In our previous discussion, we highlighted the crucial role of infrastructure in revenue management, especially for quick-service restaurants. Here, we’ll delve deeper into the three main components of infrastructure: data, systems, and culture, and how they form the backbone of effective revenue management.
Data
Accurate, granular, and timely data is the cornerstone of successful revenue management. For quick-serves, key data points include:
- Check Amounts: Accurate recording of transaction totals.
- Menu Item Prices: Ensuring that the prices in the system match the actual menu prices.
- PLUs (Price Look-Up Codes): Keeping these codes accurate to track sales effectively.
- Order Details: Capturing what items were ordered and how they were paid for.
Without clean data, decisions based on this information will be flawed. It’s vital to regularly audit your data for accuracy. The two main challenges with data are: it’s often hard to obtain, and when available, it may be incomplete or incorrect. Thankfully, the emergence of a new generation of cloud POS systems have made data integrations easier. “Data First” systems POS systems like Qu have started to gain tremendous momentum in the marketplace among enterprise restaurants as data is the driving force of the new ‘smart systems’ driving next generation restaurant technology.
Systems
Integrated systems are essential for avoiding operational inefficiencies. Historically, QSRs faced challenges with managing third-party delivery orders, leading to the “tablet hell” scenario where multiple tablets from different delivery services cluttered the workspace, causing confusion and inefficiency.
Today, several multi-channel providers are also acting as systems integration solutions that streamline these processes:
- Data Integrators: Companies like Olo, ItsaCheckmate, and Lunchbox consolidate orders from first party and third-party delivery platforms into a single system. While the systems tend to integrate now, the data consistency across channels is a different story.
- System Integration: Integrating your POS with kitchen display systems, delivery platforms, and inventory management can significantly enhance operational efficiency. This integration ensures that data flows seamlessly across systems, reducing errors and improving service speed.
- Data Table Shares: Secure table sharing is new trend in data accessibility that is rapidly changing the economics of how data is shared across the enterprise and with vendors. Currently it is used primarily for analytics purposes in large enterprises and was pioneered by Snowflake computing. Rather than requiring API’s (Application Programming Interface) and SFTP’s (Secure File Transfer Protocols) to move data around the organization with many copies of the data stored in multiple places, Data Shares require just 1 table that is securely shared within the cloud environment, saving the expense of data movement and storage replication. It also lowers error rates in transmission. Very soon, this technology will be the preferred method for store-level data integrations, which will make it much easier to have manage data around a single source of truth—and alleviate the hurdles that have caused restaurants to be a laggard in participating in the digital revolution.
Despite these advances, a fully integrated revenue management system that encompasses POS, channel management, kitchen display systems, and dynamic pricing isn’t yet available. However, progress in this area continues, and you should stay informed about new developments.
Culture
The cultural shift towards revenue management is perhaps the most challenging aspect. Implementing revenue management strategies requires a different way of thinking, which may face resistance from staff used to traditional methods. To foster a positive cultural shift:
- Start Small: Begin with simple, easy-to-implement changes that demonstrate clear benefits. This approach helps in gaining buy-in from staff gradually.
- Develop Performance Metrics: Establish metrics to measure the success of your revenue management initiatives. These metrics can help in showing the tangible benefits of the new strategies, making it easier to gain acceptance.
- Training and Education: Educate your team about the benefits of revenue management. Training programs can help staff understand the importance of data accuracy and the role of integrated systems in enhancing customer service and profitability.
Practical Steps to Strengthen Infrastructure
- Regular Data Audits: Schedule regular audits of your data to ensure accuracy. This includes checking transaction records, menu prices, and inventory levels.
- Leverage Technology: Use advanced POS systems and data integrators to streamline operations. Ensure these systems are compatible and can communicate with each other effectively.
- Employee Engagement: Engage your employees in the process by involving them in training sessions and decision-making processes. This inclusion can help in reducing resistance and fostering a culture of continuous improvement.
- Monitor Performance: Use key performance indicators (KPIs) to track the impact of revenue management strategies. Regularly review these metrics to identify areas for improvement and adjust strategies accordingly.
Conclusion
Building a robust infrastructure for revenue management in quick-service restaurants involves a blend of accurate data, integrated systems, and a supportive culture. By focusing on these areas, operators can create a strong foundation for effective revenue management, ultimately leading to improved operational efficiency and profitability. In future discussions, we’ll explore each component of the five Ps (product, price, placement, promotion, and people) in more detail.
Sherri Kimes is an Emeritus Professor at Hotel School at Cornell and specializes in pricing and revenue management. She has actively involved with teaching, conducting research and consulting in restaurant revenue management for the past 25 years. She is passionate about helping restaurants increase profitability. She can be reached at sk@sherrikimes.com.
Mike Lukianoff is an entrepreneur and data science pioneer with decades of experience serving the restaurant industry. Analytical solutions he has developed or contributed to have been used by over 60 percent of the top 200 US restaurant chains. He is CEO/Founder of SignalFlare.ai, a Decision Intelligence company focusing on pricing, promotions, targeted marketing & new market strategies for restaurants. He can be reached at Mike@signalflare.ai.
