Margins in the restaurant sector are wafer-thin. That is no news, but a problem that has existed for years. What ís new, however, is that affordable new technologies are increasingly tipping the scales towards greater profitability.
Restaurateurs that want to strengthen their bottom line must be able to keep costs under control. The trouble is that when you say cost cutting, you think quality loss (or, at the very least endless negotiations with suppliers).
It doesn’t have to be that way.
The most sustainable way to reduce costs is to make processes more efficient.
It’s a logical approach that has led to considerable growth in almost every other sector. Cost savings follow naturally from workflow optimisation.
But the restaurant sector isn’t just any other sector.
An essential prerequisite for process optimisation is access to a considerable amount of data. In the foodservice sector, such data is often unavailable, not up to date, or so fragmented that they raise more questions than they answer.
But that unfortunate situation is changing rapidly – for the better.
Modern restaurant technology has made huge leaps in recent years, allowing workflows in both the front and back of house to be thoroughly improved.
Modern restaurant management platforms can:
- automate complex calculations,
- process data from multiple sources (sales, inventory, labour),
- free up hard-working staff from repetitive tasks (that software can perform faster and more accurately anyway).
In addition, automation allows reports to be viewed daily rather than quarterly, so you can take action immediately when something goes wrong and not weeks later, after avoidable costs have been piling up.
The results are significant cost savings without too much effort. Even better, these optimisations can be rolled out company-wide, giving you a cumulative effect that resonates across all your restaurant sites.
This article covers 5 ways tech enables immediate cost savings for restaurants.
(There’s one caveat, though, the ROI of tech is faster and more pronounced for restaurant operations with multiple locations.)
Let’s dig in.
Examples of How Technology Helps Restaurants Keep Expenses Under Control
Technology has brought tremendous improvements to every industry in the past decades. The food industry is no exception. Here are five ways tech has been helping restaurants get ahead.
1. Reducing human error through automated processes
In the restaurant business, time is money. But speed isn’t the only thing that matters.
Accuracy is also important because mistakes can cost you time and money. Automating repetitive tasks helps increase speed while maintaining accuracy.
One error-prone process is relaying customer orders to the kitchen. Wrong orders result in disgruntled customers and wasted food. An automated system can capture customer orders and send them to a kitchen display. You can also ask customers to place orders via QR codes. This reduces the chances of errors forwarded by servers to the kitchen.
Another cost-reducing application of automation is the creation of purchase orders for F&B wholesalers. This repetitive task is prone to errors as staffs attempt to match inventory with demand forecasts.
An automated purchasing system will suggest purchase orders based on par levels, bills of materials or predetermined minimum stocks of raw materials.
Reducing the opportunities for human error removes the costly consequences of those mistakes. Also, when labour is short, you want to maximize your staff’s efficiency as much as possible.
For some restaurants, robotic technology helps address rising labour costs and the shortage of good staff. Various food chains have been using robots to automate repetitive tasks. We can see robots cooking food and taking orders. However, this technology is still in its infancy. And not everyone can afford the kind of technology robotics offers.
Recommend Reading: Apicbase Modules Explained | Why Restaurant Operators Call Them The Backbone of Their Kitchens
2. Reducing food waste through better menu engineering
Food waste is a restaurant’s number one enemy in saving costs.
Having lots of leftovers or non-performing dishes is terrible for the environment and your bottom line. During these challenging times, every penny counts. Wastage like these can be critical hits to one’s profitability.
Monitoring and analyzing customer wants and dislikes can help you tweak recipes. You can include more of what people want and less of what they don’t. Each menu item can be broken down by component. This helps you charge the correct menu item price and replace overpriced ingredients.
Using data-driven menu engineering, you can make smart decisions about price increases, ingredient substitutions, and promotions. With sales analytics, you can see which dishes are performing well. This will guide your recipe development and inventory purchases.
3. Reducing unnecessary spending by spotting loopholes and savings opportunities
Tracking expenses is the surefire way to identify cost sinkholes and savings opportunities.
Food cost management is one of the key ways operators can make their chains profitable. And yet, this is the aspect where there’s a lot of room for food waste and pilferage. Overstocking raw ingredients, improper recipe yields, and inventory theft increase food costs.
It’s easier to run a tight ship when everything is accurately and automatically tracked. To determine actual food costs, you can log food receipts and other expenses in an inventory management system. This helps update inventory data and COGs (costs of goods sold). As a result, you’d see how actual food costs compare with theoretical ones.
Measuring food costs regularly and identifying variances will help you spot profit leaks. You can stop them before they get out of control. It will also help you catch any missing inventory.
An advanced POS platform will also show you packaging costs, discounts, and utility costs so you can devise tactical strategies to cut them. For example, you can make take-out cutlery optional to cut down on packaging. You can also donate excess food inventory for tax credits.
4. Reducing labour costs by automating the recruitment process
At a time when restaurant staff shortages are a global problem, finding good workers is challenging.
Automation saves time posting job openings on job boards and filtering applications. Employers can use HR platforms to check out candidates before they go for an interview. They can offer instant messaging services perfect for Gen Z applicants.
In a tight economy, making wrong hires or hiring at the last minute is costly. You don’t want to lose customers because you’re understaffed. You can’t afford to suffer through a non-performing new hire.
With the economy improving, restaurants are scrambling to fill in positions. But with more job openings than applicants, hiring competition is fierce. An automated HR platform that makes recruiting seamless is a great way to stand out.
5. Reducing inventory costs by improving the procurement process
Food is the core of any restaurant. No one wants to risk running out of stock nor having too much stock on hand. It’s a delicate balance.
It’s common for managers to order more stock than they need in anticipation of a busy day. Over-ordering hurts the bottom line of even the most established food chains.
Restaurant procurement systems let managers place orders based on real-time stock levels, sales, and production needs. Using data, they can make accurate inventory forecasts eliminating overstocking and shortage. It eliminates buying mistakes and prevents stock pilferage leading to reduced food costs. In the end, profits increase.
Let Technology Bring Your Restaurant to Profitability
Investing in technology may seem counterintuitive when we want to reduce costs and save bottom lines. Yet, technology has proven itself to generate savings that justify the investment.
Without technology, restaurant staff will resort to inefficient methods to manage daily costs. These manual methods can leave a lot of opportunities for profitability and growth on the table.
In contrast, the right technology will empower your staff to make the right decisions.
It will improve their efficiency so they can focus on delighting customers. Ultimately, you’ll enjoy more considerable revenues and higher profits.
Check out Apicbase’s technology solutions to get you started on the road to growth and profitability.