CAN LEVERAGING DATA IMPROVE RESTAURANT OPERATIONS?

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If you haven’t heard, the restaurant industry is suffering from a critical labor shortage. Restaurants of all types and sizes are struggling to find enough staff to keep operations running smoothly or, in some cases, even open the doors. Workers across the United States are staying home or moving into other sectors, leaving restaurants in a bind. 

From Main St. to Wall Street, concepts have pushed everything from higher wages, signing bonuses, and free phones to increased benefits and a better work-life balance to get workers to apply. As a result, some brands have weathered the storm better than others, according to Ward Olgreen, Chief Operating Officer for Marketing Vitals. 

“We live in a supply and demand world, which includes staffing,” Olgreen said. “During this unique business disruption period, where many employees received funds to stay home, it gave them time to rethink their choice of employment and choice of career. If you were a great employer who respected your business, your employees, and your guests, that employee is probably going to return. If you weren’t operating at an optimum, the only employees that may come back are the ones that could not find a better job, exacerbating the issue.” 

The pandemic didn’t do the industry any favors, but it forced restaurants to look more closely at the information they collect and apply to their operations. Today’s restaurants rely on data coming from many sources, including their point of sale solutions, loyalty programs, back-office platforms, and cloud-based solutions. As a result, this data gives restaurants a chance to improve operations and make life a little easier for their remaining staff.

Data Driving Dining Experiences

In 1995, if a guest wanted to place an order with your restaurant, they would have to either walk through the front door or call you on the phone. Now think about all the ways your guests can get in touch with you today. We have mobile ordering, online ordering, text ordering, QR codes, third-party apps, Slack messages; sometimes it feels like we’re only a couple years away from being able to order a chicken sandwich using only our thoughts. 

But last example aside, the point is that we have more – and better – access to data than ever before; we just haven’t always made the best use of it. 

“As a 40+ year operator myself, before data (and electricity), we used to fly by the seat of our pants,” Olgreen explained. “We used a gut decision-making process because it simply took too long to get a data-based answer out of finance – the truth is the data has always been there.” 

Despite seemingly unlimited access to the millions of data points available via the POS system and associated integrations, it’s tough to break old habits. For decades, restaurants relied on time-sensitive, manual processes that still couldn’t totally be trusted due to human error. But Olgreen says the rise of cloud-based back-office platforms like Marketing Vitals can reduce the risk of bad data or faulty equations impacting the answers you’re getting to base decisions off. 

“With high-speed processing, the heavy lifting is done for you, is timelier, and more accurate,” Olgreen said. “But make no mistake; the quality and depth of that processing are important. The terms ‘Analytics, Machine Learning and Artificial Intelligence’ are being thrown around about as much as ‘Great Quality and Impeccable Service.’ In today’s environment and speed of shifting trends, I honestly can’t imagine any brand not using data and feedback from every guest to make smarter strategic decisions.”

Where Data Meets Action

It might not seem like it, but data may be a key to incentivizing employees and healing an ailing restaurant labor market. 

The thing about restaurants is that they typically don’t operate on the highest profit margins. In most cases, the average restaurant sees about a 3-5% profit margin, though the range can be up to 15% for certain eateries. However, when restaurants can find savings and efficiencies in their operations, it allows them to invest in the growth of their concept. That means higher wages for food service workers, more long-term growth opportunities for top performers, and a more manageable total labor cost that promotes productivity and effectiveness. 

Best yet, Olgreen says every piece of restaurant data is capable of telling a story. From your email database, loyalty information, reservations, online ordering, payments, marketing efforts, employee performance indicators, food costs, etc., there is no shortage of actionable information to use. 

“Combined, this data tells a story about why movement is happening, down to each unique trade area and individual guest,” Olgreen explained. “There is no more honest way a guest can talk to you about your brand than how they buy your food. And that is only found within all the data. To grow you need to minimize the mistakes you put your customers through. Data tells the story of “Why” the guest comes frequently, spends more or less, brings friends or stops coming.” 

Despite “big data” becoming a catch-all for what feels like every piece of information ever, more restaurant owners and operators are catching on. Their ability to immediately see accurate and actionable insights from their back-office platforms is making it easier to save money and pay workers more without passing those additional costs on to the guest. 

According to 2019 data compiled by Hospitality Technology, restaurants allocated 30% of their IT budgets to the back-of-house. Nearly half of those surveyed mentioned that they were planning to increase their BOH budgets. However, the benefits don’t stop with IT. 

Operators and managers can spend less time pulling reports and chasing down data points, allowing their back-office systems to collect, compile, and spit out action items in seconds. For hourly employees, better data means better direction. This lets them be more productive and gives them a clear pathway to improve each day.

Better Restaurant Technology Data Inspires Performance

Having access to better data isn’t going to turn a restaurant around overnight. However, as managers and operators make better decisions backed by factual information, it does have a rallying effect on employees. Ultimately, happy employees are more productive and, in turn, may recommend others when available job openings pop up. 

“Leaders who make smart decisions have employees that respect where the brand is going,” Olgreen said. “Nobody wants to work for a bunch of dummies who don’t know how to position or market the brand. It doesn’t take too many promotion flops for employees to lose faith that your brand is going anywhere. 

Smart decisions are immediately recognized and appreciated by your best employees. Smart decisions generate a thriving environment. Growth means more locations, and more locations mean upward mobility. Data itself may not make that smart decision for you, but it sure can help you from making bad ones.” 

When every brand from fast food to fine dining is fighting for the same dollars, those making better decisions will thrive. The average restaurant will experience more than 70% annual turnover, but the best restaurants in the industry can reduce overall turnover and create lasting guest experiences.

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Implementation Today, Innovation Tomorrow

Even after being dealt a terrible hand and suffering through a temporarily shuttered industry, brands dove headfirst into the technological revolution. Not because they necessarily wanted to, but out of the simple need to survive. 

However, the sudden increase in tech shouldn’t be seen as a one-time growth spurt that fades. Technology doesn’t stop, and the brands that are at the forefront today may not necessarily be there tomorrow. Those who didn’t see the future and plan accordingly are the same brands that shut their doors and never opened them again. 

The stakes are too high to sit on the sidelines and wait for the future to come to you. Investing in the right technology today gives you the chance to create modern and exciting guest experiences while safeguarding for whatever tomorrow brings. 

Keep an eye on the future. Just like Ben Franklin noted nearly three centuries ago, preparation today beats catastrophe tomorrow. And just because today’s solutions address today’s problems doesn’t mean they will apply forever.

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