Food Cost Percentage (FCP)
Description: FCP measures the cost of ingredients used in preparing menu items, and it's a critical KPI for all restaurant operators. This metric helps you ensure that your menu items are priced correctly and that your food costs remain under control.
Formula: (Total cost of ingredients used in a given period / Total revenue in the same period) x 100%
Example: If you own a fast-food brand called "BurgerHub," and you sell $10,000 worth of burgers in a month and the total cost of ingredients used in making those burgers is $3,000, then your FCP is 30%.
Gross Profit Margin (GPM)
Description: GPM indicates the amount of revenue that remains after deducting the cost of goods sold (COGS). A higher GPM is better because it shows that your business is generating more profit per dollar of revenue.
Formula: (Total revenue - COGS) / Total revenue x 100%
Example: If you own a pizza brand called "PizzaMia," and you generate $50,000 in revenue in a month, and your COGS for that period is $15,000, then your GPM is 70%.
Labor Cost Percentage (LCP)
Description: LCP measures the cost of labor required to operate your business. This metric helps you ensure that your labor costs are under control and that you are maximizing your labor efficiency.
Formula: (Total labor costs in a given period / Total revenue in the same period) x 100%
Example: If you own a sushi brand called "SushiKo," and you pay your employees $5,000 in wages in a month, and you generate $25,000 in revenue in the same month, then your LCP is 20%.
Customer Acquisition Cost (CAC)
Description: CAC measures the amount of money you spend to acquire a new customer. This metric helps you understand the effectiveness of your marketing and advertising efforts.
Formula: Total marketing and advertising costs / Number of new customers acquired
Example: If you own a coffee brand called "BeanBuzz," and you spend $10,000 on marketing and advertising in a month and acquire 500 new customers in the same month, then your CAC is $20.
Average Order Value (AOV)
Description: AOV measures the average amount of money that customers spend on each order. This metric helps you identify opportunities to increase revenue by encouraging customers to spend more.
Formula: Total revenue generated in a given period / Number of orders in the same period
Example: If you own a sandwich brand called "Sammy's," and you generate $20,000 in revenue from 1,000 orders in a month, then your AOV is $20.
Inventory Turnover Ratio (ITR)
Description: ITR measures how quickly you sell your inventory and restock it. A higher ITR indicates that you are managing your inventory efficiently.
Formula: Cost of goods sold / Average inventory value
Example: If you own a burger brand called "BurgerBarn," and your COGS is $12,000, and your average inventory value is $3,000 in a month, then your ITR is 4.
Sales per Square Foot (SPSF)
Description: SPSF measures how much revenue you generate per square foot of your restaurant space. This metric helps you evaluate the efficiency of your space utilization.
Formula: Total revenue generated in a given period / Total square footage of your restaurant
Example: If you own a Mexican food brand called "TacoLoco," and you generate $50,000 in revenue in a month, and your restaurant space is 2,000 square feet, then your SPSF is $25.
Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA)
Description: EBITDA is a financial metric that indicates the profitability of your business before accounting for interest, taxes, depreciation, and amortization. It is a key metric that investors and lenders use to evaluate the financial health of a business.
Formula: Net income + Interest + Taxes + Depreciation + Amortization
Example: If you own a dessert brand called "SweetTreats," and your net income is $20,000, and your interest, taxes, depreciation, and amortisation expenses are $10,000, then your EBITDA is $30,000.