Mirus Reporter

The wave of the future?

Within every industry, technology enables us to make positive changes to increase growth and productivity - Upping the ROI is certainly a great reason for making those changes. The restaurant industry is no exception.

Good things come in small packages. Well at least that was the hope when Dairy Queen launched their Mini Blizzard five years ago. Some worried that offering a smaller version of the brand's top menu item would cannibalize sales of their top seller and higher margin item, the 16 oz. Blizzard. For most companies that's where new products die. Someone voices a opinion based on past experience and their thoughts and feelings and the new product never makes it out of the marketing office. "That is not a good basis for making marketing and operating decisions," says Mirus CEO Dave Bennett. "You need data and facts to back up your decisions."

This is the first of a series of posts on the topic of restaurant food costing and perpetual inventory systems, which in most cases are two parts of a typical restaurant back office (BOH) system.  I'd like to collect your input on today's question:

Our clients love us and we love them right back! We're constantly amazed by their ingenuity and accomplishments. Their ideas and requests are what keep us on the leading edge of restaurant business solutions. Each month we shine the light on our clients, their accomplishments and what they're doing to increase their restaurant profit margin.

Not everything that can be counted counts, and not everything that counts can be counted.
- Albert Einstein, Renowned Physicist

So Much Data to Manage
Restaurants generate a lot of information. Think about it. On a daily basis you’re collecting every item ordered on every guest check, every punch in/out of every employee, every receipt of materials, every entry in the log for deposits, etc. It’s a lot to process to gauge restaurant profitability!  So how do you manage all that information?  One way is to summarize the information across 5 restaurant reports: Daily Sales, Product Mix, Theoretical Food Cost, Labor Actual vs Schedule, Daily Cash.  But when you summarize data you run the risk of losing many specifics and the granularity of the data.

In my last blog I explained the daily activities of an Above Store Reporting System, and the operational characteristics that define this style of restaurant performance management. In this entry, I will define an alternative approach to measuring the performance of your restaurants - Enterprise Data Warehousing (EDW).

Whether you own one restaurant or 100 there's no eluding the fact that you, at some point, have run a promotion.

Chances are you're running one right now! From a consumer perspective, restaurant promotions are ubiquitous. You see them on TV, online, in your mailbox, in your inbox, on billboards ... they're e.v.e.r.y.w.h.e.r.e! The question I have for all restaurant companies is, "Are you diligently analyzing promotions on a weekly basis?" If you are, that's great! When calculating restaurant profit margin, as it relates to promotion analysis, we would argue that it takes a village to analyze. It doesn't just reside in the Marketing Department to analyze a promotion; it should also have the attention of the Finance and Operations Departments. Why? Because there are a lot of misconceptions regarding successful promotions. Marketing will get giddy when they see sales spike after a promotion has begun and think it's doing great and that success will trickle down to Operations. Once it gets to Finance, they will notice the sales increased, as well, but some Financial Analyst will look a little closer and observe that though sales have risen, the profit margin has been squeezed chiefly due to the new promotion. Then the whole company gets sad because the promotion that was increasing sales that they loved so much either can't continue anymore or needs an adjustment.

Obviously there are multiple variables that get calculated into restaurant profit margin. (We did a blog about this topic a couple weeks ago: refer to Restaurant Profit Margin | 4 Areas You Care Most About for further reading!) For this post specifically, we will discuss how diving deeper into promotion analysis can help improve your restaurant profit margin. 

Whether you own one restaurant or 100 there’s no eluding the fact that running good operations is paramount to the success of your restaurant company. Or any business for that matter. I’ve been involved, to some capacity, with the restaurant industry since I was 14 years old. My father, who is the President/CEO of a multi-million dollar restaurant company, observes one number every morning he wakes up to check out the previous night’s performance.