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Key Profit Metrics Indicating Successful Management

restaurant showing enough business to be profitable

Management sets the tone for how your entire bar or restaurant will run. All too often, we see restaurants or bars fail simply because they have awful, out-of-control management. Even if you have mediocre management, the lack of effort can have a deep impact on your profits. But, as the owner, how do you truly know if your management is working as it should? People are generally on their best behavior when they see you, right? We’ve got several tips on how to see if your management is successful without having to pull teeth.

Defining Success in a Restaurant or Bar

Your success relies on knowing your profit margin first and foremost. The net profit margin of a bar usually ranges from 10% to 15% with restaurants being around 7%, but this can vary depending on the type of establishment. Each has its own average check size and customer base. This percentage is calculated by subtracting the cost of goods sold (COGS) from the total sales revenue of the restaurant and then subtracting all operational costs to determine the net profit margin. A higher percentage is obviously better than a lower one, but if you notice yours is too low, it might be time to check in with your management capabilities. 

The Importance of Management on Key Profit Metrics

Every part of decision-making in your restaurant can end up affecting your profits in some way. If your management is making decisions in an environment where they don’t feel appreciated, aren’t properly trained, or there’s little to no oversight, that will reflect on your profits. You manage your management, and that trickles down to your staff. The culture you facilitate at your bar or restaurant should help management feel prepared, creating well-trained staff members who feel confident in their work. Remember: engaged managers equate to engaged employees.

How Managers Can Have an Impact on Key Profit Metrics

Since your managers have such a high stake in how your restaurant is run, they have the ability to have a huge effect on profits. 

Average Revenue/Average Restaurant Sales

Maybe you’ve noticed your average sales and revenue has dipped a bit. Even if you sense no problems with management, it could just be that you need to assess where your problem areas are and work with your management team to figure out solutions. They want to keep their job most of the time, so it’s important to keep that line of communication open. If there’s an issue of a bar or restaurant owner being too hands-off, this is where you’ll for sure know you need to start stepping in more often.

Bar Sales Per Night

If you have a member of management who you think might be struggling, you can cross-reference your schedule with revenue and sales for each night. Doing a check-in on your profits can tell you more about the tone for each shift without having to ask around first. If you have a systemic issue, you might notice your profits go down in general. Either way, it’ll give you an idea of where to start.

What Other Key Profit Metrics Indicate a Successful Manager?

Overall profits aren’t the end-all to determine a manager’s success. There are plenty of ways to recognize when your management is successful and helping your business thrive. It’s important to keep in mind that profits are a portion of what indicates a management issue.

  • How profitable is the bar and the food? Proper inventory management helps keep your profits up and your waste/cost down.
  • Your average ticket amount. Guests will spend more when they’re happier with the service. Happy management means happy staff, which means happy guests.
  • Your average customer count. Getting a lot of customers means people are vibing with your restaurant regularly or heard good things about you.
  • Your average customer satisfaction. If customers are giving you compliments on Yelp about your food and service, it’s all thanks to your management.
  • The manager’s inventory control. Inventory control is a difficult balance, and you can tell if your management knows how to set their pars and order the right amount of product.
  • Your employee turnover rate. If your establishment isn’t a revolving door for employees as many bars and restaurants are, your management is doing something right.

Management has a big job, balancing the culture of your establishment, properly training employees, and making sure they’re doing good by you on the business end of things.

How Provi Can Help Managers Keep Their Bar or Restaurant Profitable

Provi’s inventory tracking and beverage ordering is the perfect complement to your team of management pros. You can maximize your profitability by learning from your purchase and inventory history, all in the same place. If you’re interested in learning more about how Provi can help your management team with beverage ordering and tracking, make a free account with Provi today!

Ryan Philemon


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