Key Performance Indicators and Your Food Truck’s Success
Key performance indicators (KPIs) are quantifiable measurements that reflect the factors you’ve deemed critical to the success of your mobile food business. During the process of evaluating your food truck business, you’ll regularly collect data (measurements), determine how they’ll be conveyed as a standard (metric), and compare them to a benchmark to evaluate your truck’s progress.
Many aspects of your mobile food business are measurable. That doesn’t make them keys to your food truck’s success. In selecting KPIs, limiting them to the topics that are essential to reaching your business goals is critical. Also, keeping the number of KPIs you follow small enough to keep the staff’s attention focused on achieving the same KPIs is important.
Sales and Kitchen Indicators
These indicators center on your bottom line. Your sales and food costs will determine whether your truck is succeeding financially.
- Food cost percentage: How much is your typical food bill? You usually calculate your food cost as a percentage of your total business expenses. You measure it by adding your food purchases for the week and comparing those figures to your weekly food sales.Depending on the type of cuisine you serve, this number can range from 25 to 35 percent. (Note:People who choose the route of operating a franchised concept food truck will have a lower food cost due to the buying power and cost control systems the franchisor can bring.)
- Weekly sales: This number is one of the standard sales-related numbers that everyone looks at. As you may expect, weekly sales can vary widely from one truck to the next. The key number to look at is any change you find from week to week and how it compares to previous years.
- Sales per head: One of the most used performance indicators is sales per head, which you calculate by dividing your total sales by the number of customers you serve. To do this, you must make sure your point-of-sale system or your service staff are properly accounting for the number of people each receipt covers, because many receipts may involve the purchases of two or more people.You can calculate your sales per head at different times or shifts throughout the day. For a more detailed understanding of this metric, you can track your sales per head each week or month to look for reasons for positive or negative trends. For example, your sales per head may trend downward when you run discount specials.
- Inventory value: How much food is being regularly stored back in your commercial kitchen? It should be less than a week’s use, but it can get out of control if you’re storing food by freezing or cryovacing it. (Cryovacing is the process of removing excess oxygen from a food storage bag where the bag is heat sealed to make it airtight.)
- Best (and worst) selling items: Check the weekly sales from your receipts or point-of-sale system to help you determine which menu items are consistently selling out or taking up space on your menu board.
If you have more than a couple of employees, the following staff indicators will help you keep track of how your employees are impacting your business. If you choose to use only one indicator in this category, use the total labor cost indicator, especially if you’re a new food truck owner, because it centers on how your staff impacts your food prices.
- Total labor cost: Total labor cost is one of the largest expenses you’ll incur as a food truck owner. Hence, the reason you must consistently keep track of it. The labor cost should range from 25 to 35 percent of your total expenses. Total labor cost includes salary or hourly wages,benefits, insurance, retirement, and bonuses that you pay to yourself and your employees.
- Labor hours: How many hours do your employees work during a certain time frame? You can compare these hours against your sales to measure the productivity of your staff.
- Turnover: Count the positions you employ, and then divide this number by the number of people you’ve employed during a certain period of time. For example, if you have six staff positions and you’ve employed ten people in the last year, your staff turnover is 6/10 or 60 percent.
You can measure customer satisfaction in different ways, such as feedback forms, social media, and other such methods that are hard to quantify.
The most successful food trucks aim to get at least 50 percent of their customers to visit their service window at least once a week. You can have your staff mark order tickets to confirm that an order is from a repeat customer. However, if your service window employees don’t specifically ask each customer whether they’ve visited your truck in the past, this trend can be difficult to track.
Ask customers for e-mail addresses to provide them with special offers for returning customers. This type of marketing costs you considerably less than having to advertise and market for a new customer.
Marketing and advertising indicators
This list of indicators is more important to food truck owners who actually spend money on marketing. Many new truck owners start up without putting any funding into this area, and thus don’t need to track this data.
- Marketing and public relations (PR) costs
- Response rates
- Sales inquiry conversion rate
- Press mentions