How to Calculate and Maximise Restaurant Return on Investment (ROI)

Restaurants often operate on tight profit margins. This means you want to see significant returns on any money you spend on your restaurant operations. Calculating your return on investment (ROI) helps you make sure this is happening in your business.

By thoroughly measuring your restaurant ROI, you can ensure you are efficiently investing in your business, from marketing efforts to new menu items.

In this blog, we’ll explain how to calculate your ROI, and how to improve it.

What is restaurant ROI?

ROI stands for return on investment. It’s a metric used to measure the value of investments in a business. 

It can track general investments in a restaurant, such as those required to initially get a venue off the ground. You may also find it useful to calculate ROI in specific areas of your business, such as a particular marketing campaign or the performance of a seasonal menu. 

ROI can also be tracked in monthly, quarterly or yearly intervals. This provides a rolling perspective on the money being put into your business, and the revenue that’s being generated from it.

How to calculate restaurant ROI

There are many ways to calculate restaurant ROI. The most common formula is simply dividing the net profit of an investment by the amount of money invested. Then, you multiply the resulting figure by 100 to get a percentage.

The formula looks like this:

(Net Profit ÷ Initial Investment) x 100 = ROI%

What is a good ROI for a restaurant?

A good ROI for a restaurant varies greatly based on business goals and other factors, such as size and location. For instance, a restaurant in a growth stage may accept a lower short-term ROI to spread their brand further. Restaurants like these will aim for more gross profits once they are more well-established.

According to 2024 research, the average restaurant ROI in the USA was 11.13% across four quarters.
Many restaurants may want to aim for an average ROI of 15% to ensure a more profitable year. If your ROI isn’t in this general area, you may need to re-evaluate your strategy.

7 ways to maximise restaurant ROI

Ensuring you are achieving your desired levels of ROI is crucial for a restaurant. Here are seven ways to optimise your restaurant ROI:

1. Streamline your operations

Streamlining operations in your venue can be an excellent way to achieve more revenue and lower costs, without requiring additional investment.

Inefficient operations cause staff to spend more time on tasks that could be automated, leaving less time for customer service or more important tasks. Additionally, if bottlenecks form, it can affect productivity and bloat daily costs.

When establishments use a pen and paper booking diary, they miss out on the benefits of a digital system. For example, your team has to waste time rifling through papers to make and locate bookings.
With ResDiary, restaurants gain a top-tier table management system with seamless software integrations to prevent staff from wasting time on tasks that can be automated.

With smart rules, you can set certain conditions that all accepted bookings must meet. You have access to an array of features, like creating segments for certain times of year which change your booking rules. You can save segments in your diary and re-apply them any time you like.

ResDiary is a commission-free solution. This can be a massive help to your ROI, as you get to keep more of the revenue from your bookings in your pocket.

Curious about how much business you could be losing on a pen and paper booking diary? Check out our value calculator to learn more about how this powerful software could improve your ROI.

2. Optimise your online presence

A strong online presence is crucial for attracting customers. The more visible your brand, the more likely people are to make a booking.

Depending on your particular situation, different online visibility strategies might present a greater ROI. For example, if you’ve already put a lot of time and effort into your website design, then restaurant search engine optimisation (SEO) might be the best option for you.

Alternatively, if you have a personal passion for photo and video, social media marketing might be perfect for you. With tools like ResDiary, you have all the options you need to affordably boost your online visibility.

Optimising your online presence means more than simply being seen online. If a diner has found you through your online advertising and social media, you can increase your chances of securing a booking with the right integrations. This can offer a major boost to your marketing ROI.

With ResDiary’s Reserve with Google and Meta Integrations, your diners can make commission-free reservations with your venue straight from your Facebook and Instagram profiles, or Google Search results. This reduces friction in the booking process, allowing you to achieve a superior ROI on your campaigns.

3. Know your customers

To make sure you don’t waste money on marketing and inventory, you need to understand your customers' wants and needs. With thorough market research, you can increase your ROI by precisely tailoring your services and advertising, reducing unnecessary costs.

To understand your customers more thoroughly, you need the proper data. This includes your most popular booking times, most popular menu items and booking notes. All of this data is made easily accessible with ResDiary and our range of integrations, such as EPOS systems.

You will also need to ensure that your marketing is actually appealing to your target audience. For example, if you are a family venue, your marketing campaigns could focus on your kid’s’ menu.

ResDiary’s table management system provides insights into your customers' booking data. With customer relationship management (CRM) integrations like Acteol and TalkBox, you can build detailed diner profiles while streamlining their customer journey. This builds your knowledge of your customers, allowing you to market to them as effectively as possible.

4. Perfect your menu

A strategically-priced menu with high-quality food is vital to ensure your restaurant is making a profit. Even if your food is selling well, without proper optimisation your cost of goods could be so high your restaurant fails to turn a profit.

To ensure your restaurant is generating a strong ROI, you need to thoroughly understand your cost of goods sold (COGS) and your food cost percentage. Your restaurant's COGS consists of the cost of ingredients, drinks, sauces and condiments that go into your food and beverages. Food cost percentage is the ratio of the cost of ingredients to the revenue generated by selling them as a menu item.

To optimise your menu, you should regularly examine your COGS and determine which costs can be reduced. You should also calculate your food cost percentage (COGS/Revenue x 100) to ensure you are achieving a suitable food cost percentage. This is typically considered to be around 28-35%.

With convenient ResDiary integrations like AccessEPoS and PowerEPOS by Triniteq, you’ll get reliable payment processing and a host of other features. These systems store data about your sales, helping you to understand your restaurant and customers better than ever.

With the data gained from these integrations, you can more accurately determine the demand for each menu item, and get the best possible ROI from each dish. 

5. Market effectively

High-quality marketing strategies are crucial for increasing revenue and profitability. Without a solid campaign, patrons may never discover your venue.

However, optimal marketing strategies vary from restaurant to restaurant. To ensure you achieve a solid ROI on your marketing, you need to choose an efficient and well-researched strategy that considers your most important demographics.

According to our Beyond the Booking report for Australia and New Zealand, 60% of diners discovered new restaurants through friends and family, 38% relied on social media, and 20% relied on search engines.

Based on our UK and Ireland report, 72% of diners preferred recommendations from friends and family, 48% used restaurant booking engines, 33% used social media, and 22% used third-party reviews. For 18-34 year olds, the percentage of diners who preferred social media as a method of finding new restaurants soared to 60%.

To ensure you have completely optimised your marketing ROI, you need to thoroughly examine your target demographic and their preferred marketing channels. For more information on achieving this, check out our complete guide to restaurant demographics.

Among other things, these stats show the massive importance of word of mouth marketing, highlighting the importance of online visibility. Once a diner has recommended you to friends and family, are you easy for them to find?

ResDiary’s Meta integration can be extremely useful here. By placing a booking widget oin your Facebook and Instagram profiles, it becomes seamless for customers to make reservations when they come across one of your posts.

Using ResDiary’s built-in marketing features and Silverstreet integration, you can use automated email marketing and SMS text messages to confirm bookings, follow-up with diners, request more online reviews and prevent costly no-shows. 

Check out our guide to email marketing for more information on building relationships with your diner database and encouraging repeat reservations.

6. Restaurant forecasts and business plans

To effectively optimise your restaurant ROI, you need a complete overview of data related to inventory, costs, and gross profits. With this overview, you have the insights you need to take action against bloated costs, or react quickly to unexpected opportunities.

With a restaurant sales forecast, you can act on your data with a comprehensive report that will help optimise your ROI. Review your past performance to get a better grip of what your future sales may look like, and anticipate any necessary strategy changes your business may need. 

With an understanding of future performance, you can understand how your ROI may look in the coming months or years. You can also rely on ResDiary’s analytics suite to help you process key data about your business.

Once you’ve examined your sales forecast, it’s the perfect time to return to your business plan, or create one for the first time. A business plan lays out clear targets for the future and a direct method to achieve them. A good business plan will lay out exactly which parts of your business need to be optimised, and the desired ROI for your business.

7. Rely on KPIs

While gross revenue is important to the success of your business, many other factors determine if your business is doing well. A KPI, or key performance indicator, is another metric your restaurant can use to measure its success. 

KPIs for restaurants include sales, COGS, or number of guests served in a given period. These metrics let you track the success in a bespoke way for your business.

A KPI enables your restaurant to track all aspects of its financial performance. You can identify appropriate areas to optimise ROI, and track the results. For example, if you routinely receive feedback about poor service in your venue, you might invest in new employee training.

By using KPIs like number of guests served per team member, you can track whether this training has achieved its goal. This helps maximise ROI in your business as a whole. Plus, using KPIs in addition to sales data helps you understand the ROI you’re receiving from these initiatives.

Improve ROI in your restaurant with ResDiary

ResDiary is the perfect system to help you improve ROI in your restaurant. You can rely on our wide range of features and integrations to streamline your business and gather the actionable data you need.

Our advanced table management and booking software to ensure your staff can focus on your customers' satisfaction instead of wasting time on admin tasks. This allows you to run a smooth and efficient service. ResDiary can offer some serious financial value to your business when it comes to ROI, as you can see in our value calculator.

In addition, you can take advantage of integrations in areas like marketing and EPOS systems. This offers a cost-effective solution to improving your operations and growing your business.

Book a demo with ResDiary and streamline your operations to boost ROI.