Not so Much

One of the traps of the restaurant business is measuring performance in “covers.” In laymen’s terms, this means grading your night’s performance by the number of people served. It’s akin to measuring your typing speed without factoring in errors.

When everyone is sitting around after service is done, slapping themselves on their collective backs for having made $1,000 and served 35 guests, someone breaks out a calculator to declare a per guest expenditure of $28.57.

But wait.

How many meals were sent back because they were mis-cooked?

How many meals were returned because they were mis-ordered?

How many people complained about the service?

One measure of a restaurant’s output can be determined by Adjusted Real Covers (ARC).

For instance: ARC = 35 covers minus 3 comped meals, minus 3 mis-ordered meals, minus 2 vocally unhappy customers resulting in gift cards. You have adjusted your jubilant 35 covers to 27 covers.

Another measure is revenue. From the $1000 above, subtract comped meals (3), mis-ordered meals (3), and gift cards (2) to determine the Adjusted Real Revenue (ARR).

So, ARR = $1000 minus $90 (comps for 3 overdone steaks), minus $60 ($20 each for 3 mis-ordered meals) and $40 ($20 gift card for each of 2 unhappy guests) for a total of $190. Therefore, the ARR is $810 ($1000-$190).

Now rather than having served 35 customers for $1000 in revenue, those 35 customers have generated only $810 in revenue.

Or $5.42 less (19% less) per customer.

Once this reality settles in, there might be a little less back slapping and more postmortems on performance. Tomorrow will be better.