THANK YOU FOR SUBSCRIBING
Peter Venti, Director of Operations, RealFood Consulting
Hospitality professionals are swimming in data yet rarely have the time or resources to transform information into income. With many restaurateurs mired in the pursuit of providing great food and service, data-driven decisions are often dwarfed by the qualitative musings of chefs, managers and emboldened Yelpers. The ability to break this mold, however, can be the difference between long-term success and imminent failure.
The Opportunity: The days of a restaurateur getting away with making business decisions based on intuition alone are over. Technology developments, often borrowed from other industries, have created an opportunity for restauranteurs to dive deeper than ever into the makeup of their customers’ demands, employees’ performances and key operational metrics. With access to this information readily available (and economized), data analysis has become a necessary tool in not only making profitable improvements, but in fighting to stay relevant in an increasingly competitive market as well.
Take the evolution of menu analysis, for example. In the past, operators would weigh product mix reports (quantity of menu items sold) against recipe costs to measure success. If Restaurant X’s meatloaf was the highest-margin, highest-selling menu item,that’s what was promoted. And if the low-margin crab cake was at the bottom of the report, the chef would be inclined to drop it from the menu. But while these decisions are founded they could very well be suboptimal.
Enter companies like Upserve and TableUp that combine geo-fencing and other CRM tracking tools, with point of sale data to glean complex insights about how customers interact with menus. It could have been the case that the most popular dish at Restaurant X amongst first-time diners was the crab cake, and that the meatloaf was the most popular item amongst frequent diners.
Technology developments, often borrowed from other industries, have created an opportunity for restauranteurs to dive deeper than ever into the makeup of their customers’ demands, employees’ performances and key operational metrics
This is a subtle distinction, but if Restaurant X was looking to put a picture of one menu item on its website, it may have done well to choose the crab cake for its appeal to new customers—a menu item that would have been 86’d had it not been for access to richer information.
While this example may seem minute, the truth is that restaurants are constantly confronted with decisions points that have a magnified potential to define the business for better or worse. By having a data-driven approach to tackling uncertainty and working through these decisions, restaurateurs are giving themselves the best chance to succeed; and if they can’t do it themselves, it may be the right time to think about hiring an analyst.
The Hurdles: Unfortunately for too many restaurants, success is limited by: (1) Useless financial or operational data that is inaccurate or nonexistent, (2) Reporting that is delayed or disorganized, and (3) A lack of strategic planning to move the business forward.
The only thing worse than not having access to data is having access to bad data. Even the most advanced technology solutions require some element of data entry and if not maintained properly, the chain of misinformation can spread. From recipe management to procurement to inventory to sales and reporting, a strategic meeting can quickly devolve into a guessing game if there is not a system for ensure the accuracy of all the inputs.
For many, the reality of having to log into multiple systems to extract isolated pieces of data is preventing them from performing any kind meaningful assessment of their operations. Restaurateurs can also become overwhelmed by the number of restaurant-tech solutions that are marketed to them, and rightfully so. The number of POS systems alone that are available in the market today is dizzying; but taking the time to identify the right technology vendors is one of the most fruitful things one can invest in.
Lastly, it is not always easy for a hospitality professional to extract themselves from the day-to-day operations and switch their brain from tactical to analytical. It may also not be viable if they do not have the skillset to do so, which is why it may make sense to seek help elsewhere. There is not a large pool of employees that are able to perform the job functions of a CFO or COO and are willing to get paid like prep cooks, but there are creative ways to compensate new hires, train current employees or outsource advisory services to make sure that the business is keeping up with the times.
The Solution: Whether it is making a full-time hire or assigning new responsibilities, restaurateurs should look to make data analysis part of their standard operating procedures. The risks are too great not to and the potential for long-term financial gains is too significant.
The Role of the Restaurant Analyst:
1) Research and identify restaurant technology solutions that are either “single source” (platforms that tether multiple restaurant management solutions) or “best in breed” (the optimal tool for an isolated solution) for your restaurant segment; minimize the number of vendors without compromising on your needs
2) Map out the integrations between all of your solutions and fill gaps with data entry and maintenance resources
3) Identify the metrics that are important to the business and ensure that they are targeted, measured and reported on a regular basis
4) Monitor and analyze all relevant data and trends -> gather insights -> make recommendations
5) Implement optimized sales growth and cost reduction strategies
a. For example: forecasting sales, A/B testing marketing strategies, menu engineering, vendor negotiation, scheduling optimization, etc.