What are the three most important performance metrics?
Accounting profits are nice, but for budding restaurateurs, cash flow–which tracks the actual dollars moving in and out the door–is more critical. “If you don’t keep an eye on [cash flow], you realize later you’re in a hole and you can’t recover,” says Chris Yeo, owner of Straits Restaurants in San Francisco. Cash flow should be monitored monthly–even weekly–rather than quarterly, like net income. That’s because most restaurants are very cash-intensive, forking over money for fresh inventory and tipping out servers and other staff on a daily basis. Good restaurants also constantly tweak their menu choices, and tracking those effects requires constant vigilance. Another important measure: the percentage of repeat customers. The National Restaurant Association estimates that three-quarters of most restaurants’ sales come from repeat customers. The most successful restaurants aim to get at least 60% of their customers to visit their restaurant once a week, says Louie Psallidas, senior
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- What are the three most important performance metrics?
