Operations

How many seats does a restaurant need to be profitable?

Understanding how many tables your restaurant truly needs is based on understanding the peak hour, or when the restaurant is operating at its maximum capacity

Provided

June 25, 2020 by Steve Starr — Chief, starrdesign

This is a trick question. For years, we focused on the number of seats in a restaurant, but the real critical / limiting factor is the number of tables. Back when most of restaurant dining was family dinner focused on casual dining establishments, the number of seats was critical because the vast majority of groups were parties of four.

This has changed dramatically due to fluctuating demographics, a shift in consumer trends, the rise of fast casual, and the reemergence of business dining. Add to that the changes that restaurants will need to make because of the pandemic, both temporary and long-term, and maximizing table utilization becomes even more critical.

Gather & Harvest the data

Understanding your restaurant's Performance Metrics is essential. This unchartered territory has left weighty questions lingering at the forefront of business owners' minds:

How will consumer trends shift?
What will customers expect as restaurants reopen?
Will this relate to past Performance Metrics?

VIPinsiders found in a recent survey that 50.9% of its respondents plan to eat out as often as they did prior to the pandemic, 45.9% plan to dine out less and 3.2% plan to go out even more often. Most responders felt that their normal dining-out routines would be back to normal within the next 90 days, some sooner than others. Fortunately, this means you are not starting from scratch as you gather and harvest your data. We have outlined a few key metrics to consider:

Identify your Peak Hour by sales.
Determine your peak hour median number of transactions.
Determine your peak hour average sales per transaction.
Determine median length of stay at Peak Hour.
Determine % carry-out vs. dine-in

Calculate median peak hour walk-in sales

Understanding how many tables your restaurant truly needs is based on understanding the Peak Hour, or when the restaurant is operating at its maximum capacity. The industry standard to date has been that the Median Peak Hour Sales accounts for approximately 60% of daily sales. Do not worry about how the pandemic will affect these numbers, yet. Regardless of how customer trends shift it is still important to be able to calculate that Median Peak Hour Sales as follows:

# of transactions x sales per transaction x % dine-in = Median Peak Hour Sales

Of course, when we start to factor in the post-pandemic shifts, we may have to take into account that guests may start dining out earlier to avoid the crowds, effectively spreading the peak hour sales out over a longer period, at least in the beginning. But, for now, let us stick to the simple math.

Determine the percentage of the various party sizes 1-2, 3-4, 5-6 & >6

The next important metric to consider is party size. Being able to track and understand the average party size that visits your restaurant will help inform the variety of table sizes. A restaurant full of booths may seem great on paper because booths are the number one option for guests. Parties at booths have been shown to spend more money and have a higher comfort level, leading to longer stays. However, if the average party size is two, then most of the four-top booths would be underutilized. There is a simple formula to calculate the number required for each party size:

% x # of transactions x number of tables turn in peak hour = # of parties (per size) at peak hour

These calculations give you the number of each table size that will maximize your table utilization.
Table utilization has been a key factor in fast casual profitability and will now become even more important to all restaurants entering the post pandemic era of seating / capacity restrictions. Getting the correct number of each size table for your concept will be a key factor in restaurant success going forward.

One other exercise we find extremely helpful is to chart the actual usage of each table in your restaurant(s). This is especially helpful for multi-unit operators looking to open new locations and maximize the performance of existing locations. It is a simple yet time consuming exercise.

Here are steps:

Use a copy your seating layout or table chart and a watch.
Simply mark the time and party size whenever guests are seated at a table.
Then mark the time they leave.
Create a table (spreadsheet, not furniture) showing the following: table number, table size, number of guest, duration of visit in mins (simply subtract the time they sit down from the time they leave).

We suggest looking at this over a 2-hour window starting 30 minutes before your peak hour and ending 30 minutes after. (see the example below).

As you can see in this 12-table restaurant example, table #2, table #4 and table #11 are very under-utilized and would be much better as deuces (2-tops) rather than 4-tops. This shift might allow the addition of 2 –3 extra 2-tops to get the table count up to 14 or 15, and increase the number of parties you can sit during peak hour; thus increasing your peak hour sales. Or, this kind of change will allow more space between the table to meet the new quest demands for social distancing in restaurants.

Table #	Table Size	Number of Guests	Duration (mins)
1	4	4	34
		4	42
2	4	2	31
		2	34
		2	22
3	4	3	35
		4	37
		4	43
4	4	2	28
		2	37
5	2	1	22
		2	38
		2	27
6	2	2	28
		1	27
		1	32
7	2	1	27
		2	31
		2	46
8	2	2	25
		2	27
9	4	4	43
		2	26
		2	23
10	4	2	47
		4	49
		2	37
11	4	2	33
		1	26
12	6	3	30
		6	43
		4	34

Below is an example of the existing seating configuration and the optimized seating configuration.

Below is an example of the existing seating configuration and the optimized seating configuration utilizing booths.

Below are some other strategies that we see as opportunities to provide social distancing and making guests feel safe, while still maintaining the necessary seating requirements for restaurants to stay profitable.

How to understand and adapt to industry changes as they pertain to dining out is the big question as restaurant owners prepare to move forward. Knowing how to recognize your restaurant's variables, calculate them and strategize around the changes will be the key to success and maximizing profitability.