Outside Insights | By Guest Author

How to Manage the Bottom Line Amid Change

With the right data tools, operators can battle rising costs.
image used with permission.

Read More About

There is no question that quick-service operators are feeling the pain of a number of financial burdens that are coming to a head simultaneously. Many operators continue to feel the pressures of a generally weak economy, the result of the most recent recession. The National Restaurant Association also reports that wholesale food prices have also increased nearly 25 percent over the last five years. Finally, according to Pew Research Center, 29 states plus the District of Columbia have raised the minimum wage anywhere from three to 38 percent over the past four years. 

The state of the economy combined with climbing commodity costs and rising minimum wage requirements have many restaurant operators in constant battle with their P&Ls. 

To offset increasing operating expenses, some restaurant operators are increasing menu prices—a trend that, according to the NRA, 58 percent of restaurant operators followed after the 2007 federal minimum wage increase. The dilemma is whether or not customers are willing to pay more today for the same product they paid less for yesterday.

Still other operators are limiting hiring or are cutting employee hours in an effort to reduce expenses. But this puts restaurants in a position of possibly failing to deliver on their customer service and satisfaction promises, which could drive customers to the competition.

Fortunately, by leveraging advanced restaurant data analytics tools, operators can combat their rising operating costs by streamlining their operations, reducing their loss, and setting and measuring goals.

Streamlining operations

Tools that present important operational information on a dashboard are valuable for streamlining because they provide quick, easy access to information, thereby eliminating the need for managers to dig through paperwork, sort through transactions, or sift through pages of online data. Viewing the restaurant metrics that matter the most all in one place helps save time and refocuses efforts where they’re most needed: managing the restaurant. Technology has advanced to where many web apps today collect relevant information from a restaurant’s POS and put it in one screenshot for easy review and reaction. 

Viewing the restaurant metrics that matter the most all in one place helps save time and refocuses efforts where they're most needed: managing the restaurant.

Outsourcing accounting and payroll services is another valuable means of streamlining. Such outsourced services can help tighten bookkeeping errors, provide critical financial expertise, and allow the business to ultimately scale and grow. In addition, outsourcing partners provide professional, easy-to-read reports that make managing and understanding finances a much simpler task.

Reducing loss

Restaurant operators deal with two kinds of loss—intentional and unintentional—and both take a big bite out of the bottom line. But with the right kind of loss prevention tools, operators can add 3 percent back to their top line revenue. 

Through electronic oversight, managers can connect suspicious transactions to the right employees, bolstering a loss prevention investigation. Plus, managers can see trends overtime and identify loss more specifically. For example, if one employee is consistently tendering deletes and refunds over a period of time, it’s probably due to theft.

Unintentional loss is typically due to inefficiencies in restaurant processes, like inventory management or employee training. Ensuring managers are spending time on staff development in order to cut down on mistakes at the register or back of house can go a long way in reducing such loss. In addition, using sound inventory management procedures to balance between having enough product to serve the guests while limiting the amount of product on the shelves significantly cuts down on waste.

Setting and measuring goals

Before operators can hope to cut operational costs in their business, they must first set smart goals. Some data analytics tools available today help operators set thresholds and provide tips to help stay within those thresholds. Key metrics operators should be setting goals around include:

  • Labor: Consider employee schedules and sales forecasts when evaluating labor costs. Is scheduling a daily business process? Does the schedule align with the forecast?

  • Customer satisfaction: Customer satisfaction is one of the most important factors in customer retention and is necessary to sustaining a sales forecast.

  • Theft: Identify a person or process for spotting, stopping and deterring theft. Who is ultimately responsible for loss attributed to employee theft? 

  • Speed of service and employee productivity: What are the average counter and (if applicable) drive-thru speed of service times? What employees are best at the window? Does the staff know the speed of service goals?

  • Food waste/cost: What is the food waste variance? How much food is wasted each period, and how is that being measured and improved upon?

Despite the barriers to success, quick-service operators can use advanced restaurant data analytics tools to streamline their operations, reduce their loss, and set and measure goals, they can overcome those barriers and achieve the profitability they desire.

Ed Heskett is a 30-year veteran of the restaurant industry and is a loss prevention consultant for Delaget, a leader in innovative restaurant technologies. Heskett is responsible for training and assisting restaurant operators with the implementation of loss prevention tactics and software.

Add new comment