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restaurant operations guide part 2

Restaurant Operations Guide - Part 2

Dive into restaurant cost control, how to cut costs with technology efficiently & using technology to control you day to day operations & back office.

Operations

Cut Restaurant Costs Without Affecting Quality of Service

In 2008, there was outrage among Dollar Menu Items' fans after the McDonald's management took away the second slice of cheese from the popular McDouble cheeseburger. McD's made the move after analysing how customers across many markets reacted to the launch of the McDouble with just one slice of cheese. Eliminating that one slice led to cost savings of nearly 6 cents per burger and a whopping $279 million worldwide that year.

McD’s management also realised that many customers were happy to pay for a second slice of cheese. By cutting a cheese slice from the dollar menu burger, the chain saved money, and also made a profit by charging more for the burger that was originally on the dollar menu. Implementing cost-effective strategies like these has helped McD's retain quality and profitability and keep customers "still lovin' it".

Cost Control vs. Cost-Cutting

Cost control is not a knee-jerk reaction to a drop in revenue. Rather, it’s an attempt to identify where expenses are occurring and take measures to balance finances and expenses. It is a continuous process of reducing business expenses to increase profitability, which means restaurant owners have to pay close attention to the small details to achieve incremental savings throughout operations. Most restaurants operate on thin profit margins of 3-5% as it is, which makes long-term cost reductions crucial.   

Do remember that no amount of cost control measures can stop things from going out of hand. Food prices can rise unexpectedly or labor laws can change without much warning. Managing costs that are within control can help tide over unexpected situations like these. 

Proven Strategies for Cost Control

From food to labor, there are many areas to cut costs and maximise restaurant profitability. Digitalising kitchen, inventory, and finances can make this process seamless and hassle-free. Using this method will also result in a saving on file folders and papers. Keeping digital copies of everything and backing them up regularly will reduce costs. 

 

Food Costs

Food is the number one money waster in restaurants. How does one know if food prices are too high? By calculating the food cost percentage using the formula - Total cost of ingredients / Menu item price. The answer to this will tell you how much you spend per item on ingredients versus how much you charge per item. Food costs should be budgeted at 15 to 30%, equating to 70 to 85% revenue on each item. 

Here are some ideas to help save on food costs:

  • Identify high-cost, low-profit items: There are certain items on restaurant menus that, despite costing a lot, don't sell well. It makes no sense to keep them if no one is into them. Replace them with items that customers enjoy. 
  • Optimise supply chain: Identify supply chain gaps that drain money and optimise them. Sticking to one provider is one way to reduce multiple delivery fees. Finding a supplier who will provide the bulk of ingredients will save money. The Restaurant POS system is a great asset here. 
  • Reduce food waste: US restaurants generate 22 to 33 billion pounds of food waste every year. Operators can reduce waste in many simple ways:
    - Create soup stocks with peels, seeds, skin, and bones instead of throwing them in the trash.
    - Adjust production quantities regularly and switch from bulk to small batches to minimise overproduction.
    - Throw away leftovers from customers' plates regularly? This is a sign to reconsider the portions being served to customers. 
    - Get creative with older ingredients instead of throwing them. It makes no sense to throw away slightly old ingredients if they are not spoiled. 
    - Roasted meat the following day can be shredded and used in a soup or stew.
    - If there is no use for leftovers, they can be donated to a local shelter or food bank. Donating food to charity can save you taxes, and you can help your local community too. 

Automating this process saves stress and time. Using a restaurant management system, restaurants can track waste, identify its causes, and design a waste reduction plan that will increase profits. Sports bar and grill Hickory Tavern in North Carolina decided to automate its ordering process after finding that inventory took too long and its ordering process was cumbersome. In this way, managers could order the inventory they needed based on what was available instead of what they needed. Food inventory level was reduced by 25% and profits were higher for Hickory Tavern as a result. 

Similarly, inventory automation tools helped Austin-based fast casual delivery service Snap Kitchen control purchasing and food costs. Snap Kitchen has been able to correct variance in food costs and reduce food waste by embracing automation.

Toast POS provides restaurants with a complete point of sale solution. The features of restaurant management include detailed inventory tracking, employee and shift scheduling, payroll management, and custom kitchen communication. The Toast platform offers mobile POS so that servers can carry their POS with them as they move throughout the restaurant. Customers can also order and pay using their phones at the table, providing a completely contactless experience.

Reducing food waste has become a major priority for restaurants with profit margins dramatically reduced after the pandemic and there are many emerging technologies available today, including: 

  • Tenzo: The technology allows restaurants to predict how much they will sell by creating an AI sales forecasting algorithm that uses weather data, growth trends, and a restaurant's past data to generate forecasts. The aim is to help restaurants forecast down to the menu item level. 
  • Winnow: The solution enables kitchens to monitor their waste. It comes with a weighing scale and an AI camera equipped with computer vision algorithms that record the weight and the type of food that is thrown out.  See how Winnow works; https://youtu.be/iX1F5T_eyfQ
  • Copia: The platform connects businesses with shelters, afterschool programs, and other nonprofits that need food to distribute surplus food. Moreover, their software allows you to track surplus trends, as well as identify tax savings, providing a substantial ROI to the business and feeding the hungry.
  • Leanpath: This system combines software with a smart scale and camera to track, monitor, and calculate the financial impact of food waste. 

Menu management: Simplifying the menu to keep it focused on a few items helps improve efficiency in the kitchen and better inventory management. To avoid unnecessary wastage, even the preparation time would be taken into account when preparing ingredients. Creating a recipe requires a chef to spend time preparing it, which is a direct cost.

Manually handling all of this can take a long time, but there are menu management and recipe costing solutions that can help. By integrating the menu on smart devices, the Delightree app empowers restaurant owners and restaurant managers by allowing them to upload menus, make menu changes, and encourage paperless ordering. A good POS system should be able to update menu items in real-time. In other words, when an item on the menu is out of stock, the POS automatically updates it so customers can choose from items that are readily available. 

  • Food cost calculator: You can keep track of food costs every day with a calculator that does the job faster.
  • Daily inventory: This is a must-do for any restaurateur. It’s a good practice to keep track of the items you use the most every day and match the number at the end of the day with your POS. This will indicate whether any item is being over proportioned, wasted, or being stolen. 

Manually tracking your inventory is a major hassle and this is where technology can help. Every time an item reaches its reorder level, a real-time notification helps ensure that only the items that are needed are ordered. This ensures that items that are already in the inventory are not ordered, thereby avoiding unnecessary kitchen waste.

  • Pre-portion ingredients: Employees can be overly generous with ingredients leading to higher food costs. Pre-portioning ingredients for more expensive menu items can help control this. 
  • Buy seasonal: Using seasonal ingredients has many benefits. Food tastes better and fresher. They will also be cheaper.
  • Use FIFO method: Using the "First In, First Out" (FIFO) method can help lower food costs Labeling everything with the expiration date prevents food from expiring before it is used. When the oldest product is in front, the staff will use it as soon as possible. 
  • Control liquor costs: Alcohol has a huge profit margin, but a high liquor cost (also known as pour costs or beverage costs) eats into it. Lowering liquor costs, therefore, is important to increase bar profits. This can be done in many ways:
    - Pour cost calculator: This helps calculate liquor costs easier than a spreadsheet. The app does the job once the volume, price, and units are inputted. 
    - Order in bulk: Bar operators take their weekly or bi-weekly inventories and order from suppliers who give bull discounts. This will also help management keep track of which products are in high demand. 
    - Standardise pours: Standardising cocktails, liquor pours, and wine pours can reduce costs and improve liquor inventories, leading to higher profits. 


Labor Costs

The typical average labor cost for restaurants is between 25-30% of total revenue. One way to calculate the labor cost percentage is by dividing the labor cost by the total sales for the same period. Some ways to better manage labor costs effectively:

Forecast sales and then schedule: Traffic and sales should drive your staff schedule. Otherwise, you'll miss the simplest way to reduce labor costs. Staff schedules vary so it’s important not to start copying and pasting the same schedule week after week. Slow periods must be identified so that employees are not idle. Staffing during peak hours is equally important. Be aware of important upcoming events like a major baseball game or a city festival and have enough staff to cope with the rush.

There are many inventory management and sales forecasting tools out there to help do this effectively. Employee management is also an area where an employee scheduling app like Delightree can help in tracking check-in and check-out times, the number of hours worked, attendance, leaves, etc. This helps ensure optimum use of staff. 


  • Hire smart: Costs can be controlled by hiring the right people from the start. To achieve this, it's important to hire employees who relate well to the environment of a restaurant. It's worthwhile to invest in a training program to ensure employees feel valued and invested in the business.  Experience isn't everything. It is possible to train people. What matters is a positive attitude.
  • Evaluate staff performance: Decide the Key Performance Indicators (KPI) for your restaurant staff and track them religiously to see if they are delivering their duties as per the expectations. A restaurant management system with an Employee Management System like Delightree helps monitor staff performance with data to help train them better for improved efficiency.
  • Account management:  Look for a POS system that has account management features to reduce the need for labor and ensure that accounting operations take place smoothly. It should help maintain supplier payment schedules, cash adjustments, create debit, credit, and contra vouchers, generate balance sheets and account reports automatically.
  • Opt for a Kitchen Display System: A restaurant management system that comes with a kitchen display system (KDS) can reduce the need for manual labor. A KDS ensures that when a server receives an order, it gets reflected on the kitchen screen in real-time. In case a customer changes his or her order, that will also get reflected in the KDS in real-time. 

Other Operational Costs 

Let’s take a deep dive into cost reduction strategies in restaurants excluding food or labor costs:

  • Energy usage: Small things can be done to reduce energy consumption that doesn’t take much time or extra effort. Some examples are to only run the dishwasher when it's full, opening the windows and turning off the AC when the weather is good, and investing in energy-efficient bulbs and appliances. Little things like these make a big difference.

Fast-food chain Wendy’s, for instance, has embraced energy efficiency in a big way. The chain reduced its energy bill by $1 million in 2016 after remodelling its kitchens with measures like new HVAC systems, walk-in cooler motors and LED lights, 

Or take Taco Bell for instance whose green-inspired cooking method is a great example of a cost saving measure that positively impacted the bottom line and won social media popularity for the company. Taco Bell installed water- and energy-saving electric grills in 2008 that helped save 300 million gallons of water a year. Customers continued to enjoy great Mexican-style food and the chain saved over $17 million annually.  The move reduced waste, improved productivity, and improved efficiency, in addition to earning kudos as an energy management success story. 

  • Free marketing tools: The cost of promoting your restaurant doesn't have to be astronomical. Many marketing ideas for restaurants are free or almost free. You can also look at Twitter, Facebook, and Instagram.
  • Buying used appliances/equipment: All appliances do not have to be new. Many foodservice businesses close down and want to get rid of their almost unused appliances. Tables and chairs can also be bought second-hand.
  • Prevent employee theft: There is a reality of employee theft that all restaurant owners and managers must be aware of. Usually, what gets stolen is expensive liquor. Keeping it locked up will prevent this from happening. 
  • Take it easy on the freebies: It's great when restaurants give out freebies. Some, however, are just wasteful and useless. Bulk dispensers, for instance, are preferable to wrapped straws and salt and pepper packets individually wrapped. It’s a good idea to appeal to the environmentally-conscious side of customers and encourage them to take just one napkin.
  • Listen to customers: Taking note of customer feedback can help you build stronger relationships with them and reduce operating costs. It can help identify weak areas and direct training where it's needed most. This saves time and money on unnecessary comprehensive training programs. 

Tech in the post-COVID World

The importance of controlling restaurant costs has never been greater. COVID-19 has served up major challenges for the restaurant industry, with many restaurants forced to close down. The good news is that eating out in restaurants will once again become a fun experience for people, but a lot of this will depend on the actions franchise owners and restaurateurs take now to safeguard their businesses. 

Many key steps have been outlined in this McKinsey report to enable the restaurant industry to emerge stronger, including updating operating procedures, menu management, and using technologies to rethink restaurant design and design new customer engagement experiences. 

Pre-pandemic many restaurants had just started getting their feet wet with new technologies, a process the pandemic has accelerated.  Restaurants that have adopted innovative ways during this crisis have shown the greatest resilience. For instance, QSR that switched to tech-based solutions for ordering and delivering meals.  Take Chipotle which reported a 216% growth in digital sales, accounting for 61% of total sales, in the second quarter of 2020. American fast-food corporation Yum! Brands also claimed that digital orders at all of its brands, such as Taco Bell, Pizza Hut, and KFC, reached an all-time high in the same period. 

Innovation has been taken to a new level today with virtual menus, mobile ordering, and contactless payments becoming commonplace. Changes that offer the restaurant industry opportunities to embrace technologies to optimize costs and enhance customer experiences. How restaurants adapt and evolve in the new normal will decide their future.



Technology for Cost Cutting & Efficiency


The last decade has witnessed a sudden spurt in the use of automation technology in the fast food chain and restaurant sector. What has been the trigger behind this trend? The rise in minimum wage is one of the primary reasons. The latest updates on nscl.org website suggest 29 states have a federal minimum wage above the standard of $7.25 per hour. 

No wonder then that most restaurateurs and large fast-food companies like Subway, Taco Bell, CaliBurger, Dominos and many more are turning to technology to cope with increased labour costs. McDonald’s ex-CEO Ed Rensi once said in an interview with FOXBusiness that it would be “cheaper to buy a $35,000 robotic arm than to pay low wage workers $15 per hour.” As per Ed Rensi, most franchising models depend on people who have low job skills as they are available at a low cost. The proposed $15/hour for these jobs will eat big time into the profitability. Adapting technology to replace manpower will soon be the reality of the food franchising industry.

Mr.Rensi’s prophecy has indeed proved to be true. Most American CEOs, especially in the food franchise business model have been thinking on these lines. Mr.Rensi’s statement, in a way, is representative of people in his position. Even companies like Cognizant have begun to realise how correct implementation of technology can be a game changer in the restaurant business and have come up with solutions to help players in this domain. 


Cognizant recently helped a U.S. quick-service chain worth $10 billion by digitally enabling its business applications. The company was stuck with a 20-year-old legacy ERP system. Cognizant migrated their ERP functions to Oracle cloud and in the process:

  • Optimized financial reporting and other processes
  • Reduced sequential processing
  • Expedited incentive pay-outs leading to higher employee satisfaction
  • Enabled to process operator checks 3 days earlier than before

This is a clear indicator of the fact that technology is becoming popular but not for cost saving reasons alone. Many business owners have begun to notice the overall operational efficiency that technology brings to the table. So, which technologies are restaurants and fast food chains embracing to cope with the increasing costs due to rising minimum wages? Let’s find out.


#1 Modern and advanced Point of Sale (POS) systems


A POS system is the heart and soul of the day-to-day transactions at a restaurant. Modern POS systems keep track of purchases, monitor various data points, process payments, manage inventory, and even keep track of labour. Implementing a POS system can help a  restaurant owner cope with rising minimum wages in more ways than one.

Today’s POS systems are capable of providing valuable data to restaurant owners and managers. They come loaded with features like ‘restaurant labour management’,  ‘predictive scheduling’ and ‘managing tasks’. They are capable of generating labour reports that can help owners  make many money-saving decisions. To understand more about POS capabilities read here. The labour reports generated by your POS system can give insights about:

  • Overstaffing: The POS reports will give you a clear picture an how many staff members are working during slow hours. This can help you plan better your staffing rosters. Some of the ways to save money is:
    - Reducing kitchen hours during slow periods, identifying managers who wait too long to cut staff.
    - Schedule fewer staff members.
  • Identify best servers: The modern POS systems can generate detailed shift and tip reports. These reports will help you identify which servers are upselling the most and have a high customer satisfaction rating. These reports can particularly be useful when restaurants have to cut down on wait staff. It will enable us to clearly identify good  performers over the average or bad ones.
  • Identify employee thefts: POS reports can track activities like a front-of-house staff deleting certain items, details of deleted items and no sale reports. These can help a manager or owner trace any pilferage or theft back to the source.  
  • Other benefits: POS systems help save money on inventory by keeping track of what is available in stock, helps streamline operations through floor plan management and get repeat business from customers through loyalty programs.

 

#2 Employee Scheduling Software

Employee scheduling software enables restaurateurs to optimally plan their employee schedules. Scheduling apps or software like Delightree can help bring all your communication on a single platform where everyone can access it. Integrating your scheduling software with your POS system, can help you access valuable data about your labor spending and performance. Employee scheduling software saves you and your managers so many precious hours coordinating staff schedules. 

Burrito Boyz for example was able to cut down its labour costs across all its 30 locations by implementing an ‘employee scheduling software’ back in 2019. The company has been looking forward to investing in emerging technologies such as cloud-based ERP, HCM, CRM, EPM, Procurement apps, Machine learning and artificial intelligence.

‘Scheduling software’ frees up the time wasted in texting, calling, or emailing your staff back and forth to determine their availability and make shift changes. It helps save precious dollars that  you would otherwise pay your managers to make schedules. Replacing pen and paper or a spreadsheet for employee scheduling with a cloud-based technology like Delightree can be a game changer. 

You can cope with rising minimum wage with the help of a scheduling software as it will enable you to generate labor forecasts. Integrating your POS can help you seamlessly track employee hours, wages, tips, and performance.  A scheduling software also ensures you are on top of your restaurant’s labor compliance and gives your  team the freedom to access their schedules on the go through a mobile app.

#3 Kiosks for self-ordering

McDonald’s created quite a stir by introducing self-ordering kiosks at their outlets enabling them to start table service instead of self-service back in 2016 at its outlets. See the video below to understand how a self-ordering Kiosk works.

 

A self-ordering kiosk are life-size terminals which display the complete menu with the price list and latest on-going offers. These enable customers to place an order and make payments, cutting down the waiting time. This automated customer ordering and payments process using an easy-to-use interface saves restaurant staff precious time and focus on creating a great customer experience. The same has been demonstrated in the video above. 

Another company which has written a success story by embracing technology in the Quick Service Restaurant (QSR) space is Wendy’s. The food chain’s vice-president recognised the power of digitization and technology. Starting 2016, Wendy’s launched self-service kiosks and a mobile application for placing orders setting an example on how QSR’s should stay relevant with time. Consumer’s today are glued to their handheld devices. It is indeed a smart move to enter the space where consumers are present to increase sales. 

As per a report on CBS News, by the end of 2017 the Wendy’s had self-ordering kiosks installed in 1000 stores. The motive was to appeal to the young crowd and reduce labour costs as per David Trimm (chief information officer, Wendy’s). By installing kiosks, Wendy’s was able to cut-short long waiting time during rush hours and increase kitchen productivity. The move made Wendy’s one of the pioneers in the self-ordering technology (kiosks and app both) movement.

Advantages of installing “self-ordering kiosks”

  • By automating repetitive tasks like taking orders and payments collection with a self-ordering kiosk, restaurant owners can maximise the efficiency of their front-of-house staff because a self-ordering kiosk automates the work of a cashier, staff taking orders etc. resulting in reduced labor costs.
  • These kiosks also help achieve increased revenue sales by prompting customers to upgrade their orders by adding a side dish or choosing a combo. Does this remind you about automated upselling?
  • The customisable interface makes it effortless for brands to promote high-margin items by displaying them in a way that it grabs the customers’ attention.  These kiosks also provide data on best-selling items enabling restaurants to strategically increase prices and run promotional campaigns on the best and least selling items on the menu. It is also possible to  modify prices with any dynamic factors such as the rise in the cost of ingredients.
  • With self-ordering kiosks restaurants can customise the menu display for a seamless branding experience.
  • It automates and makes two major processes contactless, namely ordering and payments. Introducing contactless methods is important in the post-covid world.

Coming back to Wendy’s success story, the company has and continues to invest in various digital initiatives to keep up with the latest QSR trends. In 2019, the company set aside a budget of $25 million for investing in the digital transformation space. Wendy’s was one of the brands successful in attracting new customers even in the Covid-19 era in the breakfast space as per a CNBC report.  This can partly be attributed to its digitisation and reducing its morning manpower and marketing. 

#4 Robotics in Restaurant and QSR Space

Robotics and automation are the newest entrants in the food industry globally. Thanks to technology everything from food delivery to cooking can be automated today. Restaurants and QSR like Spyce, Caliburgers, Café-X and Wao Bao are success stories to name a few when it comes to use of Robotics and automation.

Spyce Kitchen was started by four MIT engineering graduates Michael Farid, Brady Knight, Luke Schlueter and Kale Rogers in 2018. They built a kitchen with seven autonomous work stations and used robotic technology to prepare bowl-based meals using healthy ingredients. Then they got on board chef Daniel Boulod to create a menu for their restaurant. They have not looked back since. The USP of the restaurant is its 9 ft. long robotic kitchen. The robot chef cooks and puts food in the bowl, - all within 3 minutes. The only manual work is putting the toppings or garnish on the food. The robot then self-cleans before the next order. The brand realizes the importance of human touch. While robots prepare the food, customers are greeted and welcomed by regular staff. They are currently running two outlets in Greater Boston. See the video to understand how Spyce Kitchen has automated all operations from ordering to cooking. 


Calibugers is another example of implementing robotics successfully in the QSR space. Caliburger bought on board Miso’s robot Flippy in 2018 in their Pasadena branch, Los Angeles, USA. The Flippy robot runs on a proprietary machine learning and robotics control software to prepare fried and grilled foods. The robot has served more than 12,000 hamburgers till date. The fast-food chain has some 30 outlets across the country. They plan to implement the technology soon across all its outlets. See Flippy in action in the video below:



Though the initial costs associated with installing robotics technology is high, it actually pays for itself by reducing  a restaurant's labor costs. Take the example of Caliburger, They did not replace all their staff with robotics and automation. They focussed on one area to explore new technologies to complement their staff’s efforts, enabling them to be more productive. Robotics can be a great value addition to a restaurant business in the following ways: 

  • Enhanced customer experience and increased profitability: Automation whether partial or full enhances customer experience by reducing the turnaround time. Automation drastically reduces order taking and food serving time. This increases productivity and helps serve more customers eventually increasing the revenues and profits. 
  • A great publicity tool: Since robotics and automation is fairly new, being early supporters will get you more publicity and in turn more customers. People will be curious to try a robot cooked meal. In addition to traditional media, your customers become your free publicists too as they will share the unique experience in the form of photos and videos from you on their social media.
  • Consistency: Automation enables to create a more consistent experience. Consistency will ensure repeat business and happy customers. Your customers are assured that they would get a similar experience every time
  • Negating human error: Robotics and automation can drastically reduce human errors. From never missing an ingredient to honouring special requests accurately, robotics can do it all. 

Adapting technology and automation in various spheres of operations is all about bringing about efficiency and optimal use of resources. It is no surprise that some of the biggest food chains in the world are jumping onto the band-wagon. Automation is quickly gaining popularity with many mainstream fast-food chains and mid-sized ones too. 

Panera, McDonald’s, Wendy’s have been pioneers in installing self-ordering kiosks. Wendy’s also has self-cleaning machines and ovens installed helping them curb significant labour hours. KFC has a branch based out of China operated solely by robots. Smaller franchise businesses like Andy’s Frozen Custard are also embracing technology by investing in employee scheduling software. 

The demand for a rise in minimum wages is hitting the restaurant and fast-food industry hard. In an industry where profit margins are 10% or even less, any increase in labor costs is bound to hit the bottom line. Restaurateurs and CEOs of fast-food companies need to think out-of-the box and embrace technology to help offset rising labor costs. With the right technology applied in the right areas, businesses can better utilise employee resources in other areas, resulting in higher returns. 

A little research and creative thinking can help restaurant owners identify the ideal technology solutions that are both affordable, help optimise resources  and increase profitability.


Why are apps better than excel for day-to-day restaurant operations?

At times simple words carry such deep meaning. This quote by Teddy Roosevelt: "Do what you can, with what you have, where you are" for example has such an important message hidden within. You will often see most restaurant owner’s imbibing this philosophy in their day to day running of the business. People in the restaurant business create a customer experience which is deep-rooted in their menus, ambience, and service levels. 

However, the restaurant industry is one area where today's technology can be put to good use to deliver a customer experience beyond traditional expectation. Believe it or not, application technology has played an instrumental role in reshaping and repositioning the food and restaurant industry.

Look at these numbers that a study conducted by Toast revealed. These numbers are indicative of how deep-rooted technology has become in a restaurant’s day-to-day functioning these days. 

  • 73% of diners are of the opinion that technology improves their guest experience. 
  • 95% of restaurateurs are of the opinion that technology improves their business efficiency.
  • The top features restaurateurs look for in a restaurant POS upgrade are ease of use, depth of reporting, and inventory reporting.
  • 61% of diners are of the opinion that server handheld tablets improve their guest experience. 

These numbers are  indicative of the fact that adapting technology is more of a necessity than a choice for restaurant business owners these days. Restaurant technology is centred around POS software, payment processing, guest interaction tools and feedback tools to name a few.

Here’s another interesting fact, as per an article published on Forbes. The total restaurant sales in USA in 2020 was only $659 billion. This was a massive decline by $240 billion from what was forecasted. Many restaurants closed down, but those who survived the aftermath of the pandemic have some really interesting revelations. What are these? Let’s find out:

  • Full-service, fast casual and coffee/snack operators have invested in technology  resources like mobile or online ordering, mobile payments and delivery management. Though the technology itself has not changed much, adoption rates have gone high. Food business owners have realised that what used to be “good to have” has now become a “necessity.”
  • A recent report published by Panasonic found that 71% restaurant operators now acknowledge digital transformation to be “very important” for their business.
  • From a safety standpoint in the post-covid world, most restaurant owners have embraced contactless order and payment technologies at an accelerated pace. According to a recent study conducted by Forrester Research FORR  retailers reported a 69% surge in contactless transactions starting January this year.
  • 21% of guests now prefer restaurants that offer contactless payments facility when dining out. According to the U.S. Restaurants association’s report, a whopping 40% of restaurants operators across segments (small, medium, large) have added a contactless or mobile payment option since March. It is anticipated that the number will continue to grow.
  • In the pre-COVID era, about 80% of full-service traffic was on-premises. However to stay afloat, 56% of fine dining operators have modified their menus to include takeout or delivery food items since March 2020.
  • 53% of adults surveyed believe that purchasing takeout or delivery is now essential to the way they live. 68% of adults believe they are more likely to purchase takeaway food from a restaurant in the post-COVID world.
  • As per the same survey, 80% of fine dining, family dining and fast casual restaurant owners added curbside, with chains like Panera implementing it within weeks of the pandemic.

(All statistics from an article published on Forbes.)

The trends, impact of the pandemic, people’s preference of convenience all convey one thing. Adapting technology is the only way forward to running a profitable and successful restaurant business. So, in which areas of your restaurant operations can you apply technology and how will it simplify your life?


Read on to find out more about it.


Making your restaurant operations ‘tech enabled’


#1 Restaurant Inventory Management software

Food is the biggest inventory a restaurant has, handling it well is important for a restaurant to be profitable. Imagine having a tool or an app that can help you track your kitchen inventory by just a few taps on your smartphone or iPad. It will be such a relief to not deal with stacks and folders full of invoices, clipboards and checkmarks, and ambiguity around food costs. A cloud-based inventory management system does just that, it helps you digitally track the movement of inventory. Being cloud based you can access it 24x7 and from anywhere.


A restaurant inventory management software helps in:

  • Digitising your invoice and purchases.
  • Enables you to compare costs and make more informed purchasing decisions.
  • You can add your recipes on the app and calculate actual food costs.
  • It is a great resource to help cut down on food waste, food cost and ensure that everything in your back-of-house is streamlined for transparency and profitability.


#2 Restaurant Audience Management Software

Keeping a track of your guest preferences and contact information can go a long way in maintaining a loyal customer base. Remember the 80’s and 90’s when any café or fine-dine place you visited would take written feedback and contact details in a booklet. However, that is old school and not a practical way of tracking your guests. A good restaurant audience management software can help you keep a track of your guest preferences and contact information. 

Today’s modern technology platforms have eliminated the need for physical cards or diaries. The highly advanced and sophisticated audience management software of today can help you:

  • Keep a track of your repeat customers and their orders, dietary preferences, favourite drinks, and a lot more in one centralised place. Having a customer’s food and  preference data can help to provide a service that would turn into a ‘customer delight’.
  •  Helps aggregate data from portals like Google Local, TripAdvisor, and Yelp. This way a food business owner gets a snapshot of guests’ feedback at one place. This makes identifying and addressing guests' concerns easy and formulating successful strategies to delight them.
  • Most modern software also supports QR-code based feedback on takeaway/delivery orders. This is a boon in times where takeaway and app-based home-deliveries are the norm.

 

#3 Scheduling Software/App

An Excel or Google spreadsheet has been used by many business owners for creating their staff’s shift schedules. It looks nice, organised, and all the color-coding makes it easier to read at first glance. But all hell breaks loose once it is implemented. Accommodating  change requests, recording availability/non-availability of staff, and human mistakes can be both intimidating and confusing.

That’s not the end, a manager ends up wasting precious productive work hours in staff scheduling and rescheduling. As a result the pen-and-paper or spreadsheet schedules work out to be a costly proposition given the time and effort a manager needs to spend on it. 

Installing restaurant scheduling software can be a simple and cost-effective solution in the long run. The software allows you to:

  • Make schedules and track your employees’ time and attendance.
  • This makes processing the payroll a breeze. 
  • It also enables you to pull out reports from the POS system to track labor against sales and get a more accurate picture of your labor cost.
  • Saves your restaurant time and money.
  • Avoids any communication gaps. 


In the absence of software, a restaurant would typically maintain a separate spreadsheet for employee scheduling, track sales on POS, track attendance and hours worked in a separate time tracking app. Basically, there are too many sources that need to be tracked and then reconciled. A cloud-based scheduling software like Delightree helps you do all of this at one place. It enables easy publishing of updated schedules and also allows sending out team-wide announcements and adding events like holidays or specials to the calendar.

#4 Use of ‘Smart devices’ in a Restaurant

Smart devices are not just restricted to the confines of homes and offices of technology giants. The various surveys and their results are proof that devices like iPad smartphone, QR code scanning technology have made strong in-roads in restaurants and its commercial kitchens too. 

Automation, robotics, smart devices like Google Home and Alexa are being extensively used by the industry to stay on top of things. Managers and owners alike are using home smart devices to remind them of important tasks, smart lighting solutions for their restaurants and much more.

Having an app like Delightree can simplify your day-to-day restaurant operations beyond your imagination. It converts all your SOP’s into trackable tasks and helps verify day to day operations with the help of checklists, forms and live pictures. What’s more, it enables you to do this remotely. The app also notifies you on complete and in-complete tasks and enables you to stay connected with your team via chats.

Bye-bye to multiple WhatsApp and Telegram groups, excel sheets and checklists. Manage all your operations on a single app like Delightree and have a seamless and effective communication channel with your team!


Final thoughts 
Integration of technology to simplify restaurant operations is not a new concept. However, challenges like the pandemic, rapid digitisation and fast-evolving technology accelerated the journey of technology in restaurant space from ‘good to have’ to ‘must have’. Restaurateurs who acknowledge and embrace technology are here to stay.

Take Control of Restaurant Back Office Operations with Technology

Smiling faces, mouth watering food, tinkling music, and dim lighting - those are typically the sights and sounds of restaurants you see on films and TV shows. Few turn the lens on the back offices - typically, a messy, cluttered, and chaotic space packed with security cameras, employee uniforms, filing cabinets, post-it boards, and cables. Getting a handle on that back-office chaos is crucial to ensure the front-end stays picture-perfect. 

Most often, however, restaurant back office management gets overlooked. COVID-19 and its aftermath have altered this. Due to shifts in customer expectations, safety protocols, operating restrictions, staffing constraints, and operating constraints, the spotlight is on the need to find technologies that can manage back-office solutions and put growth back on the menu. Restaurant profit margins, which were already slim, have been further sliced by the pandemic. It makes better management of inventory, invoices, vendor relationships, etc. even more important for understanding restaurant costs and reducing them. 


Organised Back Office = Greater Efficiency

Paying attention to managing the restaurant back office has many benefits.


  • Saves time: Ready access to important documents and records like staff training materials, sales data, financial statements, or employee records is important to save money and sometimes even costs. 
  • Better organisation: Storing records and statements in specific locations reduces the physical clutter and the general mess. 
  • Send a message: Want to do some tough talking with an employee? The restaurant back office is usually the place to do this so it needs to convey an air of leadership and discipline to get the message out. 


Get Paper Documents In Order

Going digital is a great way to organise your paperwork but there are many documents for which physical copies need to be kept at restaurant premises. Here are some ways to get them in order:

  • Organise all paper items into labeled storage boxes. Find out how they got there and who needs to keep a copy of each document. Email the document to the appropriate person and discard the paper copy.
  • Documents that are needed by the manager like employee records, training manuals, etc should be put in a filing system. Confidential documents should be locked up, and there should be separate trays for incomplete documents, complete documents, and training materials.  
  • Put personal items of employees in shift lockers where available. Else they should be put in boxes and taken home by the employee. 

 

Let’s Get Digital 

A recent Oracle Food and Beverage study found that 59% of U.S. consumers plan to frequent restaurants as soon as their states permit it. Of these consumers, 26% said they planned to dine out in the first week after authorities deemed it safe. This shows that the demand for on-premise services is tremendous, regardless of whether restaurants are only permitted to offer outdoor or indoor seating.  The study also highlights consumer concerns about dining out, like: 

  • 73% plan to reduce the use of cash.
  • 49% prefer to reserve tables, order, and pay through mobile devices to reduce human interaction.
  • 46% of respondents prefer to settle the bill via mobile apps without waiting for a server.
  • 39% prefer to order ahead on devices to reduce wait times.
  • Over 37% of users would like to track orders on the go.

These changing demands make it important to deploy a back-office system that helps improve process controls and automate repetitive tasks, like monitoring:

Reporting:

Keeping a tab on all the restaurant operations manually is a task that not all managers can perform efficiently. The POS system of a restaurant will give a central view of all restaurant operations. These include:

  • Sales report: It is composed of all the sales data at a restaurant on a particular day. It includes details such as the total number of bills generated and the discounts granted. The report makes it easy for franchise owners with multiple outlets to access the data of all the outlets from one place. In this way, the sales across all the outlets can be compared. They can then take steps to increase sales with specific marketing strategies across all outlets.
  • Inventory reports: Since internal thefts are rampant in inventory, it is essential to generate an inventory report every day that summarises how much each item has been used. There is also a variance report that compares actual and ideal stock consumption. A variance over 3-5% indicates that there has been theft or wastage. 
  • Menu performance reports: Analysing menu performance reports gives insight into business and what customers like in the restaurant. Using this information, restaurant managers can add or remove items from the menu. 
  • Expense reports: Unexpected expenses crop up, so tracking all expenses like rent, electricity, phone, WiFi, water bills, inventory costs, and damaged crockery is imperative. Expense reports should include a summary of the daily and long-term expenses incurred by the restaurant. This will help reduce unnecessary expenses and boost overall profits. 
  • CRM reports: CRM reports give information about customer orders, dates and times of visits, and bills generated at the table. By understanding the most popular and least popular items, restaurant managers are able to tweak their menus accordingly. Additionally, they help determine customer loyalty and this can be used to run loyalty programs and marketing campaigns and increase customer retention.
  • Outlet performance reports: Monitoring operations and tracking sales can be challenging for franchise owners running many restaurant brands. With a centralised restaurant management system, quick and efficient decisions can be implemented since outlets and brands are visible in one place. When reviewing performance reports for outlet restaurants, outlet level sales, brand level sales, and brand to outlet comparisons should be considered.
  • Employee performance reports: To run a successful restaurant, it is important to analyse employee performance. Restaurant reports generated from POS software can be used to establish individual goals and Key Performance Indicators (KPI) for each employee and measure their productivity on a weekly and monthly basis. A measure of staff productivity can be found in the number of tables served, total sales in a week, etc.

While finalising a restaurant POS it is important to make sure they are empowered to provide the inputs mentioned above. The Toast platform for restaurants is a one-stop-shop solution that offers in-house online ordering, gift card and loyalty programs, labor management, and reporting tools. 

Food, inventory costs:

The back office is managed through an inventory system that constantly keeps track of the items on hand, the cost of inventory, and theoretical food costs. The system needs to be configured with a lot of data in real-time to arrive at a reasonably accurate picture of food costs. 

POSist software is used by many restaurants and cloud kitchens for inventory control and theft prevention. Through its real-time inventory tracking system, the software helps restaurateurs keep track of the raw materials.

Using a workflow automation app like Delightree, franchise owners and restaurant managers can efficiently manage their inventory for improved profitability and reduce the headache of managing back-office processes. 

Labor:

Employee scheduling tools are usually part of the back-office system. A manager can use these tools to decide how many employees are needed per shift based on the sales forecast and customer traffic. A schedule is generated for every employee for every day/shift for the upcoming week. Sometimes managers need to make decisions on the spot and they can make better decisions by referring to the previous day’s data. 

The 7-shifts employee scheduling software helps manage timesheets, team communication, task and tip management, and labor compliance, enabling decisions that are time-efficient and cost effective. With an operations app like Delightree,  managers can change shift schedules based on employee workloads. Employees can also easily access the schedule. The accessibility is a win win for all. 

Purchasing:

Suggested ordering is another feature of many back-office systems that are closely linked to the calculations of theoretical food costs.  Based on the information in a recipe, the system determines how much of each ingredient is being used in point of sale data.  Focusing on that one ingredient per menu item, along with tracking the quantity sold of each menu item, will give a good idea of the usage of that ingredient. EagleOwl, a cloud-based platform that offers features such as supply chain management, recipe costing, menu engineering, etc., claims to help restaurants improve their bottom line by up to 20%.

Prep schedules:

When there’s a lot of prep work on a daily basis, back-office systems can be helpful as they create a prep schedule for these items using the extensive recipes loaded into it. If the recipes are up to date with the latest ingredients, the prep schedules can be accurate to the smallest detail. GOFRUGAL software includes the ability to maintain a fresh inventory, manage operations of the central kitchen, and prepare signature dishes with recipe control.

Payroll management:

Four out of five business owners experience timesheet errors on a weekly or even daily basis. Given that many employees track their hours manually or through the honor system, this is not surprising. Restaurant managers and owners must spend hours collecting employee time data, figuring it out, and manually entering it before running payroll. It's a waste of time and money. A simple button click or tap can clock an employee in and out using automated time tracking. As time data is stored safely in the cloud, it is always available and accurate. 

Pocket HRMS, a fully cloud-based and automated payroll solution, takes care of everything from salaries to tip calculations, leaving restaurant managers and owners free to focus on customer service.

Bank reconciliation:

Many restaurant management systems are integrated with POS and bank systems, allowing for features such as automated bank reconciliation. The process of manual bank reconciliation at the end of the month is time-consuming and tedious, but solutions for restaurant management can streamline bank reconciliation. Automated bank reconciliation allows operators to reconcile their bank activity every day. With Restaurant365 restaurant owners have access to a complete cloud-based restaurant management system that combines key restaurant modules with a back-end accounting system. 


Happy employees:

Going paperless is preferred by many millennials as the new age is savvy with technology and likes to work with new tools. 75% of millennial employees believe access to tech makes them more effective in the workplace according to one study. They are more open to letting old-school ways go. 


Investment in valuable restaurant point of sale systems are keeping the fires burning across many top restaurant chains. Starbucks is one great example of the effective use of restaurant technology. In addition to allowing people to prepay and order coffee in advance, the Starbucks app collects data on the buying habits of consumers, and it integrates with Starbucks' in-store POS system in order to keep track of sales and stock trends. It provides the company with the means to process transactions, manage customer relationships, and improve business operations. 

Subway has a custom-made POS system that was created to reduce training time and prevent employee theft. The system is so seamless and efficient that store managers no longer need to formally train new hires. Instead they just give a basic orientation. Earlier this year, the Connecticut-based chain introduced a multi-country payment solution for nearly 21,000 franchisees operating 42,500 restaurants. The platform helps restaurants overcome COVID restrictions and consumer anxiety by providing a safe dining and eat-in experience. The contactless e-commerce payment solution accepts GooglePay, ApplePay, and many others. 

Tech Brings Passion and Process Together 

In the post-pandemic era, customer expectations have drastically changed, and restaurants require a more comprehensive, integrated back-office technology suite to stay competitive. Given the growing demand for contactless delivery, a number of vendors have integrated their curb-side pickup and delivery apps with a full-featured back-end management system. Restaurant operators are also using apps and platforms to find skilled workers with immediate availability or to train their staff on COVID-19 safety protocols. 

From inventory to payroll, restaurant technologies are pushing the boundaries. They are tools that are becoming increasingly powerful and the implications for restaurant operations have never been greater.


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