Labor as a % of Revenue

With some restaurants reporting record levels of hourly staff turnover, it’s clear that loyal employees are a scarce commodity. In 2020, U.S. unemployment is at 3.5%, and minimum wages higher than the federally required $7.25 per hour have been legislated in 30 states. For restaurants, quality workers are more difficult to find and retain and are more expensive. Add in the high cost of turnover, and it’s clear why restaurants must reduce costs across the employee lifecycle. Read more.

  • > 36%
  • 30%
  • 27%
  • < 24%
60% of restaurant meals are now consumed off premises Read about more trends here. (Source: NetSuite Blogs)
"Americans spend just over half — 51% — of their food dollars in restaurants, doubling the 1955 spend.” "

Prime Cost

Operational efficiency is key to reduce prime cost. What are some ways to be more economical?

  • > 75%
  • 63%
  • 58%
  • < 54%

Net Promoter Score

Your Net Promoter Score comes down to a simple question: “How likely are you to recommend this restaurant to a friend or colleague?” By surveying guests and tracking NPS scores on a monthly and rolling basis you can spot problems quickly while tracking growth and improvements over time. Using NPS versus tracking social media, review sites or other sources of guest feedback allows for a standardized, industry-recognized metric.

  • 21
  • 43
  • 50>
  • 72
Foundational
Competitive
Best in class
Transformative

Revenue
Growth

< 0%

4.4%

8.6%

> 13%

Revenue
Growth

Revenue growth (for example, quarterly) is an increase in a company’s sales compared with a previous quarter’s revenue performance. The current quarter’s sales figure can be compared on a year-over-year basis to show growth with seasonality considered or sequentially to show the effects of recent menu or marketing changes.

Cost of Goods
Sold (COGS)

> 39%

33%

31%

< 29%

Cost of Goods
Sold (COGS)

Direct cost of goods sold as a % of net sales. Typically in restaurants this is the expense for supplies used to create items for sale. Examples are food, paper goods and beverages.

Days in
Inventory

> 31 days

14 days

10 days

< 7 days

Days in
Inventory

The average time in days that a restaurant takes to turn its inventory into sales; the figure represents how many days a restaurant’s current stock of inventory will last.

Labor as a % of
Revenue

> 36%

30%

27%

< 24%

Labor as a % of
Revenue

Labor costs, or fully burdened labor costs, includes management salaries, hourly employee wages, benefits, payroll taxes, workers’ compensation, health/medical insurance and other employee expenses.

Prime Cost

> 75%

63%

58%

< 54%

Prime Cost

Prime cost is the total cost of sales plus total labor costs. Cost of sales is the combined cost of food and beverage stock and possibly paper products. May also include cost of merchandise sold. Cost of sales should be based on purchases plus the value of the inventory on hand at the beginning of the reporting period minus the value of the inventory at the end of the period.

Net Promoter Score

< 21

43

50

> 72

Net Promoter
Score

The NPS is an index ranging from -100 to 100 that measures the willingness of guests to recommend your products or services to others. It is used as a proxy for gauging overall satisfaction and the customer’s loyalty to the brand. It serves as an alternative to traditional guest satisfaction research and may correlate with revenue growth.

Percentage of
Free Cash Flow

< 0%

1.8%

3.6%

> 5.4%

Percentage of
Free Cash Flow

Free cash flow is the cash a company produces through its operations, less operating and capital expenditures. Free cash flow shows how efficient a company is at generating cash. Investors use free cash flow to measure whether a company might have enough free cash to pay investors through dividends and share buybacks.

Parameters

Foundational

Your business may just be beginning to track this metric, perform this business function or identified this as a problem. Improved execution in this area should be a high priority.

Competitive

Your business is competitive in this area, but there’s still room for advancement. Consider investments to improve related operations to achieve better results.

Best in Class

Your performance in this area is considered best in class and is superior to the average company in your sector. You’ve laid a solid foundation in this business function, and the next step is optimization.

Transformative

You’re achieving the optimal results for this metric. Your business processes in this area are highly efficient and stand out against competitors. Keep investing in this area to maintain these results.