[00:00:00] When it comes to growing revenue in your restaurant, there are two paths we can take and we have to exhaust both of them. On the one side, on the operations side, we have to maximize each cover that's in our dining room, understand all our revenue streams and maximize those revenue streams. Then from a marketing perspective, we gotta get people in the front door, we have to increase the frequency of visits, and we gotta make sure that everyone is telling everybody they know about us so that we can get more butts in seats. That's it. Maximizing the people you have in the room, maximizing all your various revenue streams and getting more people through.
[00:00:32] That's it. So what are the metrics that matter? That's what we're going to talk about today on Restaurant Strategy.
[00:00:38] There's an old saying that goes something like this. You'll only find three kinds of people in the world. Those who see, those who will never see, and those who can see when shown. This is Restaurant Strategy, a podcast with answers for anyone who's looking.
[00:01:03] Foreign.
[00:01:09] Thanks for tuning in. My name is Chip Close. This is the Restaurant Strategy Podcast. Two episodes every week, all meant to help you level up to increase the profitability of your restaurant. So I give talks all over the country. I wrote a book. It's called the Restaurant Marketing Mindset. I host a Mastermind group. The P3 mastermind is geared towards independent owners and operators who are looking to grow. They're looking to solidify profitability, make more so that they can work less or expand their empire. If you want to learn more about any of the stuff I do, the links are all in the show notes. But mostly my big request for you is that if you are out there struggling with profitability, let's start the year off on the right foot. Set up a call to chat with me or someone from my team. There is no pressure. Would you get to ask each other a bunch of questions and see if it's a good fit? Restaurantstrategypodcast.com it's the best way to grab time on the calendar and let's see if it makes sense for us to work together again. RestaurantStrategyPodcast.com Schedule running Restaurant means juggling a lot. Staffing, inventory, customer service and finances. Sales tax has to be done and while no one plans to miss a deadline or miscalculate a payment, mistakes happen. When those happen, they can lead to penalties, fines, and, yeah, added stress. That's why there's Davo by Avalara. Davo integrates with your point of sale system and automatically sets aside sales tax daily, giving you a clear view of your actual cash flow. Then, when it's time to file, Davo files and pays your sales tax on time in full, guaranteed. No more last minute scrambles or costly mistakes. Just seamless automation.
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[email protected] RestaurantStrategy. I will add in here. This fits in perfectly with what we're about to talk about again, davosalestax.com restaurantstrategy and yes, that link is in the show notes.
[00:03:17] Okay, so today we're talking about revenue growth. And what I really want to say is that the only growth metrics that matter are the ones we're going to talk about here. Because there's lots of other things you can measure and there's lots of other things you can manage. But revenue growth, there's only very, very brief ways that we can do it, right? When it comes to growing revenue, right? We can sell more of our thing, we can sell our thing for more money, or we can sell a variety of different things. And in the restaurant industry, that means we can get more butts in the seats, right? We can increase our prices or increase check average, or we can sell a bunch of different day parts or a bunch of different products, meaning lunch, dinner, catering, private dining. Those are all different products. But that's it. We could sell more of the thing, we can sell the thing for more money, or we can sell a variety of different things. That's it. And when we talk about growth, revenue growth specifically, we want to talk about the metrics that matter. We got to split this up. Like I said at the beginning, on the one side is operations, on the other side is marketing. So let's start talking about the operation side. The things you have to measure are cover counts. How many people do you have walking in your front door and sitting down for lunch, sitting down for dinner? That's the first one you have to measure. The second one is PPA per person average. Or if you're in a quick service, if you're in a quick service environment, you're looking at check average, about how much goes, how much is one person worth to you when they walk in the front door? How much is one order worth to you? Those two together are really valuable covers and ppa. So when you look and to arrive at these numbers, you look at the total revenue generated over the course of a given night, you divide that by the number of covers who came in for dinner and that gives you your ppa. You have to know your breakfast ppa, your lunch ppa, your dinner ppa. I want to know my weekday dinner versus my weekend dinner. I want to know about how much I can count on people spending. Because then if I look and I see, oh, I got 162 covers, I should be able to triangulate how much revenue I think I'm gonna generate. That is the best way to understand if you are growing, are you doing less covers but at a higher ppa? So revenue is static or going up a little bit. That's been the name of the game the last two years. Or our covers up, but PPA is down, which means you get people coming in, but they're just, you know, tightening their belt a little bit, holding onto their money. That's also been happening the last year and a half, two years.
[00:05:44] Understanding your cover counts, right, that in order to grow revenues, it's a good idea to grow cover counts. And then in order to grow revenue, we gotta maximize the spend of each person there. That's PPA per person average. Or again, in a quick service, fast, casual environment, we call that check average. You also need to understand your servers by ppa. I wanna know, right? Not all servers are created equal. If you get 10 servers on staff, you got three Rockstars, three Duds and four in the middle. That's pretty much how most restaurants work. It works on a bell curve. So I wan know, right, the average, let's say the average is $55, but our best server is generating $72 per person and the lowest performer might be generating $42. So it averages out at 55, let's say. But we do have some top performers. That's really important because I want my top performers waiting on more covers. I want my top performers on the big nights. I want my top performers closing so that they get a as many covers as possible.
[00:06:46] Likewise, on the bottom side, I want to know who's underperforming and I want to limit their exposure to guests because I know the guests that sit with my top performer are worth more to me than guests who sit with the low performer. Also, more importantly than all of that is that I want to know what the top performers are doing so I can teach that to the low performers. And likewise, I want the low performers to know when they're underperforming. And I want to point to people who are doing what I want Them to.
[00:07:16] So you gotta know your cover counts. You have to know your per person average and you have to know your servers by ppa. You have to know your first, second, third, fourth, all the way down to the bottom of the list. So you have to know they're not all created equal. Some of them are more valuable to me and some of them should be more valuable to you. I think you need to understand all your different revenue streams as well. This is a metric understanding. Okay, I've got breakfast, I've got lunch, I've got dinner, I've got the private dining room, I have off site catering and I have retail products, let's say merchandise and cookbooks.
[00:07:47] You have to understand how much revenue each of those revenue streams, each of those different products brings into the top line.
[00:07:56] That will tell you a lot about where you can grow. For example, right, you know, lunch is, lunch is maxed out, dinner is maxed out on the weekends, but we've got room on the weekdays.
[00:08:08] We've got one cookbook and you know, we generate, you know, I don't know, half a percent of our sales from, from merchandise, from retail items. Maybe it's an opportunity to come up with a sauce, a jarred something, a pantry box, a better cookbook, a line of chocolates. There's so many things, there's so many examples out there of things you could sell to the people who were already in the dining room, which, guess what, incidentally, also helps increase ppa. So I've done that at various restaurants. There are restaurants that have a retail component. There are restaurants I've worked at that offer chocolates, that offer cookbooks, things like that.
[00:08:44] Understanding the different revenue streams you have available and the percentage of sales for each revenue stream that will show you what's maxed out and what can still grow.
[00:08:54] Then finally, and this is really crucial, revenue growth year over year, right? Understanding revenue covers ppa, all of that, understanding the growth, targeting a certain amount of growth, and then understanding where you are in relation to where you were last year, that ends up being really crucial. And not just saying, oh, a flat, we want to grow by 5%, but understanding what you can grow by and what you're going to do to increase the total overall revenue. Those are the metrics on the operations side.
[00:09:27] Now on the marketing side, the number one metric, and I asked, I've asked a lot of people, I've sat in on lectures and panels and everybody who's really smart, certainly way smarter than me, the metric that everyone says we should measure are subscribers to the email list Net new subscriber Net Subscriber Growth so how many email addresses do you add to your list every single month? Or if you're in a fast, casual, quick service, maybe it's phone numbers to your list.
[00:10:00] Number one way to be able to remarket to people to stay top of mind to invite them back to convince them to try you out again is right. You gotta get their phone number, you gotta get their email address. Just like when you're at the bar and you buy somebody a you don't buy them a drink and then they walk over to their friends, you buy them a drink for a little bit of conversation. Hopefully you get the phone number so you can call them later. See, you can do this again sometime. Net Subscriber growth is the number one at least in the year 2025. Going into 2026 it is the most important metric to track when it comes to growth on the marketing side.
[00:10:31] Google Search Ads cpc right? Understanding this metric, the cost per click. Number one, the first dollars you should be spending are on Google Search ads. Hard stop. There is no debate. The first dollars you spend are on Google Search ads. Just run Google search ads. Don't let them talk you into anything else. While it might be nice, you don't need it. You are a brick and mortar restaurant. You need to appear in search and you need to appear on maps. That is Google search ads and you have to understand CPC cost per click. You got to get up below a dollar. Kudos to you if you can get it below 50 cents. That's when you scale up. You start at $5 per day and then you scale it from there. When you see it's coming in at $0.32 $0.47 $0.27 CPC.
[00:11:13] The next one I really want to try and understand is how many of my tables are first time diners. So if I've got 35 tables on the reservation book, I bet you half of them at least have at least one person at the table who is a first time diner. You'd be amazed. It's like 40% of your nightly reservation list. It's their first time there. I want to know who those people are so I can target them and track the next metric which is second time visits. Now if you've been listening for a while, you know that I love a good old fashioned bounce back especially for first timers. So many ways you can do it. You can give a free appetizer next time, free round of drinks, $10 off, you know, free tour of the kitchen, whatever it is. You give a business card, there's a million ways to do it. Talked about it a lot, certainly something we spent a lot of time talking about in the P3 mastermind. But if you identify the first timers, then you can do something to invite them back. So I want to know first timers and I want to know the repeat visits. How many of those cards, poker chips, business cards, how many of the bounce backs come back, meaning how much of my marketing is actually working? If you're giving those out and if you're giving something out to first time diners to get them back. Right. If you're giving them out to every first time diner, then you should be able to come up with a reliable percentage of return visits. The last one on the marketing side that I want to talk about is your Google rating and the number of new reviews you get every single month. You should be getting somewhere between 30 and 50 new reviews every single month. And if you're not, and I'm guessing out here, you're going, ooh, we don't. We get like nine or 10.
[00:12:41] You're just not putting enough into it. There's a playbook that I have to do it. I've certainly talked about it on the show. Happy to talk to you about it as well. We talk about it a lot in the P3 mastermind. It's a lot of the work we do there. But understanding your Google rating, you got to be 4.4 or higher. And the number of new reviews every month you should be getting between 30 and 50. And that's it. When we talk about growth metrics, the only ones that matter are those on the operation side. It's covers per person average, your servers by ppa, the different revenue streams you have, and the percentage of sales. So almost like a pie chart. And then revenue growth year over year. And on the marketing side, it's net new subscribers, meaning how many subscribers are added to the email list, your cost per click on Google search ads. Your ideal is getting it below 50 cents. The number of first time diners you have every night, the number of second time visits you have every night, and then your Google rating and the number of new reviews you get every month. And that's it. That's what I want to talk about. Short and sweet episode. I hope that helps. Again, if you want to learn more about the P3 mastermind, if profitability is something you struggle with, meaning you're not making what you feel like you should make from your restaurant, just reach out, set up a call there is no pressure. We bring about a dozen new people into the program every single month. That happens consistently. It's happened consistently for the last, I don't know, three and a half, four years. So it doesn't have to be you. But my question to you is, why not you?
[00:14:01] We have so many different ways to grow this community, and you're definitely part of that. So if you struggle with profitability, set up a call. RestaurantStrategyPodcast.com Schedule I look forward to chatting with you. Thank you very much for making time to be here. I know there's a lot of great podcasts you can listen to. I appreciate you making this one part of your week. Thank you very much. I will see you guys next time.
