Do you know your worth? To run a successful restaurant, you need to know your full potential – and how close you are to reaching your goals. You can measure your restaurant’s potential total revenue by calculating its revenue per available seat hour (aka RevPASH). This figure helps you understand the average cost of each seat in your establishment.
To determine your revenue sales per seat for a single day, follow the equation below:
Total Revenue ÷ Seat Hours (the number of seats in your restaurant multiplied by the number of hours you’re open)
For example, let’s say that your restaurant made $12,000 last night, you have 100 seats in your restaurant, and you were open for five hours. Your equation would be:
$12,000 ÷ (100 x 5)=
$12,000 ÷ 500=
In this example, the average amount of money each you earned per each seat your restaurant would be $24.
To further understand your restaurant’s potential revenue, you will also need to know the table turnover ratio. This is the number of times that a table is turned over on average (how many different parties are seated at that table during a shift).
Knowing this ratio, as well as your average revenue per seat, can provide an even clearer view of your business’ true earning potential. Your ultimate goal is to try to fill every seat, maximize what the people in those seats are spending, and turn tables as quickly as you can so that you’re serving more customers.
5 Tips for Increasing Restaurant Revenue Per Seat
1. Optimize Your Menu
A low revenue per seat could indicate a few different issues. The most obvious is that you might be undercharging on your dishes. However, if you know that your menu is priced right, you may need to train your servers to increase sales by upselling, recommending certain dishes, or pushing appetizers, desserts, or other extras beyond the main course. You could also optimize your menu by adding more accurate descriptions or photographs, or highlighting particular dishes.
2. Improve Seat Turnover Time
If a slow turnover time seems to be the issue, you may need to reevaluate server or kitchen practices to figure out what’s slowing down the flow of business during busier periods. It could just be that your host/hostess isn’t seating groups properly, such as putting a couple at a table for four, and then not having a spot to seat the party of four that walks in while the table for two stays empty.
Another thing that could be slowing down the service is if your menu is too complex. If it takes guests 15 minutes or more to decide what they want, that could result in those tables turning over fewer times.
Is your menu design optimized to make more sales? Find out now.
3. Upgrade Your Point of Sale
Once everyone is seated, you don’t necessarily want your customer to feel rushed, but you also don’t want them waiting too long to order, too much time between courses, or even more lag time waiting on the check. Using POS systems can help speed up the checkout process since it can cut down on the time it takes for a server to print out the check and walk it back for payment and change.
4. Implement Seating Policies
Letting customers linger for longer than they should once their order is complete could be costing you money. Make it a policy to only seat parties when they are all present so there isn’t too much wasted time at the start of service. And at the end, drop subtle, but polite hints after you’ve delivered the check (like clearing plates, or asking if they’d like to move over to the bar area). This is where having a friendly staff is key, because you want the customer to always feel like they are top priority, even when you’re asking them to leave.
5. Experiment with Promotions
Another reason your revenue might be down is if you’re having slower periods in which your tables aren’t filling up. Try experimenting with different special promotions to boost slower hours. Perhaps you can try a “kids eat free” offer on your slowest night, or two-for-one cocktails for diners who are seated before the evening rush comes in.
Overall, being aware of your business’ revenue per seat is integral to making key decisions regarding your sales tactics, marketing efforts, and even the future growth of the restaurant. If doing the math isn’t your strong suit, you’re in luck. Today’s technology and software can do all of the calculating for you in real-time so that you can quickly spot where leaks in your revenue are coming from.