Metrics that matter: The KPIs every coffee shop and restaurant owner should track

As many of you saw last week, the Autumn Budget brought a lot of negativity, especially across hospitality. One of the key updates was the rise in the National Living Wage from April 2026, increasing to £12.71 for workers aged 21 and over. 

Most operators in London already pay above this, but whenever the National Living Wage goes up, it tends to create pressure across teams. Staff often request increases to stay aligned with the new level. We’ll discuss how to manage this through labour percentage targets and better workforce planning. 

Autumn Budget Overview 

Another change many of you noticed was the freeze on income tax and National Insurance thresholds until 2030. This usually results in less disposable income over time. We cannot control that side of things in hospitality, but we can control efficiency. That is why KPIs matter so much and why we are focusing on them today. 

Corporation Tax Update 

Corporation tax remained unchanged. 

• Profits up to £50,000 stay at 19%
• Profits above £250,000 stay at 25% 

This helps with planning, even though there were no surprises. 

Licensing Authority Guidance 

There had been talk about changes to licensing. The government has asked licensing authorities to consider the need for growth when making decisions. In practice, this could mean more flexibility around extended hours, especially in areas like Soho where local operators have pushed for this. 

Nothing formal has been published yet, but it is worth watching because longer opening hours directly impact profitability. 

Business Rates Relief 

Business rates remain a key concern for operators. From April, the new permanent business rate relief will apply. 

• 5 pence reduction per £1 on the multiplier
• Small business multiplier: 38.2p
• Standard multiplier: 43p 

Many had hoped for something closer to 20p, so reactions have been mixed, but it still offers some relief. 

Inflation Outlook 

The government has suggested that inflation is stabilising, with a target of falling below 2% by 2027. While this is not in our control, more stability will make planning and forecasting easier. 

Why KPIs Matter? 

We have just gone through several things that hospitality businesses cannot influence. KPIs are the opposite. They show you what is actually happening inside your business. 

KPIs highlight: 

• Wastage
• Overstaffing
• Pricing issues
• Shifts in customer behaviour
• Operational inefficiencies 

Relying on gut feel may work when you run a single site, but once you expand, gut feel is not enough. You need consistent numbers and a clear view of each site’s performance. 

Hospitality is a low margin, high volume industry. A shift of 1–2% in the right metric can make a noticeable difference to profit. That is why daily, weekly and monthly KPI tracking is essential. 

3 Essential Pillars of Hospitality KPIs 

There are 3 main KPI pillars in hospitality: 

• Financial KPIs
• Operational KPIs
• Customer KPIs 

As accountants we focus heavily on financial KPIs, but the other two pillars are just as important for a complete picture. 

For example, labour may look high from a financial point of view, but cutting labour too far damages service quality and customer retention. KPIs only work when viewed together, not in isolation. 

Financial KPIs 

Let us now move into the first pillar, starting with revenue metrics. 

Revenue Metrics 

RevPASH (Revenue per Available Seat Hour) 

Formula:
RevPASH = Total Revenue ÷ (Number of Seats × Operating Hours) 

RevPASH helps you identify: 

• Peak hours
• Underused hours
• Revenue generated per seat 

Healthy range during peak hours for restaurants: £15–25 per seat. 

Revenue per Labour Hour 

Formula:
Revenue per Labour Hour = Total Revenue ÷ Total Staff Hours 

This metric shows team productivity and rota efficiency. 

Average Transaction Value (ATV) 

ATV shows the behaviour of your customers and reflects your business model. 

Examples: 

• City coffee shop: lower ATV, higher footfall
• Residential café: higher ATV, fewer but longer visits 

When you have multiple sites, ATV helps you decide whether each location needs its own model or pricing structure. 

Revenue Mix 

Revenue mix breaks down where your sales come from, such as: 

• Food vs drink
• Eat in vs takeaway
• Delivery vs in store 

This helps with pricing, staffing and menu planning. 

Cost Metrics 

Cost metrics are critical because small shifts have large effects on profit. 

Food Cost Percentage 

Formula:
Food Cost % = (Food Cost ÷ Food Revenue) × 100 

A high food cost percentage may indicate: 

• Over ordering
• Incorrect pricing
• Excessive waste
• Poor portion control 

Beverage Cost Percentage 

Formula:
Beverage Cost % = (Beverage Cost ÷ Beverage Revenue) × 100 

Typical benchmark: 20–25%. 

Useful for identifying: 

• Over pouring
• Waste
• Theft risks 

Labour Cost Percentage 

Formula:
Labour Cost % = (Labour Cost ÷ Total Revenue) × 100 

Benchmark: 20–35%, depending on the model. 

Overstaffing adds unnecessary cost while understaffing reduces service quality. Many operators use scheduling tools to keep this under control. 

Overhead Ratio 

Formula:
Overhead Ratio % = (Overheads ÷ Total Sales) × 100 

Benchmark: 18–25%
London operators may sit higher due to rent and utilities. 

COGS and Gross Profit

Cost of Goods Sold (COGS)

Formula:
COGS = Opening Stock + Purchases – Closing Stock 

COGS includes: 

• Ingredients
• Dairy
• Coffee beans
• Pastries
• Packaging 

Breaking COGS down by category gives you much more control. 

COGS Percentage

Formula:
COGS % = (COGS ÷ Total Sales) × 100 

Typical ranges: 

• Coffee shops: 25–35%
• Restaurants: 28–38% 

Gross Profit (GP) 

Formula:
GP = Sales – COGS
GP % = (GP ÷ Sales) × 100 

Benchmarks: 

• Restaurants: 60–70% for food, higher for drinks
• Coffee shops: 70–85% for coffee drinks, 55–65% for food, 40–55% for retail 

EBITDA 

Formula (operational level):
EBITDA = Revenue – COGS – Labour – Overheads 

Benchmarks: 

• Coffee shops: 10–15% healthy, 15–20% strong
• Restaurants: 5–10% 

Break Even 

Knowing daily, weekly and monthly break even helps you: 

• Set sales targets
• Inform pricing decisions
• Guide staff expectations
• Plan for slower trading periods 

Operational KPIs 

Table Turnover 

Table turnover measures how many times a table is used in a period. 

It helps with: 

• Staffing
• Menu design
• Capacity planning
• Understanding peak efficiency 

Inventory Turnover 

Formula:
Inventory Turnover = COGS ÷ Average Inventory 

• High turnover = fresher ingredients and less waste
• Low turnover = higher spoilage risk and over ordering 

Waste Percentage 

Formula:
Waste % = (Weight of Waste ÷ Prepared Weight) × 100 

Benchmarks: 

• Coffee shops: 3–5%
• Restaurants: 5–10% 

Other Operational KPIs

Examples include: 

• Order accuracy
• Speed of service
• Booking efficiency 

We usually track: 

• 15 operational KPIs
• 20–25 financial KPIs 

And help operators choose 12–15 that matter most. 

Customer KPIs 

Customer Satisfaction 

Measured through surveys and guest feedback. 

Net Promoter Score 

Shows how likely a customer is to recommend your business. 

Repeat Customer Rate 

Highlights loyalty and retention. 

Reviews 

Online reviews provide insight into service and consistency.
Staff training plays a major role here. 

Benchmarking 

Benchmarking compares your performance with similar businesses. 

We look at: 

• Average spend
• EBITDA
• Gross profit
• Waste
• COGS
• Labour
• Prime cost percentage 

We use a red, amber, green system to show where each site sits. 

A benchmarking survey will run throughout December, with results shared in January. 

Action Points 

Key actions to take: 

• Categorise accounts correctly so performance is clear by site
• Build a KPI dashboard and review it monthly
• Keep detailed monthly management accounts
• Benchmark against the right operators
• Set clear financial and operational targets with your team
• Use variance analysis to compare budget and actual performance 

Questions and Answers  

1. How often should KPIs be tracked? 

• Daily: waste, average spend, stock movements
• Weekly: COGS performance, labour percentage, cash position
• Monthly: GP, overheads, net margin, site performance 

2. How do I reduce COGS without raising prices? 

• Renegotiate suppliers
• Standardise recipes
• Improve portion control
• Reduce waste
• Use menu engineering 

3. Can you share management accounts examples?

Yes, we can share a mock set to show how the KPIs are presented. 

Thank you to everyone who joined the session. If I missed any questions, please feel free to get in touch and I will follow up with you directly. I hope you found the session helpful.