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Restaurant Analytics to Increase Profits

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Restaurant analytics
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Are you using restaurant analytics? Your restaurant group generates valuable data every day in the normal course of operations. There’s sales and customer data, labor performance data, and even data telling you how much food you waste.  But merely gathering the data offers little value. It’s what you do with the data to improve the way your business operates on a day-to-day basis and over the long term that makes it invaluable.

Analyzing your restaurant data to get a detailed look at your profitability, food costs, and labor costs can drive strategic decisions and improve your bottom line.

What is the process of restaurant analytics?

Restaurant analytics is the process of dissecting and evaluating your restaurant data to develop actionable insights to improve your restaurant group’s overall financial and operational performance.

Restaurant analytics studies more than just financial metrics and KPIs but digs deeper into such labor performance details as revenue generated by server, customers served per labor hour, labor actual vs. scheduled and food-related studies such as menu item profitability and popularity, item pricing across locations, actual vs. theoretical food cost, and more.

How is restaurant reporting different from restaurant analytics?

Many operators equate restaurant reporting with restaurant analytics. Although the two terms are similar, they are not interchangeable. While restaurant reporting refers to your numbers, restaurant analytics, on the other hand, provide actionable insights.

Restaurant reporting may be a profit and loss statement that shows an overview of your financial health over a specific period. Restaurant reporting may go as far as comparing your profit margin between specific periods or analyzing labor hours between a three-month period this year and that same three-month period last year.

Restaurant analytics go much deeper than restaurant reporting. Analytics may combine different sources of data or offer a dynamic view on various data segments. Analytics go beyond the “what” of your numbers. Analytics create insights into business operations and provide explanations for performance, giving you the why and how of those numbers so you can plan for the future.

Why you should use restaurant analytics

Your restaurant sales data holds the keys to how successful your restaurant group can be, if you use this business intelligence to drive your decisions. Interpreting the data and applying it to your operations can give your restaurant group a competitive advantage.

Restaurant revenue analysis from your restaurant financial reporting software can optimize your financial health and add to your bottom line. Similarly, analyzing your operations data and making critical business decisions regarding labor and inventory can improve operational efficiency.

The importance of POS integration in restaurant data collection

POS integration is a connection between your restaurant accounting and operations platform POS software. This integration enables your operations platform to get detailed data directly from your POS in real time.

Detailed POS data integrated with your restaurant accounting and operations drives important insights in sales reporting, labor details, recipe costing, menu engineering, and advanced business analytics.

While some platforms may offer POS customizations, they can be costly and time consuming. True POS integration is completely compatible, with POS as one part of an entire cloud-based accounting and operations platform.

How to use restaurant data analytics to improve operations

Improving operations and running your restaurant locations more efficiently is one of the main reasons you want to incorporate data analytics into driving your operational strategy. Here are some of the benefits of analyzing restaurant data to improve operational efficiency.

Reduce Food Loss

Accurate restaurant inventory management is the key to reducing food waste, and inventory is informed by your restaurant data. With POS integration, you can automate tracking your theoretical inventory based on sales. You must also count your inventory by hand, accounting for what is lost in spoilage or waste.

By understanding the variance between your actual versus theoretical (AvT) food usage, you can make adjustments where there are anomalies in your inventory usage, implementing training or changing order quantities as needed.

Improve Margins on Menu Items

Analytics can help you make decisions about your menu. By using analytics with sales data pulled from your POS system, menu engineering can help you identify your hottest selling menu items. You can also break down your menu by category to determine what types of menu items are popular (appetizers, desserts, etc.). Once you know your menu’s top performers, you can highlight customer favorites in your marketing campaigns and encourage your staff to selectively sell.

Analytics can also identify the quantitative relationship between popularity and profitability for individual menu items. Knowing both your top-selling items and those with the highest profit margin can help you make informed decisions about which items to promote.

Menu engineering data helps you identify underperforming items to drive decisions on price adjustments, recipe adjustments, menu placement or description, or whether an item should be dropped from the menu.

Optimize Labor

You most likely track metrics such as total labor cost and labor cost as a percentage of sales, but there are other labor data that can provide even more helpful detail about your labor spend.

Other key labor data that are critical for optimizing your labor costs include sales per labor hour (SPLH), which plots your labor hours alongside your sales. Customers served per labor hour is another useful data point to track. This exact metric may shift by day part or day of the week but having a SPLH (or customers served) goal can help you recognize scheduling issues of over and under staffing, maximizing how you are spending your labor hours.

Labor productivity analysis by week takes a weekly look at the SPLH and customers served per labor hour metrics, and can be an important marker of labor productivity, allowing you to see what day parts or shifts are the most productive. You can also compare productivity across locations to determine which locations might need more attention or training.

Employee vs. guest count indicates the number of staff members that are working, compared to the customers served, during a specific period, filtered by location. Combined with your sales forecasting, this report can be essential for your store-level scheduling. Examining the labor peaks of previous weeks enables your managers to create more precise schedules.

Like the AvT food cost report, your labor actual vs. scheduled analysis compares your scheduled labor cost, in theory, versus your actual labor spend, for a specific period, indicating your labor variance. You can drill down into details attached to the data points, such as job titles, date, and employee name to dig deeper into the cause of the variance.

Optimize Restaurant Scheduling with Restaurant Analytics

By accessing average sales data from your POS and projecting that data forward over time, you can forecast your labor needs. Your restaurant operations reporting software can show your restaurant’s busiest and slowest periods for specific windows of time, broken down by hour, day part, day of the week, or season. Your labor analytics help you adjust your staffing to match these peak or slow periods. By using analytics to help meet your average labor spend goal, you can run at the optimum despite sales fluctuations. Effective scheduling depends on analyzing your labor data and scheduling your employees accordingly.

Forecast Sales Revenue

Forecasting is one of the most powerful analytics tools for your restaurant group’s profitability as it helps you staff and order inventory at appropriate levels. Restaurant forecasting monitors past sales to identify trends, enabling you to leverage that information to predict future sales. This restaurant revenue analysis provides information for you to adjust costs as needed and create strategies to meet your long-term business goals. By analyzing historical data about sales, you can plan inventory and make smart decisions about labor hour allocation.

Identify Least and Most Profitable Locations

If you own or operate multiple restaurant locations, accurate analytics are essential for getting the full scope of your business. Conducting restaurant analytics across all your locations gives you to access to metrics that objectively pinpoint both your high-performing and low-performing locations. Beyond identifying what may be causing the underperformance at some stores, you can also dig deeper into the data of your best performing stores to see what they do well. Having a thorough understanding of all your stores, you can use your insights to bring all your locations up to speed.

Use restaurant analytics dashboards

If you’re using an advanced restaurant management solution that provides both financial and operational reporting, with restaurant KPI dashboards, labor dashboards, operations dashboards, you can get a visual representation of your operational and financial performance on a single page. Dashboards allow you to compare the performance of all your locations in one simplified dashboard.

Restaurant analytics dashboards allow you to access all your business intelligence – financials, food costs, sales, and labor numbers – in an easy-to-read format. This   empowers you to effortlessly analyze your restaurant performance and apply it toward strategic decisions that reduce costs and increase profits.


Using restaurant analytics can help you get a detailed look at your profitability, while helping to drive strategic decisions regarding operations to improve your bottom line. Analyzing the vast amounts of data that your restaurant business generates is key to operating a more efficient and profitable business.

If you would like to easily track data and gain insight into your operations, consider a comprehensive, restaurant-specific management solution that includes restaurant analytics. Restaurant365 incorporates accounting, inventory, scheduling, operations, and payroll +HR. It is an all-in-one, cloud-based, restaurant-specific platform that is integrated with your POS system, vendors, and bank. For more information, schedule a free demo.