Optimization is an important part of building a profitable business in the restaurant industry. When your operations are working efficiently, it’s easier to reduce waste and maximize productivity.

Restaurant analytics play a critical role in this process — by collecting data about each aspect of the business, you can establish a baseline understanding of current operations. From there, you can identify areas for improvement, measure results of optimization activities, and monitor ongoing performance.

Sound like something that could benefit your business? Let’s look at how you can use restaurant data analytics to boost your bottom line and improve the customer experience.

What are restaurant analytics, and how do you use them?

Restaurant analytics are data points created by gathering and analyzing information about your business. Each metric assigns a numerical value to a specific process so you can assess the restaurant operation objectively and track performance over time.

Many restaurants use data analytics to measure performance and find ways to improve. If you notice it’s taking longer on average to prepare each meal, for example, you might decide to improve staff training, develop a more efficient kitchen workflow, or replace older equipment. 

Then, you can monitor the average prep time to see if your changes had the desired impact. Used effectively over time, restaurant analytics can help you make informed decisions that cut costs, increase profits, and improve the dining experience for delivery and in-house customers.

Why should you use restaurant analytics?

The restaurant industry is always changing, and successful restaurant owners adapt quickly. Data analytics can help you do so — they override perceptions and provide an objective framework for informed decision-making. Hard data helps you identify the actions and menu items that maximize profits; it also makes it easy to spot inefficiencies in your workflow. With that information, you can strategically streamline restaurant operations, reduce waste, and boost returns.

Used effectively, data analytics can also help restaurant owners identify technology trends and changes in customer preferences. That makes it easier to capitalize on new innovations and stay ahead of the competition. If your restaurant analytics indicate an increase in takeout, for example, you could enhance the customer experience by investing in self-order kiosks.

Ways to use restaurant analytics to increase your revenue

Before you can use restaurant analytics to boost your business, you’ll need to decide which information to track. To start, select the key performance indicators (KPIs) that are most relevant to your operation. Then, calculate each metric based on your current data to establish a baseline. Your restaurant POS system may have built-in restaurant analytics software that can access sales and customer data and generate KPIs for you.

From there, examine current KPIs to identify ways to bring in more revenue. Look for areas that aren’t performing well and take steps to correct the problem. Check data analytics regularly to see if your efforts are working.

Over the long term, continuous monitoring can help you:

• Spot areas for improvement
• Identify operational issues before they impact revenue
• Jump on new opportunities

What does this process look like in practice? Let’s review popular restaurant KPIs and how you can use them to increase sales and profits.

1. Profit margin

Your restaurant profit margin is the percentage of your revenue that’s left over after you pay for expenses. This is the main KPI you should use to determine if you’re earning enough money to support sustainable growth. It also helps you determine the profitability of individual menu items.

If your profit margins are low, it’s an indication that you need to make changes. Bring in more profit by switching to cheaper ingredients, reducing serving sizes, or increasing menu prices.

2. Delivery speed

This key piece of restaurant data shows how quickly your delivery drivers get food from the restaurant to customers’ locations. Ideally, it should be as low as safely possible; that way, the food stays hot and guests stay happy.

This KPI has an indirect relationship to sales; it impacts customer satisfaction, which in turn affects repeat business, word-of-mouth advertising, and online reviews. Reducing delivery times can boost satisfaction and encourage customers to order more. Try choosing different routes, optimizing the kitchen for delivery, or partnering with a third-party delivery service.

3. Average order value

Your restaurant’s average order value is a key metric in any restaurant data analytics strategy — it tells you how much customers are spending on a normal meal. When the value increases, you bring in more revenue.

Boost this number by offering add-on items, such as appetizers, desserts, or drinks; it can do wonders for your bottom line. Discounts can also increase sales by helping diners overcome price hesitation and encouraging customers to treat themselves. Offer lower-priced add-ons and free or discounted delivery fees.

4. Customer review scores

Track your average review score to get a sense of how customers perceive your restaurant business. If the score drops, it indicates that guests are unhappy with one or more aspects of your service.

Because review scores are visible to the public, they can have a dramatic impact on sales. To raise your score and give customers the confidence to order from your restaurant, examine negative feedback to find opportunities for improvement. If multiple customers complain about customer service, you might need to invest in additional staff training. If they’re unhappy with the quality of delivered foods, look into new to-go containers. Make sure to track the scores going forward to see if your adjustments result in better reviews and higher revenue.

5. Order accuracy

A high order accuracy rate means customers usually get exactly what they ordered. This is critical — even small errors, such as forgetting to remove mayo or add onions, can negatively impact your brand and sales.

To improve this KPI, consider implementing new quality checks, adding more comprehensive staff training, or hiring more employees per shift. As you roll out the changes, your data analytics should reflect the results.

6. Average orders per shift and day

Monitoring trends in order volume gives you an enormous amount of data to work with. Tracking how it varies by shift, day, week, and month can help you increase profits by:

• Adjusting staffing to meet demand. If the restaurant data indicates you’re busiest on Wednesday and Friday evenings, for example, consider scheduling more servers; on slow Tuesday mornings, you might cut costs by going with a skeleton crew. 
• Manage inventory effectively. When you can anticipate the average order volume for a given period, you can order just the right amount of food. This reduces waste, which leads to a bump in profits. You can also use analytics to improve restaurant inventory management.
• Choose incentives. This KPI helps you determine the best times to add incentives to increase sales during slow periods. You could add promotions during off-peak orders, offer in-house specials, or reduce delivery minimums.

7. Food cost percentage

This data analytics metric expresses your ingredient costs as a percentage of the revenue those ingredients produce. A high percentage usually means your food costs are eating into your profit margins.

When you see an increase in this KPI, it’s important to take action. Some ways to reduce food cost percentage and increase profits include adjusting inventory, negotiating better deals with suppliers, or revisiting your menu pricing.

8. Customer support requests

Tracking the number of online support tickets, phone calls, or in-person requests can help you gauge the overall performance of your restaurant. If a restaurant guest contacts customer support, it almost always indicates a problem — one that might lead to a drop in sales if uncorrected. 

When this KPI increases, it’s a sign that something is going wrong in the business. Prevent it from eroding your profit by digging into the customer feedback to identify and address the cause.

9. Social media engagement

About 37% of customers use social media platforms to get information about restaurants. Measure the effectiveness of your social media presence and restaurant marketing efforts by tracking metrics such as likes, comments, follows, and profile link clicks. To improve these KPIs and drive more business, you can post more frequently, experiment with different content, and ensure your profiles are complete.

10. Ad conversion rate

This metric tells you how many ad viewers convert into paying customers. It’s an essential KPI for determining the ROI of digital restaurant marketing campaigns.

If data analytics show low conversions, it means your ad spend isn’t bringing in enough revenue. Boost the conversion rate by targeting a different audience segment or investing in a different platform. Alternatively, adjust the ad copy or artwork.

Get more restaurant insights with Grubhub

As a restaurant owner, you have a great deal of data at your disposal. Restaurant analytics help you put that information to use to improve the business, serve customers efficiently, and boost profitability.

Need more restaurant data from your delivery operations? Switch to Grubhub — the Customer Insights dashboard collects and analyzes delivery, order, and customer data automatically, so you can check KPIs, including sales, average daily orders, and more at a glance. You can even segment that information to monitor restaurant analytics performance by date and customer type. To try it out, partner with Grubhub today.