Do You Know the 3 A’s of Good Back Office Restaurant Reporting?

There are three important attributes of good reporting in any restaurant – and they can be categorized by three words all starting with the letter ‘A’.

  • Accurate
  • Actionable
  • Accessible

Let’s briefly touch on each one:

Accuracy – This might be the most obvious one but it isn’t always a given if you find yourself re-keying data from one system to another.  Also, if you are looking at the same data out of two systems, it always possible (and is frequently the case) that something is entered in the one that didn’t make it into the other thus causing the data to be off.  Restaurant365 helps eliminate this by reducing the number of systems needed to run a restaurant – it’s all in the same database.

Actionable – This has to do with when your people get the data.  Is it a day or two after the end of the period or is it a few weeks?  (heaven forbid it is a few months!)  Reporting becomes less and less useful as time passes.  And in a restaurant, there is a big difference between a day, week, or month.  Restaurant365 polls data from your POS nightly that creates your sales & labor accrual entries for you each day.  Managers enter or import vendor invoices and their stock counts in Restaurant365 at the store level each day.  So reports such as the Weekly Prime Cost report by Location can be generated on the morning after the end of your week!

Accessible – What good is a report or data if the people who need it, can’t get to it.  Restaurant365 puts this powerful back office information in the hands of the store managers.  They are the ones that can impact the restaurant the most.  They are the ones that can do the most with it – as long as they can easily get to it.  It’s about user adoption and ease of use as much as training.   Restaurant365 puts all this info in the hands of the store managers directly.

Morgan Harris  | Co-founder  |  Restaurant365

 

 

 

How Can Restaurant Accounting Software Help My Business?

I found myself in a conversation today with a restaurant professional discussing the merits and benefits of restaurant accounting software over generic accounting software.  The key difference is how it specifically helps restaurants achieve their objectives of:

1.  Protecting assets

2.  Identifying opportunities and trouble

3.  Increasing profitability without lowering customer service

What tool can help the restaurant business owner achieve these?  The answer is restaurant-specific ERP software such as Restaurant365. 

  • Precious assets such as time, inventory, & cash are monitored and controlled tightly
  • Trends, variances, and outliers are displayed clearly in easy to use reports
  • The system does the work of multiple people, thereby reducing administrative overhead 

Take you business to the next level with Restaurant365.

Morgan Harris  |  Co-founder  |  Restaurant365

“I know my food costs are higher than I am expecting them to be. But why are they high?”

Reasons for High Food Cost Restaurant365 Feature
Paying too much   for food Vendor Contract Administration – store contract prices for each location for each vendor for each item with an expiration date and acceptable variance %.  Be visually notified on the AP Invoice when the vendor has charged you for an item outside of your contract before paying the invoice.Item Price Monitoring – Identify the items with the greatest price increases over a given period of time with graphical reports that can be sorted by % change in purchase price.  This visibility helps identify when a substitute item needs to be purchased, a menu price needs to increase, or the product needs to be sourced from a second vendor offering a more competitive price.  The report also shows all the menu items that include these items with the highest price increases.
Waste and Spoilage Waste and Spoilage Log – managers track the food that is thrown away due to over prepping or spoilage.  This log creates a transaction that lowers COGS and books the expense to a COGS –Waste Account.  Reports identify the most commonly wasted or spoiled goods and give management the visibility to identify training needs.  Use the   spoilage numbers to determine if you are buying and storing too much of a given item (i.e. you are buying more of than you can use during a given period.)
Theft Stock Counting and Theoretical Inventory – managers count their inventory on a regular basis.  These quantities are compared to the expected inventory levels taken from the sales mix report (using the recipe costing cards to determine how many or how much of each item should have been used based on what was sold.)  Reports display the variances sorted by variance % and amount so that you can focus on those of highest dollar value or highest variance %.
Over-portioning Recipe Costing Cards w/ Preparation Training Videos   –  each menu item setup in the system contains a detailed description of the proper preparation.  A photo of each item is displayed and a link to a video training of how to prep the time is available right from within the system.

The First 3 Steps To Seeing Traction Towards Restaurant Profitability

There are so many moving parts in a restaurant that it is extremely difficult to identify and quantify the impact of any one number on your business.  It’s true and it is what it is-welcome to the restaurant industry!  So what is the best approach for beginning to make sense of all the data that is tracked in a restaurant and how can I use that data to make my business more profitable?  Let me make a few suggestions:

  1. Take steps to ensure your data is accurate
  2. Look at the variances to the same data for the same period last year
  3. Pick the largest variances by dollar and by % and begin there

The first step is to ensure your data is accurate.  Software, such as Restaurant365, can help in this regard – technology is more reliable and consistent than a person and much less expensive.  Secondly, you may not know what is ideal for your business but you can certainly identify what was different than the same day/week/period as last year.  Begin your efforts by identifying what you did worse than last year.  And lastly, pick the numbers that are the biggest, and have the largest variance % of last year’s numbers, to start with.  This will help keep you focused on a few things that will have an immediate impact on your business.

Do these things and you will begin to see what people call ‘making traction’ on your way to more profitability.

Morgan Harris  |  Co-founder  |  Restaurant365

3 Reasons To Review Location Side-by-Side Prime Cost Reports Weekly

Multi-unit restaurant businesses have at least one inherent advantage over single unit operators:  on a store level, they have access to detailed financial performance of other stores in their market – the other locations.  Why is this an advantage?  For at least three reasons:

  • Driving Sales  – Store managers can catch a vision of what is possible within their own company – with the brand they are working with.  Comparing the top performing stores to the rest can be very inspiring for store managers.
  • Exposing Excessive Spend on COGS – When kitchen managers are buying food for the same menu, it’s easy to look at the location side-by-side report to see variances between locations.  Any difference will be easy to spot and identify what needs to be fixed.
  • Labor Efficiency – Which manager is the best at scheduling?  With a location side-by-side report, you will know who is keeping folks on too long or not having folks there early enough.  It’s an easy calculation.

There is no question but that the Location Side-by-Side Prime Cost Report is a valuable tool for any multi-unit business. So valuable in fact, it’s almost worth opening up a second location in a similar area to where you are located now just to have the information to make your original location better.

Most companies are manually assembling this report or are not doing it at all because of the effort involved.  With Restaurant365, the entire process is automated.  Restaurant accounting software has never been easier to use.  The benefits dramatically outweigh the minimal costs.

Morgan Harris  |  Co-founder  |  Restaurant365

2 Benefits of Daily Net Sales Forecasting by Managers

Your corporate team creates and distributes a quarterly, or annual budget, for each store.  But of what value is that to the store managers on a day-to-day basis?

Managers of course will do their best to achieve the goals set by the corporate team.  However, they need a more realistic daily Net Sales goal in order to make the exercise of budgeting/forecasting more useful.  And they are the best ones to create these ‘realistic’ daily net sales forecasts.

By allowing the managers to create their own forecasts:

  1. Managers feel more ownership of the numbers and are more driven to achieve them
  2. Managers know more about what is really possible for a given week based on weather, events, staffing, holidays, etc.  and can come up with  much more accurate numbers.  The more accurate the forecast, the more useful it is in keeping COGS within budget and labor scheduling.

Restaurant365 provides managers an easy way to forecast their sales for the week ahead.  Purchasing logs and staffing reports can generate variances against both the manager set numbers and the corporate numbers.  It’s a tool your managers won’t be able to live without.

Morgan Harris  |  Co-founder  |  Restaurant365

Restaurant Purchasing Logs Help Manage Cash Flow

Food & beverage inventory is cash on your shelves.  It’s necessary throughout the month to convert your cash into inventory so that your cooks have what they need to create the menu item you are selling to your customers.  But the ‘conversion rate’ (i.e. purchasing food) needs to be controlled tightly so as to minimize theft, waste, and spoilage that can occur from having too much food on the shelf.  Also, you can’t pay your bills with food & beverage inventory, so you need to keep your assets in cash as much as you can.  What is a simple method of controlling this?  Use purchasing logs. 

When your kitchen managers purchase food, they need to keep the spend during the week under an allotted amount (i.e. 33% of Net Sales).   If they track this by day, they are likely to hit their weekly targets.  If they keep it within budget for the week(s), they will be no surprises at period end.

Of course you won’t know your actual food usage until you count your inventory at period end but with purchasing logs, you give your managers a very effective way to control the ‘conversion rate’ of cash into food & beverage inventory.  With Restaurant365, the managers simply enter their food invoices directly into the Restaurant365 system.  By doing so, the system gives them a Purchasing Log as a % of their budget by day and week.  It also saves the accounting team the step of having to enter in the invoices as the corporate level.

Restuarant365 is not only a time saver but a cash flow manager.

Morgan Harris  |  Co-founder  |  Restaurant365

 

3 Ways People Are Better Than Software – For Restaurants

As a follow up to “Top 3 Ways Software is Better Than People – For a Restaurant”, I’d like to counter punch those ideas with 3 ways people are better than software – for restaurants.

  1. Judgement Calls – The retail industry is a people business.  Taking it one step further, the hospitality segment within retail is really a people business.  A restaurant’s job is to make their customers comfortable and satisfied.  Customers walk in the door with all kinds of moods, temperaments, back grounds, budgets, tastes, and general circumstances.  Your ability to make small, on the fly adjustments to how you welcome them and make them satisfied requires great judgement.  Nothing is better than a caring person to make this happen.
  2. Selling – On average, 80% of a restaurant’s revenue comes from recurring customers.  The team in a restaurant should be constantly selling – even if it is subtly.  People buy from people.  It’s a relationship thing and it’s how the world turns.  If you can hire some gifted servers that can leave a memorable impression, no piece of software can beat that.
  3. Management –  Software can control things but it doesn’t do a good job of managing things.  An employee won’t stay with a company for many years because the software they have is incredible.  But they will stay with a company for much longer than they otherwise would if they enjoy who they work with and who they are management by.  This stickiness in staff reduces all the costs associated with turnover.  Some restaurants have calculated that each person they have to replace costs them up to $2,500 (time and money spent on training, administration, recruiting, hiring, and legal.)   Great people at the manager level can keep turnover low and morale high.  No peice of software can compete in this regard.

The software people use can augment their ability to shine and add true value to an organization but never can replace it.  Restaurant365 is designed with people and best practices in mind so that your people can spend more time with your customers, sell, and manage.  Let your people do what they do best and let your software take care of the rest.

Morgan Harris CPA  |  Co-founder  |  Restaurant365

Top 3 Ways Software Is Better Than a Person – For Restaurants

The most powerful force in the world is delegation.  It is what enables ideas to grow into large enterprises that cover the globe and serve millions of people.  Whether you own/run 3 restaurant locations or 300+, your ability to succeed is dependent on your ability to delegate.  You can’t do it all.  So you have three choices: delegate tasks to a person, a machine, or a combination of the two.   You will need to consider a number of things when determining which delegation method is best for you, including cost, customer experience, mission statement, capabilities of current staff, pros and cons of people and pros and cons of machines etc.

Much of the analysis will depend on the owner’s style, budget, and staff.  To help with your analysis here are three ways in which a machine can be better than a person.

  1. Consistency
  2. Timeliness
  3. Cost

You can make the argument either way on each of these depending upon the situation but let’s be clear about the obvious elements of each.

  • Consistency – Machines/software generally don’t think.  It does the same thing over and over again and once a system is dialed in, it never varies.  It also never gets sick or takes a vacation.  There may be the occasional system outage but comparing this to the amount of time a human has outages, it isn’t even close.
  • Timeliness – Machines/software can serve up and share information instantly.  There is no need to wait for someone to gather the data, send it, etc.  When a system contains data, it is instantly available to all other users of the system.  Machines/software also can process and search large amounts of information quickly and accurately.  Some of the best humans can do crazy math and can recall every detail from years ago but nothing like a machine/software.
  • Cost – When you add up the real cost of a person v. a machine/software, there is no question that in most cases the technology is less expensive.  Remember one thing, the makers of machines/software take into account the ROI benefits before they go to the trouble of making the machines/software.  If it didn’t pencil out, you would not see be seeing it in the marketplace to begin with.  Remember when doing this calculation, include the cost of taxes, insurance, training, and general turn-over of people.  The additional costs of employing someone above their stated salary or wage is commonly referred to as ‘burden’ and when factored in, helps present the true facts of your analysis.

These are a few of the most important factors when deciding to delegate a task to either a machine/software, a person, or both.  For multi-unit restaurant operators, they need to regularly review their processes to ensure that the delegation choice they made is providing the best results for the desired outcome.   Restaurant365 is designed to help multi-unit restaurant owners work through and reduce the spend on human labor but also consolidate the spend on machines/software.  You could say it’s a win/win/win.

Morgan Harris  |  Co-founder  |  Restaurant365

 

 

Why Restaurant Owners Fear The Cloud

Restaurant owners and operators are not typically early technology adopters.  Wanting to conserve precious resources, avoid risk, and minimize disruption to a loyal customer base, it’s understandable why this is the case.  However the technology world is moving underneath their feet and serves as a gentle nudge towards change.  The good news is that technology in the restaurant space is getting better and less expensive and more proven.  Customers are now anticipating and even expecting their favorite eateries and watering holes to adopt the new technology landscape.  The objective of this article is to provide restaurant owners a quick summary of the challenges and benefits of one of the biggest shifts in how we use technology – the cloud.

What is the ‘cloud’?

Here is the short and simple answer:  It is when you access a piece of software in real-time over the internet instead of having the software installed locally on your computer.

Why is it better?

It’s cheaper.  Really cheaper in some cases.  And this is the primary reason a restaurant owner should be paying attention.  Studies show that cloud computing can be up to 70% less expensive than on-premise (or software purchased and installed on one of your machines in your office.)  It can be such a dramatic savings that today’s business community is willing to live with minor downsides in exchange for the savings.   (A separate article can address how these savings are calculated.)

What types of applications are available in the cloud for restaurants?

There are numerous offerings available today:

  • Marketing
  • Catering
  • POS
  • Reservations
  • Accounting
  • Above Store
  • Recipe Costing
  • Franchising
  • Loyalty
  • Event Management

Typical Concerns and Downsides

If you have initial concerns about this deployment method, you are not alone.  Historically, there are three concerns associated with the concept of cloud computing.

  1. Up-time – Although no cloud based system can guarantee 100% up time, neither can your on-premise solution.  When you factor in the total time the service is running (24/7/365) it is easy for cloud providers to tout 99.9% up-time.  More of a concern is the Internet in your home/office/or business.  That is more likely to be spotty that the cloud service itself.  Resolving up-time concerns was discussed more about 5 years ago.  It’s still mentioned in sales cycles but it is less of a factor now because time has shown that the cloud is plenty stable and reliable.
  2. Security – Once again, time has proven that cases of security breaches are practically never heard of in the ‘business cloud world’.  For example, early cases of security lapses in Microsoft products caused an internal transformation of not only their development focus but also their marketing efforts.  They, for one, have gone over the top in trying to become the strictest when it comes to security.  Others have followed suit and it is now a prerequisite.  Security conversations have shifted from the provider to internal configuration.  Most cloud software has the ability to easily restrict access to pretty much anything you want any user to see.  It’s now a matter of configuration and setup.  If you compare this to the expense of being PCI compliant on a locally installed POS system, you will appreciate the simplicity of simply having all of your sensitive data collected and stored offsite, from the point of entry.
  3. Performance – It’s like swimming in 68 degree ocean water compared to 70 degree ocean water.  You definitely can feel the difference and when you first jump in it can feel a bit chilly but once you get swimming, it becomes refreshing.  With better internet connectivity more prevalent, computers shipping with more horse-power everyday, and cloud providers constantly simplifying their code, it is just a matter of time before the water is 72 degrees and perfect.  The good part is, everyone swims in the same ocean and has come to expect a certain level of performance from the cloud.  As long as the provider meets that minimum threshold, it becomes a non-factor (and most have.)

The Biggest Challenge

It’s less expensive.  There is no material risk.  The guy down the street is doing it.  Yet you still are having a hard time with it.  I know why.  It’s the same reason you open a banana from the top instead of the bottom when the banana is clearly designed to be opened from the bottom.  You have just been doing it that way for so long.  Change is hard.  This is much more an issue for the older generation of restaurant owners and operators than it is for the upcoming.  There will be an inflection point in the industry when the majority of restaurants adopt cloud solutions.  When that day comes, the makers of on-premise restaurant software will have to make significant investments into ‘cloud’ versions of their software (this has already begun).  For them, the cost of maintaining two code bases will then require them to drop support of their on-premise solutions and when that happens, restaurant owners will be forced to go with them into the cloud.  I’d suggest reviewing your technology strategy today so that you can act – instead of being acted upon.

Morgan Harris CPA  |  Co-founder  |  Restaurant365