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How restaurants can defy inflation storm clouds

24 September, 2021 |   | 

Right now, it feels as if the dark forces of inflation are closing in on the global restaurant sector. But it’s possible for chains and independents to cut through the gloom and win at a numbers game of their own.

The hospitality industry seems to be taking hit after hit to its bottom line. The ‘new normal’ has seen global supply chain issues and commodity price rises. Labour and tax costs have increased — and now fuel and CO2 shortages are impacting some countries.

Customers are also feeling the pinch. Consumer inflation is eating into their disposable incomes, which could mean a drop in demand for meals out, drinks and delivered food.

Let’s be blunt: More than ever perhaps, we’re in survival of the fittest territory. And this begs the question: How can a restaurant sharpen its fitness and survive?

The simple answer is that restaurants need to transform their operations and become data driven. This is the key to reducing costs, increasing income and offsetting the external pressures of inflation.

The good news is that it’s possible to do this quickly and easily.

A tale of two restaurants

Let’s imagine two businesses. Restaurant A runs on traditional lines, relying on a great reputation and loyal customers. As inflationary pressures have increased, customers have swallowed a few prices rises and the business has absorbed the rest. But this isn’t sustainable. Sooner or later, customers will walk away or the business will fold.

Restaurant A feels at the mercy of external forces and its run out of options. Its managers lack something fundamental — actionable insights based on real-time data about every aspect of their operation. Almost certainly, there’s cash within the business that could be saved … if only managers could see it.

Here’s where they should be looking:

  • Some suppliers charging more than others for the same items
  • Missed opportunities to consolidate suppliers and orders
  • Food that perishes because inventory counts are too infrequent
  • Write-offs, breakages, discounts and missing stock that’s not recorded
  • Prep plans that produce more food than is needed on the night
  • Menu items with expensive ingredients that are rarely ordered
  • Portion sizes that are too large
  • Shifts where too many staff have been scheduled
  • Time wasted keying in takeaway orders received from aggregators
  • Hours spent calculating profit and loss (P&L) and other reports

In the new world, Restaurant A is powerless to act in the face of rising costs.

In truth, managers haven’t addressed these issues because they can’t spot problems easily and they don’t have the right tools to intervene effectively.

Solving each problem would mean spending hours pouring over spreadsheets, writing memos to their team, and trying to micro-manage staff who then feel patronised. This could take up the time of several managers which would add to costs and defeat the whole purpose of the exercise.

But it doesn’t have to be this way. Step forward Restaurant B.

Next-Gen tech for a new realities

Almost everything that happens at Restaurant B is recorded digitally when it happens, usually in a click or a swipe, so it’s effortless for staff. This is the case from supplier ordering and receipt, to food production and service.

What’s more, data from one event feeds automatically into another. For example, the system already knows what should be in the inventory — and so visual checks are a matter of swift confirmation rather than reinventing the wheel.

Restaurant B’s Next-Gen restaurant technology also makes use of artificial intelligence and rich data to predict demand with remarkable accuracy. Prep plans are created automatically, the correct staff levels are recommended and supplier orders can even be sent by the system on its own, whenever stock levels are low. In fact, a host of previously costly, labour-intensive tasks are either removed or transformed.

The whole system creates a wealth of tracking data and key performance indicators that help managers to identify waste and opportunities for improvement.

Offsetting the ravages of inflation

Restaurant B can withstand external cost rises in several ways. Firstly, its ultra-lean operation has led to healthier margins, so the business is more robust — and the real-time financial picture can be checked instantly. Managers can view last night’s restaurant performance on their phones, while P&L reports can be generated in moments.

But secondly, Next-Gen tech gives managers the insights and tools to respond confidently to outside pressures. The system can be used to road-test ‘what if’ scenarios. You can see the financial impact of a host of different actions to cut costs and grow income.

Here are some options open to Restaurant B:

  • Use data on order volumes to negotiate better with suppliers
  • Discover which are your most profitable and in-demand dishes
  • Shape your menu around customer preferences and profitability
  • See savings from using different ingredients — and make changes
  • Roll out staff incentives that will have the most impact on profitability
  • Track staff performance and reward your star players
  • Offer food delivery with an optimised app for drivers
  • Integrate seamlessly with food aggregators
  • Launch easy-to-manage loyalty programmes for customers

That’s just a taste of what’s possible with next gen POS system software. Syrve_Speak with an Expert Banner

Let’s change the mood music

Right now, many restaurants and bars will feeling battered by inflationary pressures. But the right technology can put you back on the front foot. Whenever there’s a jump in one cost or another, you’ll be able to see the financial implications — and take action without infuriating customers or sabotaging your profitability.

You don’t need to be some kind of data analyst either. The best Next-Gen restaurant tech is simple, helpful and intuitive. It’s your best compass and an essential toolkit as you follow a safe path through uncertain terrain and stormy weather.

Simon Dadswell

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