Mirus Reporter

Measuring success or failure of a system that improves decision making is challenging in many respects. But, the Same Store Sales (SSS) metric can be useful, especially when applied to a long period of time, and across thousands of restaurants. SSS is caluclated as a percentage change from last year to this year, and only uses locations that are open for both years.

More than two ways to skin a cat...

In a previous post, I touched on the impact human behavior has on the deployment of a restaurant back office system. Many times the most difficult part of deploying a back office system is to get the managers to change their day to day behavior to fit the new system. If everyone doesn't use the system properly, it becomes garbage in - garbage out.

So, why would we want to start such a challenging project? Two motivations to deploy a back office system are improving process controls and automating repetitive tasks. In this post, I'd like to describe some alternatives to traditional back office systems. There are layers to this onion, and you do not need to view it as an "all or nothing" game.

It seems like an eternal question for many restaurant companies; should I dump the POS we use today in favor of a 'better' one? In our business, the POS is a fundamental system. Without a POS it is vitually impossible to run a multi-unit company. From out vantange point, it is also one of the most disliked systems. The churn in POS is not well documented but I think it is easy to say over 50% of companies choose a different vendor when their current POS reaches end of life. Shooting the POS vendor seems to be a popular sport among restaurant companies.

The Data Is In

The word on restaurant sales has been out in the public for a while now. Same store sales are down for many segments. And for some of the most recent months, the industry overall is down.

Two factors lead to negative same store sales:  declining customer traffic, or customers spending less on each visit. It has been well documented that restaurants have been increasing their prices over the past few years. The National Restaurant Association measured price inflation at 2.7% in July 2016, while the average cost of ingredients fell -3.5%. The increased margin dollars have helped some restaurants cover the increases in labor.

Labor markets continue to tighten. "Applications have been below 300,000, a historically low level, for 64 weeks, the longest such streak since 1973" (US News & World Report 2016). For the restaurant industry, this is one of four major considerations when managing labor costs. This 'perfect storm' of conditions only happens 2 or 3 three times in a typical career, so if you are feeling the pressure, it is to be expected.

The four horseman challenging everyone today are:

1. Low unemployment
2. Reduced skills in the remaining labor pool
3. Minimum wage increases
4. Overtime rule changes affecting salaried employees

Let's discuss the first two of these challenges. We will touch on the others in later blogs.

The power of consumer knowledge

Understanding your customers is a prerequisite to satisfying their wants and needs to increase customer satisfaction in restaurants. Typically we do not know who our customers are; their name, their email, etc. The lack of knowledge keeps us in the dark when constructing menus and promotions, and hinders our ability to measure whether we are satisfying our restaurant customers.

Consumer profiling based on purchase behavior is a technique you can use to see patterns to determine the various types of customers you have, and how you might better service them.

Brains or Beauty?

What's more important, the way something looks and feels or the functionality and power behind the product? When you have been developing software for as long as we have, you hear it from both sides.

But it's important to find a medium, a middle ground you and your team can work with. Because at the end of the day, the combination of beauty and brains is what everyone is after!

The Elephant In The Room...

Theft, or loss, in the restaurant industry is everywhere. Lots of small, cash transactions are one factor that sets the stage for loss. Food that can be consumed at home is another. This is a touchy subject for restaurant companies, a reality that very few like to discuss.

Of all the discussions that are uncomfortable for restaurant companies, manager theft ranks near the top. At most companies, the manager is a key control point for finances. We empower them with unique access to money and data. One bad apple can do a lot of damage.

Introduction

A restaurant company has dozens of critically important, inter-connected processes. After all, restaurants are a combination of a factory and a retail operation rolled up into one. And, don't forget distribution. Delivery and catering are both growing revenue centers for many restaurant companies.

To keep track of all these processes without software solutions is a high-risk, low-reward option. A very smart team might be able to keep all the facts in their heads, but they would not be able to grow the business.  There aren't enough really smart people in the world to do all this work manually.

Introduction

Controlling food costs is essential if you are interested in restaurant profit margin. I'd like to discuss a few options for implementing controls over your food costs. In practice, there are many ways you can create a control. Let's start with a definition:

According to a website affiliated with the NRA, "The seven stages (of food cost control) are purchasing, receiving, storage, issuing, preparation, cooking, and service."

If you include retailing and selling under service, I agree. If your controls over food costs do not cover the activities of selling, or retailing, you are not seeing the entire picture.

Be careful when researching food cost controls. There are too many sites that think food cost control is simply the formula for calculating Actual Food Cost as a percentage of sales. While this formula is useful as part of a control, by itself it is simply a measurement.