In an era when terms like Data Scientist, and Analyst are commonly used in mass media, it is important to understand that interpreting data can be complicated. It is easy to draw the wrong conclusion. I touched on this point in my material for Restaurant Finance Week last November. You should take caution when measuring your restaurant performance during this Covid period. Read on to see why what you see may not be what's happening and how a poor analysis can lead you to the wrong conclusion.
The news and social media are filled with stories about dramatic new technologies like Augmented Reality (AR), and Artificial Intelligence (AI), and how these technologies are going to revolutionize every day life. Business Intelligence (BI) is part of those story lines, and the term suffers the same misconceptions and misunderstandings as AR or AI. These terms are broad categories of software, services, skills, and systems, but are not specific products or solutions. These terms are useful for discussing concepts and potential uses, but are not very useful to companies trying to apply them.
Everyone has likely heard about the dramatic impact the Covid pandemic has had on restaurant sales. In March, it was common for restaurants to have lost 70% or more of their sales from 2019. Since then, we have all been monitoring the progress of sales returning to restaurants. One tool for monitoring the restaurant industry is the Mirus Index which allows us to examine trends daily across thousands of restaurants. Index tracks both sales and traffic patterns for each location, and the trends for both of these metrics leads you to some interesting questions. Have you been tracking both your sales as well as your traffic? Do you see any differences in each metric's trendline?
The competition in the restaurant industry is fierce. You need to make your brand stand out, apart from the rest. Bringing in consistent revenue is tougher than ever. Restaurant executives find themselves pondering a series of questions:
- What steps do we take to make sure we stay ahead of the competition?
- How do we assure the success of our marketing initiatives?
- What are some tactics that help improve sales in our restaurant business?
- Are our restaurants staffed properly for heavier and lighter traffic times?
- How can we keep employee turnover down?
- How can our employees help increase sales?
The ordering experience at a fast-casual restaurant can be overwhelming for some guests. Take a second and imagine this scenario with me: You walk into a fast-casual restaurant with a friend. Let's say this is one of those new pizza concepts where you go through the line picking toppings, making your pizza similar to a Subway line.
It's lunchtime, the place is fairly busy. You have a handful of customers behind you as you stare at the menu board above. But it's ok, they are also staring, trying to decide how they should begin their journey. For some, the ordering experience can even cause anxiety. To make the process go smoothly and put guests at ease there are two things fast-casual operators can do. Focusing on these two areas will help fast casual operations increase profits.
Why is it difficult to find and organize reporting data?
All you want is a factual answer to an important question you have about the business. It may take hours or days of labor to get all of the data put together properly. But you need to make a critical decision and you need the data to figure out the best course of action. To make matters worse, if you need to the data refreshed again in six weeks, it will take just as long to compile the data.
According to Microsoft, there are 1.2B (that’s right, B for Billion) Office users today. Of that, roughly 750M use Excel. Wow! That’s a lot of number crunching going on.
But what’s even more interesting is that 9 out of 10 (88%) spreadsheets have errors on them – that warrants another Wow! That’s a lot of inaccurate information being used by companies. And depending on the data being reported it could have a significant impact on a company’s regulatory compliance, perceived health not to mention incorrect assumptions being made about strategy, marketing, etc.
"POS, Meet BOH"
In today’s restaurant space, the business of owning and operating a restaurant is more challenging and competitive than ever before. This means it’s more important than ever to leverage technology to your advantage and no better place to start than using your Point-of-Sale system’s (POS) sales data combined with your Back of House (BOH) to help more tightly control your two biggest controllable expenses – food and labor costs.
Looking more closely, restaurant food & beverage purchases plus labor expenses account for 60 to as much as 68 cents of every dollar in restaurant sales. The combined total is referred to as; “Prime Cost”, and it's at this crossroads where the battle for restaurant profitability takes place. Why, because you have the ability to control these expenses. Unlike your fixed costs (lease, utilities, insurance, etc.), you can directly impact your food cost percentage by more effective purchasing, product handling and menu pricing and your labor with tools to help with allocation, scheduling and overtime reduction/prevention. More on the labor from an earlier series of Blogs.
Has Data Become More Valuable Than Oil?
Read an article on this very subject. Think about it, every day you can find something in the news about businesses using data to make more money. With that in mind, I wondered if Mirus clients were ahead of the curve? If they are, could their actions of leveraging data be paying for itself?