From overhead and labor costs to daily sales and profit margins, there are many restaurant numbers to keep track of — so many, in fact, that it can be difficult to determine what they are, what they mean, and how to act on them.
To help, we’ve pulled together the top 13 key restaurant metrics to use to gauge how your restaurant is performing. Once you know what’s working and what’s not, you can make informed business decisions to help maximize your restaurant profits and meet the needs of your customers and staff.
These baseline numbers will help you calculate more advanced restaurant metrics.
Your total sales are your on-premise, delivery, and pickup sales combined. Find your delivery and pickup sales in the Merchant Portal, and add them to your on-premise sales. Or, with a point of sale (POS) integration, you can see all of your sales together in one place.
Total Sales = On-premise Sales + Delivery Sales + Pickup Sales
Cost of Goods Sold (CoGS)
Cost of Goods Sold is essentially how much every item on your menu costs to create. The first step to determining your CoGS is keeping track of your inventory on a monthly business. You’ll calculate CoGS using the value of your inventory at the beginning of the month, the value at the end, and any inventory purchases made during the month.
Cost of Goods Sold = Beginning Inventory + Purchased Inventory - Final Inventory
Labor Cost and Labor Cost Percentage
Labor costs include salaried labor, hourly wages and other employee-related expenses like workers’ compensation, benefits, taxes, and insurance. You can calculate labor cost percentage by looking at labor as a percentage of sales or as a percentage of total operating costs.
Labor = Salaried Labor + Hourly Wages + Employee-related Expenses
Labor Cost Percentage (as a Percent of Sales) = [Labor Costs / Total Sales] x 100
Labor Cost Percentage (as a Percent of Costs) = [Labor Costs / Total Operating Costs] x 100
Fixed costs are costs that generally don’t change from month to month, like rent, mortgage, salaries, loan payments, license fees, or insurance premiums.
Variable costs like food, hourly wages, and utilities are more likely to fluctuate from month to month, though after a while they become easier to predict depending on season or time of year.
Key Restaurant Metrics
Use the basics to calculate these metrics and start to gauge the health of your business.
Prime cost is the amount of money it takes to run your business on a daily basis. Find it by adding together your labor costs and your cost of goods sold. Typically about 60% of total sales, prime cost is a helpful metric to keep track of because it involves costs within your control (unlike rent).
Prime Cost = Labor + COGS
Gross Profit Margin
Your gross profit is your total sales minus your COGS and labor cost. Your gross profit margin is a percentage that helps you determine how efficiently you’re managing your operations and sales. The higher your gross profit margin, the better. If your gross profit margin is a little low, it may be an indication that sales are lower, efficiency could be improved, or your pricing model needs some tweaking.
Gross Profit Margin = [(Total Sales - CoGs - Labor)/Total Sales] x 100
Net Profit Margin
When people talk about profit margins, they’re usually talking about net profit margins. Your net profit is your total sales minus all costs: COGS, labor, and all other fixed and variable expenses. Your net profit margin tells you exactly what percentage of your total revenue is profit. For restaurants, net profit margins range from 0-15%, with most restaurants falling in the 3-5% range.
Net Profit Margin = [(Total Sales - CoGs - Labor)/Total Sales] x 100
You can also use our free Profit Margin Calculator to estimate your profit margin on off-premise vs. on-premise sales.
Food Cost Percentage
Your food cost percentage is the difference between how much an item costs to make and how much you are selling it for. Although this percentage will vary based on the item, this metric can help you identify which items are the most profitable. Once you know that, you can use the Merchant Portal to prominently feature those items on your DoorDash menu.
In addition to figuring out the food cost percentage for individual items, you can also calculate the overall food cost percentage for your entire menu, which is typically somewhere between 28 and 35%.
Food Cost Percentage = Item Cost / Selling Price
A useful metric for new and established restaurants, your break even point is how much food you have to sell each month to break even and start turning a profit.
Break Even Point = Total Fixed Costs ÷ ( (Total Sales - Total Variable Costs) / Total Sales)
More Important Restaurant Data
Looking to dig deeper? There are many other important pieces of data that can help you make informed decisions about your business. Plus, some good news: we compile them for you in the new Insights Hub of the Merchant Portal (in other words, no math required).
Menu Performance & Popular Items
Use the Menu Performance tab in the Insights Hub to access product mix reporting, so you can find out which items on your menu are most popular and which are bringing in the most sales (they might be different items). Bonus: You can then calculate the item’s food cost percentage based on your data on inventory costs and see if there’s room for improvement.
Data isn’t all numbers. Use the Customer Feedback tab in the Insights Hub to see what your customers are saying about your restaurant. You can even reply to reviews with pre-written templates and use targeted promotions to increase customer satisfaction and loyalty.
What’s working and what could be better? The Operations Quality tab in the Insights Hub shows you how you’re performing against operational metrics that play a large role in customer satisfaction, including: cancellations, Dasher wait time, customer ratings, order accuracy and downtime.
If you’re not already, sign up with DoorDash today to expand your customer base, increase sales, and keep track of important metrics. If you’re already using a POS platform like Toast or Square, that’s great — you can integrate your POS with DoorDash to track on-premise and off-premise metrics side-by-side. Finally, don’t forget to log in to the Merchant Portal to track menu performance, operations, and customer experience.