For the past few years, the focus of all industries and businesses is digitization and automation. Automation has allowed businesses to reduce manual work to yield consistent results. Meanwhile, digitalization further allowed businesses to improve processes and systems using data gathered in real-time with the help of digital transformation tools.
All data coming from the customer-facing solutions such as mobile applications, web ordering, self-order kiosks, to back-office systems are now being analyzed by businesses to keep up with the competition.
McDonald’s, one of the largest American fast food companies in the world, shifted its focus on digital transformation to cushion losses brought about by the pandemic. They are expecting that the digital sales will exceed $10 billion because of their strong digital presence and customer experience improvement by bringing value, personalization, and convenience to customers.
Restaurant owners and franchisees can now take advantage of the available technology used by retail companies. These digitization initiatives have now been improved and customized to be used in the hospitality industry.
The food-tech startup niche is one of the fastest-growing industries and in 2020, the funding for European food tech innovators has reached more than 2.4 billion euros.
Startup companies that are offering online ordering platforms, internet-of-things appliances, restaurant analytics software, and food publishing content websites are actively funded by tech investors around the world because of their potential. While data and technology are now readily available, it is also critical for restaurant operators to know how to gather data and extract insights to make better business decisions.
We have listed the benefits that were reaped by restaurants around the world when they implemented restaurant data analytics.
1. Optimal Manpower Scheduling
To drive optimization in your restaurant manpower requirements, you need to use the productivity data of your employees. While it is sometimes obvious that some staff members are faster and more productive than others, it is better to rely on data than gut feeling and experience to create the right-size manpower schedule.
Most point-of-sale (POS) systems store the sales data and time stamps of transactions. You can use these data points to determine how many cashiers you need to deploy during your peak hours to keep up with the demand and during your slack hours to minimize manpower costs.
In addition, the timestamps of transactions in your kitchen display system can also be your basis to know if some staff members take longer to accomplish tasks.You may retrain them to improve their productivity and also look into improving their workstations to enable them faster assembly of food products in the kitchen. If you will use data to plot the schedule of your staff, you are assured that your customers are served within their expected serving time without overworking your staff to retain their productivity for the entire shift.
The sales and transaction data can also help you determine how many managers you need in your outlets. Your managers can help you do administrative and functional tasks that you usually do. This will free up your time to focus on high-level problems that you can solve.
2. Menu Profitability Analysis
The profit-and-loss statement is the usual reference of restaurant owners to analyze the profitability of their outlets. The menu data coming from your back-office system is often overlooked and taken for granted. Menu profitability analysis allows restaurant owners to see the actual food cost and packaging cost per menu item. If you find out that the top-selling menu item of your restaurant might not be the most profitable one, it’s time to start marketing strategies to combine top-selling items and high-profit items in one value meal.
McDonald’s is offering combo meals in all its locations because combo meals allow them to protect the profitability of each transaction they serve. After all, beverages yield high gross profit while burger items and fried meals are usually costly to cook.
Based on your data, if you find that your top-selling item is causing you to lose money because of high food and packaging costs, you may opt to look for raw material suppliers that can sell you similar items at a cheaper cost. This recommendation will allow your restaurant to have better profitability without sacrificing the quality and consistency of your products.
3. Improved Customer Experience
Data coming from different ordering platforms in your outlets can enable you to improve your restaurant’s customer experience. You can draw meaningful insights if you know who your customers are, understand why your customers prefer you over other restaurants, and what motivates them to keep on ordering from your brand.
At the start of the pandemic when limited seating capacity was imposed by the government, customers have shifted to delivery channels to comply with social distancing protocols. Some restaurants have introduced Chatbot ordering that allows customers to receive a personalized experience through their mobile phones.
Some Chatbots are using speech processing technology that allows them to speak naturally, making sure that orders are taken accurately without incurring additional manpower to take them. Before the availability of Chatbot, additional headcounts are hired when the demand surges to ensure that all calls are taken. Sales data allows Chatbots to recommend additional products and upsell desserts that were ordered by the customer previously.
The chatbot project of Wingstop that was implemented in Facebook and Twitter accounts resulted in 16% of their total sales and is still growing rapidly. Wingstop used Conversable to integrate the chatbot to their POS system. Conversable refers to the menu and pricing and uses it in a conversational language to control the ordering conversation of actual customers. These transactions will then proceed to the POS so that the cashier will not need to punch it anymore.
When sales are down, restaurant owners look into managing the costs being incurred specifically on those that can be controlled like the inventory cost. A back-office inventory system enables you to track your raw materials delivery, usage, wastage, and losses. If you have real-time tracking of your inventory items, usage of items that are near the end of their shelf-life can be used to reduce inventory wastage.
Based on your tracking, if you find that there are raw materials that have not been moved for a long time, you can advise your cashiers to upsell menu items that use these raw materials. Proper tracking of inventory will allow you to lessen costs that are often caused by a lack of tracking.
You may also input your menu item recipes into the system to forecast your theoretical inventory cost based on your previous sales data. During your physical inventory count of raw materials, you may feed your findings into the system to compare the actual usage with the theoretical usage. If there are variances that are beyond your tolerance, you may conduct root-cause analysis and usually, these are the usage of incorrect ingredients or incorrect measurements were used or wastages that were not recorded by your staff.
These insights will allow you to involve your team during game plan activities. You may cascade to them the importance of being mindful of the tracking and usage of raw materials.
Your team will then start to use correct recipes and correct portioning utensils, similar to how Red Rhino improved their cost management by using the data analysis provided by their back-office system. The Red Rhino team improved their food cost from 37.8% to 33.2% by using correct recipes, weighing portions, and regular checking and recording of stocks. In a few months of closely monitoring the reports being generated by the system, the consumption and variance percentage of raw materials have reached optimal levels.
5. Increase Sales
Restaurants launch promotions and discounts to increase their sales. But how do you know when is the best time to launch promotions? How do you measure the effectiveness of your promotions?
Data analytics gathered from your restaurant’s back-office system can allow you to view your weekly, daily, and even hourly sales and you can also compare it to your average daily sales. If there are certain slack days in a week, you can opt to schedule promotions during those days.
Timely scheduling of promotions can allow you to plan your inventory and manpower to give consistent service during your promo day. Imagine that if you launched the promo day on your peak days, it is possible that you might not have been able to buffer raw materials, schedule enough staff to keep up with the surge in demand, and the experience of your existing customers will also suffer. Restaurant data analytics will enable you to plan and implement promotions in your restaurant effectively.
You can offer discounted products or invite a celebrity to attract more customers. To measure the effectiveness of these promos, use your restaurant data analytics to extract sales from the past month and compare them with the sales data of your promo day.
The difference between your average daily sales and sales during the promo day is the incremental sales brought by your promo. You may also extract the products ordered by your customers during the promo day. The top-selling products can then be pushed for upselling in your next promo days.
As you can see in the list above, investing in a high-quality restaurant data analytics system from a reputable supplier will allow you to improve your business.
-You can plot an optimal manpower schedule that is based on your restaurant’s transaction count, target sales, and product mix.
-You can also improve the profitability of your menu by analyzing the gross profit of all items and offer meals with high gross profit and products with low gross profit. To improve your customer experience, you can automate the ordering process and use the customer’s previous transactions to personalize the recommendation.
-You will have strong inventory and cost management once you get real-time reports that can be improved by proper usage and tracking of raw materials.
-In addition, you can use back-office reports to effectively plan and measure the promotions in your restaurant.
With the fast-paced changes in the hospitality industry and the availability of technology, you can now purchase and implement solutions that will continuously improve your processes, systems, and your business. Don’t hesitate to contact us if you need any further consultancy on restaurant data analytics.