Revenue per customer in a restaurant

Now I am asked a lot of time how do you know what will work and will not work as a restaurant. How do you know what will be a place that makes money and will not. The true answer to that is I do not, and I do not think that anyone really does.  It comes down to  the welcome,  warmth, interest, confidence, personality, pace of service, training, knowledge, skills, value for money, perception  of the customer and their willingness of customer to recommend.

If you get all of that right then you will be half way there but there is one other toll that you can use and that is the plan how much you need to make. To maintain a level of service you need so many staff, a good waiting staff should be able to serve a twenty to thirty cover section in a restaurant all depending on the table break down and when they are coming in, same with a chef or bar person.  So by knowing this you can calculate what you need to do to make your establishment work.

Say that you are looking at a restaurant that has fixed yearly costs of £104,000 a year and a wage bill of £61,000 a year, your cost a year are £165,000. Your restaurant is a 60 cover restaurant and you open for 11 until 2 and 6 until 10 for dinner. The average dinning session is 1 hour per customer. Now you need to know what you your average prices, for a starter £3 a main £7 and a sweet £4 and two drinks £4 giving you an average spend of £18 per cover.  So with tree hour lunch service and 4v hours’ dinner service you could turn round one cover seven times in one day given your opening time.  So you could make £7,560 a day.

1 cover X 7 sitting 60 = 420 covers a day

 420 @£18 per person= £126 X 60= £7,560 a day.

Now if you know you’re running costs are £165,000 a year so divided that by 365 days a year and divide by 60 and you have £7.53. So you have the petechial to make £118.47 on every seat.

£165,000 cost / 365days a year / 60cover = £7.53

 But you will not get that, unless you are very lucky and if you did you would probably find that your fixed wag bill would be a lot more.  But that does not matter that is your target that is the maximum you could achieve. Let’s be realistic and say that you want to achieve 50% of this.

1 cover X 3.5 sitting 60 = 210 covers a day

210 covers @£18 per person= £63 X 60= £3,780 a day .

This would still be a good return, but the actual truth is what the restaurant is making a year and that is a very different picture.  The restaurant only made £170,000 last year. So now if you take £18 as the average spend then that means divide that by the revenue and then the number of cover you get a very different picture.

£170,000 revenue / £18 average menu price/ 356 days in the year = 25.8 covers a day

25.8 covers @£18 per person= £464.40 a day

So you actually are not doing as well as you expected in fact you are in fact if you look at the average covers to the full potential you are only trading at 6%

25.8 / 420 = 0.06

Evan if you look at the more realistic 210 covers a day you are still way behind what you should be trading at 12%.

25.8 / 210 = 0.12

So know you know where you are and the next thing is to sort out what you can do. Well that is look at what is really being spent per head, it might not be £18, and it might be more. Look at adjusting you   prices or how you sell things , break your menu down to drive a better gross profit on some items and help support others but you have to increase customer threw put to make it more profitable . But at least you know what to work out and where you can go.