaction. One of the Key Performance Indicators (KPIs) used to track customer satisfaction is the 'Food quality satisfaction rate' KPI. Here's everything you need to know about it:

Definition

• Food quality satisfaction rate is a KPI used to measure customer satisfaction with the quality of the food served at a Chinese restaurant. This KPI measures how satisfied customers are with the taste, appearance, and consistency of the food they order.

Use Case

• Restaurants use this KPI to identify food quality issues and make improvements to enhance customer satisfaction, which can increase customer loyalty, retention, and revenue.

How To Calculate KPI

• To calculate food quality satisfaction rate, divide the number of customers who are satisfied with the quality of their food by the total number of customers who have ordered food.
Food quality satisfaction rate = (Number of satisfied customers / Total number of customers) x 100%

Calculation Example

• If a Chinese restaurant had 200 customers in a month and 160 customers said they were happy with the quality of their food, the calculation would be:
Food quality satisfaction rate = (160 / 200) x 100% = 80%

KPI Advantages

• Food quality satisfaction rate is a simple metric to calculate that can provide valuable insight into whether customers are satisfied with the quality of food served at a restaurant.

KPI Disadvantages

• There are some limitations to using food quality satisfaction rate as a KPI, such as customers' subjective opinions of food quality and the potential for inconsistent feedback across different customers.

KPI Industry Benchmarks

• The ideal value for food quality satisfaction rate KPI should be around 90% according to industry benchmarks.

Customer Acquisition Cost (CAC)

As a restaurant owner, you're probably wondering what metrics you can use to measure your success. One of the most important KPIs (Key Performance Indicators) is Customer Acquisition Cost (CAC).

Definition

CAC measures the cost of acquiring one customer. It includes various expenses related to marketing, advertising, and sales efforts to bring in new customers.

Use Case

Having a low CAC means your restaurant can attract customers at a lower cost, ultimately leading to higher profitability. By calculating this KPI, restaurant owners can identify which campaigns lead to more customer acquisition. A low CAC can help justify increasing the marketing budget.

How to Calculate KPI

Calculation Example

Let's assume a restaurant spent $1000 on marketing, advertising, and sales in a particular month, and it acquired 10 new customers during that same period:

The restaurant's CAC for that month is $100.

KPI Advantages

• Helps identify which campaigns lead to more customer acquisition.
• Allows restaurants to allocate resources efficiently by cutting unnecessary expenses.
• Measures the effectiveness of marketing strategies and helps adjust the marketing plan accordingly.

KPI Disadvantages

• Can be time-consuming and challenging to calculate because it involves tracking expenses and customers.
• The accuracy depends on the quality of data collected regarding expenses and customer acquisition.
• Does not measure customer loyalty or long-term customer value.

KPI Industry Benchmarks

Industry benchmarks may vary depending on the type of restaurant, geographic location, and target market. However, according to a study by the National Restaurant Association, the average marketing and advertising expense for full-service restaurants was 3.6% of sales in 2019.

Employee turnover rate

As a serial entrepreneur with experience in running different businesses, I have found that tracking Key Performance Indicators (KPIs) is essential to their success. Employee turnover rate is one of the most critical KPIs to track for any Chinese restaurant. In this chapter, we will explore this KPI in detail.

Definition

The employee turnover rate is a KPI that measures the number of employees who leave your Chinese restaurant over a specific period, usually one year. The rate can be presented as a percentage of the total number of employees.

Use Case

The employee turnover rate is crucial for Chinese restaurants because high staff turnover can be a sign of underlying problems such as poor management, low job satisfaction, and high staff stress levels. This KPI helps you identify areas where you need to improve and implement retention strategies to keep your best employees.

How To Calculate KPI

To calculate the employee turnover rate, you will need to gather data on the number of employees who left your restaurant over a specific period (N) and the total number of employees you had at the beginning of that period (T). The employee turnover rate is calculated using the following formula:

Calculation Example

Suppose you had 40 employees at your Chinese restaurant at the beginning of the year, and ten employees left during the year. The employee turnover rate would be:

KPI Advantages

• It helps to identify problems within your Chinese restaurant that may be causing high employee turnover.
• It allows you to implement targeted strategies to retain your best employees.
• It provides feedback on the effectiveness of your staff retention strategies.

KPI Disadvantages

• The employee turnover rate alone does not provide insights into the underlying reasons why employees are leaving.
• It may not be effective for Chinese restaurants with a small number of employees.

KPI Industry Benchmarks

The industry benchmark for the employee turnover rate in the foodservice sector is around 75%. However, it is essential to compare your Chinese restaurant's rate with your previous performance and your competitors' rates.