Search

Total Sales or Average Check?



Adina Brunetti
Adina Brunetti

These are the most difficult values to manage. We often hear happy comments from managers that the average check has increased lately, and sales have increased accordingly. But this is not always a reason for rejoicing. Rather, it is necessary to understand why this happened.

First, the average check may rise due to higher prices. Almost always, even with an overall increase in revenue, a rise in prices provokes a decline in transactions. Thus, by raising sales a little, we can lose precious customers and hence, their associated returns. Consequently, after a while, revenue decline is likely to follow. However, that doesn’t mean it’s impossible to raise your prices — in fact, it’s necessary to do this within the framework of inflation and an increase in purchase prices for your ingredients. But in every segment of the restaurant business, there is a certain guest sensitivity to price increases. For example, in the segment of fast food or coffee shops, a price in- crease of 2-3% will be noticeable by guests, in casual dining 3-5% is almost the limit, while in high-end restaurants a price increase of 10-15% may go unnoticed.

The second reason for an increase in the aver- age check may be the characteristic flow of guests from a high price segment to a lower one during the pandemic. New customers are more willing to pay for premium products and generally buy more items per order. In this case, we will see stability or a slight in- crease in the number of transactions while increasing the average check. The third likely reason is a departure of the guest category who paid the least. Here we will ob- serve a decrease in the number of transactions, especially at lunchtime, with a significant increase in the average check. This is one of the most difficult scenarios to manage. The fourth reason is so-called suggestive selling, when a waiter or cashier prompts the purchase of an additional product (cross sell) or an upgrade to the dish already ordered (upsell), for example, a double portion of juice. Using these sales techniques, you need to be as minimally intrusive as possible and, if you offer your guests an additional product or another bottle of wine, make sure they understand how much it will cost. Otherwise, the most frequent result of intrusive sales is negative online comments about the restaurant’s pricing policy and a subsequent churn of guests.

The fifth reason for an increase in the average check may be that guests have begun to visit your establishment in large groups. As this scenario develops, we often observe stability or growth in the number of transactions simultaneously with an increase in the average check. Sounds wonderful. But in many cases, this phenomenon can be accompanied by a decrease in the average cost per guest. In other words, large groups of students or workers who ea.

Your Restaurant: Creation, Transformation, and Promotion All of the above examples cannot be unambiguously attributed to a qualitative increase in the average check, but there are several really “good” explanations underlying an increase in the average check: • You have introduced wine, spirits, a cocktail list, new hot dishes on sale. • You have carried out a successful advertising campaign aimed at a wealthier audience. • The share of regular guests is growing. • The demography has changed in your area and the number of well-off residents has increased.

Just as an increase in the average check can generally lead to a decrease in the number of transactions, the opposite is also true — a decrease in average check can become an incentive to increase the number of checks. This simple formula explains the popularity of discount and bonus mechanics, as well as the introduction of attractive prices for external communication: by providing a guest with a lower threshold for “entry” or savings on the next order, it is possible to increase the number of new purchases or the frequency of returns.