,
Ever felt like you’re working harder but not seeing the profits you deserve?
Many restaurant owners find themselves in this situation, but a mysterious ingredient could change the game for you.
It’s called PPA, and it’s time you got acquainted with it.
PPA, or Per Person Average, isn’t just another acronym to add to your already overflowing plate of restaurant lingo.
It’s a powerful metric that could be the difference between barely staying afloat and sailing smoothly toward success.
But what exactly is PPA, and why should you care?
Let’s dive in, shall we?
You’ve just closed up shop after a busy Saturday night.
The restaurant was packed, the kitchen was buzzing, and your staff was running off their feet.
But was it a successful night? That’s where PPA comes in.
The Per Person Average is exactly what it sounds like – the average amount each customer spends at your restaurant.
It’s like taking the pulse of your business, giving you a quick health check on how well you’re maximizing each customer’s value.
But why is this little number so important?
Let’s break it down with a simple example:
Scenario A: Your restaurant serves 100 customers a night, with a PPA of $20.
Scenario B: You serve 50 customers, but your PPA is $50.
In both cases, you’re bringing in $2,000.
But which scenario do you think required more resources, staff hours, and ingredients? Naturally, – Scenario A.
This is the power of PPA.
It’s not how many customers you serve, but how much value each customer brings to your business.
In other words, It’s about working smarter, not just harder.
Master PPA and other profit-boosting skills in our live weekly webinars.
Join 4,800+ restaurants learning from 40+ years of experience.
Now that we’ve whetted your appetite, let’s understand how to calculate this metric.
Don’t worry – you won’t need a degree in advanced mathematics for this one.
The formula is simple:
PPA = Total Revenue / Number of Customers
Let’s break it down with a real-world example.
Say your cozy Italian bistro, “Nonna’s Kitchen,” made $10,000 last Saturday and served 200 hungry pasta lovers.
Your PPA would be:
$10,000 / 200 = $50
This means, on average, each customer spent $50 at Nonna’s Kitchen that night.
Not bad, right?
But like any good recipe, the devil is in the details.
Here are some key things to keep in mind:
Choose a measurement period (daily, weekly, monthly) and stick to it. Jumping between periods is like comparing apples to spaghetti – it just doesn’t work.
Remember, it’s a per-person average. A family of four counts as four customers, even if they’re on one check.
Don’t forget to factor in all revenue streams – food, drinks, merchandise, even that cute “Nonna’s Kitchen” apron you sell at the counter.
While PPA gives you a valuable snapshot of customer spending, it’s even more powerful when paired with another crucial metric: Customer Lifetime Value (CLV). CLV estimates the total revenue a customer will generate for your restaurant over their entire relationship with you.
Here’s a simple way to think about it:
CLV = (Average Value of a Sale) × (Number of Repeat Transactions) × (Average Retention Time in Years)
For example, if a customer spends an average of $50 per visit, comes in twice a month, and remains a loyal patron for three years, their CLV would be:
$50 × 24 visits per year × 3 years = $3,600
A high PPA combined with a high CLV? That’s a customer worth their weight in gold. These are the patrons who not only spend more per visit but also return frequently and stay loyal over time.
Keep an eye on how your PPA stacks up against your Customer Acquisition Cost (CAC). If you’re spending more to bring in a customer than they’re spending with you, it might be time to revisit your marketing strategy.
Ensure your PPA is comfortably above your average cost per customer. After all, the goal is profitability, not just popularity.
Restaurant owners often obsess over their PPA. It marks the difference between good profits and great ones. Let’s talk about why this number should be on your radar as much as your signature dish.
By focusing on raising your average check size, you’re essentially giving your restaurant a raise.
Here are some practical strategies to boost your PPA:
Train your staff to suggest appetizers, side dishes, or premium drink options that complement the customer’s order. For example, “Our truffle fries pair perfectly with that burger. Would you like to try them?”
Place high-margin items in prominent positions on your menu, such as the top right corner where eyes naturally land first. Use visual cues like boxes or different fonts to draw attention to these dishes.
By implementing these strategies consistently, you can see a significant impact on your PPA. But what does this mean for your restaurant’s bottom line? Let’s crunch some numbers to illustrate the potential:
A $5 increase in PPA might seem modest, but it can lead to substantial gains:
Your PPA is like a window into your customers’ minds.
Are they loving your appetizers but skipping dessert? Is your wine list outperforming your cocktail menu?
It can reveal these trends, helping you make informed decisions about menu design, pricing, and promotions.
Use your PPA data to create a menu that sells. Identify your high-profit, high-popularity items and give them prime real estate.
Strategic menu design isn’t just about aesthetics – it’s a powerful tool for boosting your bottom line.
According to industry research, effective menu engineering can increase restaurant profits by 10-15%.
By analyzing your sales pattern across different menu items, you can make informed decisions about pricing, placement, and which dishes to feature or phase out.
Sure, that two-for-one deal packed the house, but did it boost your bottom line?
This metric helps you distinguish between promotions that drive profitable traffic and those that just keep your staff busy.
By analyzing your PPA during and after promotional periods, you can fine-tune your marketing strategies to attract high-value customers and maximize your return on investment.
A rising PPA often signals stellar staff performance.
It could mean your team is nailing their upsells and providing service that encourages customers to indulge a little more.
Use this data to recognize and reward your top performers, and to identify training opportunities for others.
If you’re looking to hire more quality staff, check out our guide on how to hire quality restaurant staff.
Ready to turn your PPA insights into real profit?
Learn how our managed advertising can double your guests and triple your margins.
Even experienced restaurant owners can make errors when calculating PPA.
Here are some common pitfalls to watch out for:
Ever forget to factor in that complimentary dessert or happy hour discount?
It happens, but it can throw off your calculations.
Consider setting up a system to track these items accurately.
Dine-in and takeout customers often behave differently.
By analyzing these separately, you might uncover insights you’d miss if you lumped them together.
For instance, you might find your dine-in customers have a higher PPA – valuable information for tailoring your services.
Your December PPA probably looks quite different from July, right? Factoring in these seasonal trends is crucial for setting realistic goals and making informed decisions.
Take a moment to consider how your PPA fluctuates throughout the year.
Remember that big wedding reception last month? While it was great for business, it’s not an everyday occurrence.
Large events like these can significantly inflate your PPA, giving a skewed impression of your typical performance.
Make sure to note these outliers in your data.
This way, you’ll have a clearer picture of your day-to-day operations and can plan more accurately.
It’s tempting to lump all sales together, but food and drink often tell different stories.
They typically have different profit margins and can reveal unique customer behaviors.
By analyzing them separately, you might uncover opportunities you hadn’t considered before.
For example, you might find that customers spend more on drinks during certain hours, informing your happy hour strategy.
Avoid costly PPA mistakes. Get expert advice on food costs, prime costs, and more in our live webinars.
Start your risk-free trial and join our thriving restaurant community!
Focusing on PPA can boost profits, refine your menu, and create a dining experience that keeps customers coming back for more.
But this metric is just one ingredient in the recipe for restaurant success.
It works best when combined with other key metrics and a holistic approach to restaurant management.
That’s where professional guidance can make a difference.
At Restaurant Growth, we specialize in helping restaurant owners like you turn metrics into money.
Our team of experts can help you understand your PPA and implement strategies to improve it.
Here’s how Restaurant Growth can help:
1. Comprehensive Strategy:
We combine PPA optimization with advanced advertising, expert coaching, and a community of successful restaurateurs.
2. Proven Results:
We’ve helped over 4,800 restaurants increase profit margins by 5-8% in just 90 days.
3. Expert Knowledge:
Access live webinars and learn from industry veterans with 40+ years of experience.
4. Personalized Coaching:
Our Certified Restaurant Coaches™ understand your unique challenges and how to overcome them.
5. Cutting-Edge Marketing:
Our suite of tools helps increase awareness, acquire customers, and boost visit frequency.
Book a free strategy call with Restaurant Growth today.
Let’s work together to double your guests and triple your profit margins.
PPA stands for Per Person Average. It’s the average amount each customer spends at your restaurant. You calculate it by dividing your total revenue by the number of customers served over a specific period.
A “good” PPA varies depending on your restaurant type, location, and target market. Generally, casual dining restaurants might aim for a PPA of $15-$25, while fine dining establishments could target $50-$100 or more. The key is to consistently work on improving your PPA over time.
From strategic marketing planning to seamless execution, we’ve got you covered!
