Many factors affect Quick Service Restaurants’ (QSR) profitability and operators have to juggle a lot of different, sometimes competing, dynamics to maximise their bottom line. Some of the key ones are the menu, pricing, promotions and the familiar problem of staffing. They all merge together into a melting pot of ingredients that determine the success (or failure) of a restaurant.
So, how do you sift through the noise and get to the key indicators that tell you if you’re on track for a good year, or getting dangerously close to the twilight zone of unsustainable profitability? The key point is to start tracking the most important statistics as soon as possible, so you can start forming an idea of how you’re doing.
Business management guru, Peter Drucker makes this point: “If you can’t measure it, you can’t improve it.” If you can’t track how your business is performing and understand the results, you’re not able to get better at it. This applies to any business – not just QSRs. However, it’s particularly true for fast casual dining, as the margins are slim and the competition is super-hot.
Here are three key statistics which will help you get a handle on how your QSR is performing and let you benchmark yourself against others in your industry.
Item value: This is the price of each item on a menu; the profit margin varies according to what type of restaurant you’re operating. The margin for QSRs is usually lower than, say, a fine dining venue. Profitable restaurants keep the margin on food within 28 to 35 percent of gross income – QSRs are generally on the lower end of this scale.
Cover value: In the restaurant industry, the term ‘cover’ refers to a customer who eats or a meal that is served. This differs from the term ‘table’ in that it represents only one of the meals served at that table. It differs from a ‘dish’ in that it includes the extras that a diner orders such as drinks or desserts. When projecting sales business owners find they achieve a greater degree of accuracy by basing their calculations on average cover value rather than the expected number of tables.
A restaurant cover is a more valuable sales unit, as it includes additional items such as drinks and desserts, than if a diner simply orders an individual entree. Restaurants often use upselling techniques to increase the value of covers.
Table turns / cover turnover: The faster a restaurant turns over its covers, the more diners it serves and the more money it makes. In order to reap the maximum profit from the process of turning over covers, service should be smooth and efficient. If a restaurant has effective systems and service has a steady, relaxing rhythm, then covers will turn over smoothly without diners feeling rushed.
Balancing these three metrics is essential for maximising profitability in the QSR industry. A business owner aims to maximise the average item value, which in turn pushes up the average cover value. If they can increase table turns, this results in maximum profit.
However, in the highly competitive QSR sector, this is easier said than done, so venues need every advantage they can get to improve these metrics as well as provide a pleasant dining experience for customers so they keep coming back. Fortunately, technology provides an answer.
Food and beverage software solutions company TabSquare offers a cutting-edge self-orderding technology solution that deals with many of the challenges faced by the QSR industry. It gives a real-time measurement of these key metrics and is proven to lift the performance of each.
TabSquare offers a solution that extends POS and payment systems to provide a more engaging and satisfying dining experience. Analytics and insights are presented in an easy-to-understand dashboard that tracks the interaction of all products, including item placement.
Using artificial intelligence (AI), Tabsquare helps drive restaurants’ profitability by creating seamless operations, saving labour costs, boosting average cover value and speeding up table turns. Their solution is compatible with POS platforms and it works with existing payment systems to give F&B chains, bars, bistros, cafés, and full-service restaurants an edge in their highly competitive market.
TabSquare uses artificial intelligence (AI) engine, nicknamed Aiden, to power its solutions. Aiden combines data from previous customer visits with deep learning algorithms to identify customers and analyse their dining patterns and preferences. This helps any venue get a better understanding of a guest’s behaviour and offer a more satisfying, personalised meal recommendation. This enriched dining experience helps boost venue profitability.
This AI-driven technology is recognised as the future of dining, particularly for time-poor and information-hungry Millennials, who expect higher standards than ever of the venues they patronise. They want a quick and easy experience, together with all the detail at their fingertips so they can make an informed decision.
TabSquare’s solution takes care of the customer-facing aspects of QSRs and also provides operators with the insights they need to lift average item and cover value, and speed up table turns. They offer this through an iPad restaurant ordering system, a self ordering kiosk system, as well as an online ordering system.
If you want to provide a seamless dining experience and keep your customers coming back, join other F&B businesses that are seeing significant benefits from the latest that technology has to offer. Download our case study to find out how.