Average check size is an important restaurant metrics with a quite simple formula:
Total sales / number of covers within a given timeframe.
NB: This is an article from Eat App
It’s not necessarily the most effective way to measure profitability or revenue. Average check size may be high, but if your costs also are, profits will be low. Or, even if your customers spend a lot when they eat at your restaurant, if you don’t seat enough of them, you won’t reach break-even point.
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However, restaurants with high average check size are more likely to do everything else right, so it’s a good success indicator. Also, it’s very useful if you want to forecast sales (in this case, the formula would be average check size x number of expected customers), or know how many guests you need to seat to make a profit.
When you calculate average check size, you can use different timeframes depending on your goals. By using weeks, months, or years, you have a general idea of where you stand. Ideally though, for a more accurate analysis you should keep track and compare lunch, dinner, weekdays, and weekends separately. Diners naturally tend to spend more at dinner and during the weekend than at lunch and on weekdays, as they are more relaxed and less pressed for time.
Is your average check size good enough?
The ideal figure will depend first of all on the type of business. $200 would be totally unrealistic for a fast casual restaurant, but may be not nearly enough for a fine dining establishment.
Here is a list of what the typical average check size looks like for the main industry segments:
- QSR: less than $8
- Fast casual: $8 – $12
- Family restaurants: $6 – $12
- Casual dining: $8 – $15
- Theme restaurants: $13 for lunch and $23 for dinner
- Casual upscale: $16 for lunch and $50 for dinner
- Fine dining: up to $500 and beyond
(Source: School of Hospitality Management at The Pennsylvania State University.)
Another good reference is how much similar restaurants in your area charge. This is just a starting point, though. Basing your prices on your competitors’ is never a good strategy, unless that’s your only differentiator. If your average check size is below average, you should try to increase it. But even if you’re in line with everyone else, you can still find ways to improve it.
How to increase restaurant average check size
How much your guests spend is the result of two factors:
a) their willingness to pay, which in turn depends on how much value they see in the dining experience;
b) how good you are at selling that value.
If you want them to spend more, you will have to improve one or both of them.
The key word here is value. If you provide great value but you’re undercharging, you’re losing money. Conversely, you can employ the most sophisticated pricing and upselling techniques, but they won’t work for long if guests don’t see enough value in your offer.
Increase your perceived value
Have a really unique USP. Even if your restaurant fits squarely in a specific segment of the industry, it doesn’t mean you have to be like your competitors. If your USP is valuable to your guests, you can charge more. A great example is Chipotle, whose USP is centred around natural and organic ingredients. When the brand raised its prices in 2018, analysts believed it was still underpriced, considering “its compelling value relative to major fast-casual competitors.”
Improve ratings. Your reputation – whether online or offline – has a big influence on your perceived value. If people think you’re the best, they will be happy to pay more to eat at your restaurant than your direct competitors’. In order to receive great ratings, you have to provide a great dining experience. But how you reply to online reviews plays an important role too.
Improve ambience. When two similar restaurants both have great food and service, the one with better ambience will be able to command higher prices. In Restaurant Success by the Numbers, Roger Fields defines ambience as “anything that your customers see, hear, touch, smell, feel, and taste, […] communicated through your choice of food, décor, furnishings, lighting, acoustics, air flow, flatware, dishes, glassware, your staff’s dress, and your service and management staff’s overall attitude.”
Décor, ambience, food, and service are a two-way street: the better they are, the more you can charge. The opposite is also true, though: the more you want to charge, the better they must be.
Sell your restaurant value better
Increase prices. The easiest way to increase average check size is to simply charge more. Quite often, this won’t be possible, as the risk of losing regular customers or receiving negative reviews would be too high. However, if you discover that you’re undercharging compared to your competitors, or that your customers are not as price sensitive as you thought, raising prices could be an appropriate choice.
Increase price of specific items. A classic menu engineering technique is to divide items in four categories depending on their contribution margin and popularity:
1. High-sellers with high contribution margin
2. High-sellers with low contribution margin
3. Low-sellers with high contribution margin
4. Low-sellers with low contribution margin
Categories 1 and 2 (usually called ‘Stars’ and ‘Cash cows’ respectively) are good candidates for a price increase. This way, you can safely grow sales, profits, and average check size at the same time and without extra effort.
Create different menus. As we mentioned, average check size changes naturally depending on the time of day and day of the week. You can take advantage of that by creating special dinner and weekend menus with more sophisticated choices, larger portions, and higher prices.
Add pricier dishes to set menus. Fixed price and à la carte are two classic types of menus. A third option is to add more expensive options to a prix fixe menu. For example, if you have soup and pasta as first courses, you can add a tuna tartare for $5 more. Or, if the meat course is meatballs, add rib-eye steak also for an extra. With this hybrid concept, you can attract both those who are looking for value and are happy with the basic options, and those who would be willing to pay a bit more for food they prefer, but still don’t want to order à la carte.
Teach staff how to sell. You can have high ratings, great ambience, and a perfectly engineered menu. But they may not work if your servers don’t know how to sell it. We’re not talking about sleazy salesman tactics. People go to restaurants to have a good time, not to buy dishes, and the ‘don’t be annoying’ rule applies more than ever in this case. In hospitality, selling should come across as recommendations. Typical examples would be asking customers what they would like for dessert (cross-selling) or suggesting higher-priced liquors when guests order generic drinks (upselling).
Teach staff not to be just order takers. Suggestive selling techniques aside, if you want to make guests spend as much as they are able and willing to, it’s crucial that servers know the menu like the back of their hand. What the ingredients are, where they come from, how they are cooked, what the dish tastes like, and how it compares to other items on the list.
A scene we see too often at restaurants goes like this: a guest is on the fence about ordering an unfamiliar dish. To have a better idea whether she may like it or not, she asks the server how it’s cooked. The server says he’s not sure, but he can ask the chef. The guest doesn’t want to wait the extra time and opts for a more familiar option. If her tentative choice was a higher-priced dish, an upselling opportunity has just been wasted.
The best way to avoid this is to train servers not to be just order takers, they need to be able to recommend, explain and answer any questions about the menu. That’s the best form of suggestive selling.
Make high spenders come back. Growing your average check size is not just about making guests spend more, but also making sure that those who already spend a lot come back more often.
