Seven Important KPIs for the Boston Restaurant Franchise

Introduction

Discovering the right restaurant franchise KPI Metrics is essential for measuring the performance of any franchise business. KPIs (Key Performance Indicators) are meaningful indicators that allow you to track and measure the success of your franchise. By focusing on seven key metrics, you can gain key insights into the operational performance and overall health of your franchise network.

In this blog post, we’ll explore the seven KPIs important to the Boston restaurant franchise, how to track and calculate them, and the impact these metrics have on the franchise network as a whole.

The list of KPI measures to discuss are:

• Average Franchise Unit Setup Time
• Sales of franchise units
• By customer spend
• Average number of orders per franchise unit
• Cost of Goods Sold
• Customer retention rate
• Franchisee profits

Now, let’s dive in and learn how to track and calculate these seven KPIs.

Average Franchise Unit Setup Time

Definition

Average Franchise Unit Setup Time (AFUST) is a Key Performance Indicator (KPI) used to measure the time it takes to set up a new Franchise Unit. This metric is used to assess the efficiency and effectiveness of the franchise setup process and to identify areas for improvement.

Benefits of Tracking

Tracking the average time it takes to set up a new franchise unit provides valuable insight into the efficiency and effectiveness of the franchise setup process. It allows franchise owners to identify bottlenecks in the setup process and take corrective action to reduce setup time. Additionally, AFUST tracking helps franchise owners understand how their setup process compares to industry benchmarks, allowing them to stay competitive in a crowded marketplace.

Industry Benchmarks

The average setup time for a franchise unit varies by industry. Generally, the average setup time for a franchise unit is between 6 and 8 weeks. This includes time to acquire necessary permits, secure financing, hire and train staff, and perform other pre-opening tasks.

How to calculate

The formula for calculating focus is:

Calculation example

For example, if it takes a total of 6 weeks to set up 10 franchise units, the average franchise unit setup time would be:

Tips and tricks

• Develop a detailed plan to set up a franchise unit to ensure that all tasks are completed in a timely manner.
• Streamline the setup process by outsourcing certain tasks such as marketing and web design.
• Invest in technology such as cloud-based software to make the setup process more efficient.
• Provide training and support to franchisees to ensure they understand the setup process.

Sales of franchise units

Definition

Franchise unit sales are a key performance indicator (KPI) for restaurant franchises. It measures the total number of units sold by a franchisee during a specified period. This metric can be used to assess the performance of a particular franchise, as well as to compare the performance of different franchises.

Benefits of Tracking

Tracking franchise unit sales is beneficial for a number of reasons. It can provide valuable insight into the performance of a particular franchise, allowing you to identify areas for improvement. Additionally, it can provide insight into the success of a particular product or promotion, and can be used to compare the performance of different franchises.

Industry Benchmarks

The industry benchmark for franchise unit sales varies by franchise type and location. Generally speaking, a successful franchise should be able to achieve a unit sale rate of at least 10% of its total potential. This can vary based on location and other factors, so it’s important to research industry benchmarks for your specific situation.

How to calculate

Franchise unit sales can be calculated by dividing the total number of units sold by the total number of potential units (i.e. units available for sale). The formula for calculating franchise unit sales is as follows:

Calculation example

For example, let’s say a franchise sold 500 units in a given month, and there were 1000 potential units available for sale. The franchise unit sale rate would be 500/1000 = 0.5, or 50%.

Tips and tricks

• It is important to track franchise unit sales in order to measure the performance of a particular franchise.
• The industry benchmark for franchise unit sales varies by franchise type and location.
• Franchise unit sales can be calculated by dividing the total number of units sold by the total number of potential units.
• It is important to keep track of the total number of units sold, as well as the total number of potential units, in order to accurately calculate franchise unit sales.

By customer spend

Definition

According to Customer Spew (PCS) is a KPI that measures the average amount the customer spends when visiting a restaurant. It is used to determine the effectiveness of marketing campaigns, analyze customer spending habits, and measure customer loyalty.

Benefits of Tracking

Tracking by customer spending can provide valuable insight into the success of a restaurant franchise. By measuring PCs, restaurant owners can identify successful marketing campaigns, understand customer spending habits, and gauge customer loyalty. This data may be used to adjust prices, improve customer service and optimize marketing efforts.

Industry Benchmarks

Industry benchmarks for spend per customer vary by restaurant type and geographic location. Generally, a healthy PCS should be higher than the average spend per customer in the local market. This helps ensure that the restaurant is able to generate a positive return on investment.

How to calculate

The formula for calculating spend per customer is as follows:

Calculation example

For example, if a restaurant franchise had total sales of ,000 and served 200 customers, the expenses per customer would be .

Tips and Tricks for KPIs

• Regularly monitor PCs to ensure the restaurant is generating a positive return on investment.
• Track PCs over time to identify trends and understand customer spending habits.
• Conduct customer surveys to gauge customer loyalty and identify areas for improvement.
• Compare PCs to industry benchmarks to ensure the restaurant is performing above average.

Average number of orders per franchise unit

Definition

The average number of orders per franchise unit (ANOPF) is a key performance indicator (KPI) that measures the average number of orders placed by customers in each franchise unit. It reveals how many orders each franchise unit is able to generate and is a metric that helps franchisors understand how their franchisees are performing.

Benefits of Tracking

Tracking this KPI can help franchisors:

• Understand the performance of their franchisees.
• Identify areas of improvement for each franchise unit.
• Evaluate the effectiveness of marketing campaigns.
• Monitor customer satisfaction levels between franchise units.

Industry Benchmarks

The average number of orders per franchise unit varies from a different industries. For example, in the fast food industry, the average number of orders per franchise unit per day is around 200-250. In the retail industry, the average number of orders per franchise unit per day is around 50 to 100. It is important to compare the performance of each franchise unit to industry benchmarks to identify areas for improvement.

How to calculate

The formula to calculate the average number of orders per franchise unit (ANOPF) is:

Calculation example

Suppose a franchisor has 10 franchise units and a total of 1000 orders have been placed across all units in a month. To calculate the average number of orders per franchise unit, we can use the following formula:

This means that the average number of orders per franchise unit was 100 in the given month.

Tips and tricks

• Follow this KPI regularly to monitor the performance of each franchise unit.
• Compare the performance of each franchise unit against industry benchmarks to identify areas for improvement.
• Use this KPI to assess the effectiveness of marketing campaigns and identify the most successful ones.
• Monitor customer satisfaction levels across franchise units to ensure customers are getting the best experience.

Cost of Goods Sold

Definition

Cost of goods sold (COGS) is a metric used to measure the cost of items sold in a restaurant franchise. This metric is used to calculate the profit or loss of the franchise. It is the total cost of all the inventory that a restaurant franchise has purchased in order to maintain its operations and sales.

Benefits of Tracking

Tracking and monitoring COGs is important for restaurant franchises because it helps them better understand their operational and financial performance. Tracking COGs can help identify potential areas for improvement and opportunities for savings. Additionally, tracking COGs can help franchises identify their most profitable menu items and make adjustments to their menu accordingly.

Industry Benchmarks

The industry benchmark for COGs is typically between 20% and 30% of total sales. However, this percentage may vary depending on the type of restaurant and the cost of the ingredients. For example, a fast food restaurant may have a lower COGS percentage than a fine dining restaurant.

How to calculate

The formula for calculating COGs is:

Calculation example

For example, if a restaurant franchise has an opening inventory of ,000, purchases inventory for ,000, and has a closing inventory of ,000, then their COGs would be calculated as follows:

Tips and tricks

• It is important to track COGs over time to identify any trends or changes in costs. This can help identify possible areas of cost savings.
• COGs should also be tracked against total sales, to ensure that the franchise is not overspending on inventory.
• COGs must be closely monitored to ensure that the franchise is making a profit.

Customer retention rate

Definition

Customer retention rate is a KPI metric used in the restaurant franchise industry to measure and evaluate the number of customers who remain loyal to a business over a certain period of time. It is calculated as a percentage and is a valuable indicator of customer loyalty and satisfaction.

Benefits of Tracking

Tracking customer retention rates is an important part of measuring customer loyalty and satisfaction. It helps companies understand the success of their marketing and customer service efforts and can be used to identify areas for improvement. Plus, it can provide businesses with an accurate snapshot of their customer base, helping them better target and tailor their products and services.

Industry Benchmarks

The average customer retention rate for the restaurant franchise industry is around 70%. This rate varies depending on the type of restaurant, its customer demographic, and the quality of its customer service.

How to calculate

The customer retention rate is calculated as follows:

Calculation example

For example, if a restaurant franchise had 100 customers at the start of the period and gained 20 new customers while losing 10 customers during the period, its customer retention rate would be calculated as follows:

Tips and tricks

• It’s important to track customer retention rates over time, as it will help you identify trends and areas for improvement.
• Analyze customer retention rates by demographics to better target and tailor your products and services.
• Focus on improving customer service and satisfaction to increase customer loyalty and retention.
• Use customer feedback and surveys to find out why customers are leaving and how to prevent them.

Franchisee profits

Definition

Franchisee profit is a key performance indicator (KPI) that measures the financial success of a restaurant franchisee. It is calculated by taking the franchisee’s total revenue and subtracting expenses, including taxes and other costs associated with running the restaurant.

Benefits of Tracking

Tracking franchisee profits is an important KPI for restaurant franchise owners. This metric helps franchisees understand the success of their business and can be used to identify areas for improvement. Tracking franchisee earnings also allows franchisees to compare their performance against industry benchmarks and make informed decisions about how best to run their business.

Industry Benchmarks

The industry benchmark for franchisee profits varies depending on the type of restaurant and the market in which it operates. Generally, the benchmark should be set at a level that is achievable and sustainable for the franchisee. The benchmark should also be adjusted as needed to reflect changes in the market and the franchisee’s own performance.

How to calculate

Franchisee profits can be calculated by subtracting expenses, including taxes and other costs, from the franchisee’s total revenue. The formula for calculating franchisee profit is:

Calculation example

For example, if a franchisee has total sales of 0,000 and total expenses of ,000, their franchise profits would be:

Tips and Tricks for KPIs

• Set realistic benchmarks for franchisee profits that are achievable and sustainable for the franchisee.
• Regularly track franchisee profits and benchmark against industry benchmarks.
• Analyze franchisee profit trends to identify areas for improvement.

Conclusion

By understanding each KPI and its associated impact on your franchise network, you can measure the performance of your restaurant franchises and maximize your business success. By tracking and calculating these seven KPIs, you can gain valuable insight into the performance of your franchise network and make informed decisions for long-term success.

By ensuring your restaurant franchise network adheres to these seven KPIs, you can ensure that it remains competitive in the global marketplace, and you can continue to grow your business as it grows.