Restaurant Food & Labor Operations: A Dynamic Back-Office Pairing to Drive the Bottom Line
Restaurant operators often look to technology systems to achieve strategic objectives, chief among them reducing costs and increasing productivity. According to data from Hospitality Technology’s 2019 Restaurant Technology Study, 29% of operators link planned IT investments directly to improving employee efficiencies and another 25% list reducing operating costs as a top objective for technology rollouts.
The restaurant back-office is one of the most complex compared to other industries, and it is only becoming more so as tech stacks become deeper. The Restaurant Technology Study reveals that restaurants earmarked 30% of IT budgets for back-of-house systems in 2018 and 42% of operators plan to increase back-office investments in 2019.
With 19% of operators admitting that a top challenge facing IT teams is the presence of too many systems, it is vital for restaurants to be strategic with enterprise design and integrations must be smart and effective.
When investing in new technology systems, operators face the challenge of deciding between a combination of best-of-breed systems or all-in-one solutions. While certain elements of the back-office tech infrastructure can rely on single solution providers, operations are truly optimized when food and labor is tightly integrated.
Go with the FLO
Half of restaurants’ sales revenue is spent to cover labor and food costs. Having an accurate account of expenditures for these two cost centers is essential. This is not only for accounting, it is critical for forecasting and achieving operational excellence as well. Building a foundation for the back-office with a strong food and labor operations platform requires that transaction-level sales detail and historical sales trends are used to generate an intelligent modernized food and labor operations (FLO) forecast. Having such a modernized FLO will help drive revenue not only by keeping costs in check, but making it easier to deploy – and therefore profit from – new guest-facing technologies.
Forecasting based on a tight integration of inventory and workforce data, will yield the cost reduction and increase in profit margins that restaurants often struggle to reach. With a tight labor market and increasingly competitive field, there cannot be room for error.
3 Key Benefits of Keeping FLO in Lockstep
- Reduces operational complexity and increases productivity
Controlling costs is a constant struggle in restaurants, opportunities are always present, Zaxby’s Franchising LLC locations are no different. While Zaxby’s locations didn’t struggle as a whole before the restaurant implemented CrunchTime, "We didn’t have one tool that was predictive, customizable, and consistently used for cost control," says Micah Greene, Inventory and Labor Manager. “Prior to CrunchTime, we had a bunch of different systems we used.”
“Some locations tracked numbers using control programs, while others used only Excel, most used a monthly tracking system for inventory and a biweekly tracking for labor. Operators within our system varied in what they used to track their costs and some controlled their costs well, but others struggled.”
There wasn’t a standard inventory control program in place for the restaurant chain known for its family-friendly fare. Each of the 900 Zaxby’s restaurants are independently owned and operated under a licensed franchise agreement. Getting buy-in from licensees can be difficult. “New processes can generate inconsistencies and can yield a varying degree of accuracy. Using multiple systems can also generate a varied return,” Greene adds.
CrunchTime restaurant operations platform helps standardize procedures and can lead to more accurate reporting.
“As great as a tool can be, it must have adoption. Some people adopt technology quickly, some struggle. We’re not exempt from that barrier,” Greene says.
Zaxby’s chose a restaurant operations platform that is efficient and easy to use for maximum buy-in.
“With CrunchTime, it is customizable and user-friendly. Vendor integrations provide easy to confirm invoices and minimize errors,” explains Greene. “Data is received in and requires minimal adjustment, the products are sorted into the correct general ledger, and information is situated into the correct place.
2 Increases P&L Reporting Accuracy
The system also helps Zaxby’s identify potential cost-saving opportunities, identifying waste and areas of potential loss prevention. Saving small percentages on food and labor costs add up quickly, especially with 900 locations. For Zaxby’s, a major bonus has been the ability to do a makeshift P&L week by week instead of waiting until the end of the month.
“It is like school work being dictated by the final exam,” explains Greene. “Doing a weekly count is time-consuming, but you know where you are. You’re not waiting until the end of the month to find out there’s a problem. If you are running high in waste, you can cinch up the belt and minimize waste and reduce losses.”
Discovering a variance in inventory is a red flag that something is amiss. Here are a few scenarios: perhaps the product was wasted and not accounted for. Or it walked out the door. Or someone forgot to input the invoice or input too many invoices. “If you can eliminate one, you have one less to investigate,” explains Greene.
3 Streamlined Reporting Reduces Costs and Increases Profit Margins
POS data is integrated into the restaurant operations platform for maximum operational insights. The ability to compare operations location to location week by week is very insightful for companies with multiple locations.
“Management and leadership in organizations can see if they need to address cost of goods in their location,” says Greene. “You can see the opportunities in one report, and you have the opportunity to drill down to see the individual item. CrunchTime gives us a roadmap of the operations and provides an opportunity to correct it.”
Zaxby’s uses CrunchTime’s canned reports which can be easily customized. Franchisees can easily build their own reports.
“More than anything else, the structure allows you to sort your inventory,” explains Greene. “It is a timesaver. Looking back users can see if they overused or underused a product. They can compare the actual cost versus the theoretical cost, it is all on one screen.”
DEMYSTIFYING THE RESTAURANT BACK-OF-HOUSE
The restaurant eco-system is complicated. The business necessitates an infrastructure that can be flexible and can handle the intricacies of a mercurial marketplace and workforce that is further complicated by inventories that are constantly in flux – consider fluctuating food costs and changing menus plus labor and wage complexities.
Making Sense of a Complex Tech Stack
A methodical organization of back-of-house systems can result in these silos, each that act as a funnel for multiple sources of information:
Food Costs: Inventory management, food costing, food prep planning, supplier and vendor management, food safety compliance
Labor Costs/HR/Payroll: Scheduling management, legal compliance, labor skill management, team communication, employee information, payroll
Sales Related: Point of sale, sales forecasting, time clock
Accounting: Accounts payable, accounts receivable, purchases, payment information, transfers
Naturally, some synthesis occurs and in cases when there is immense overlap, consolidating systems makes the most sense and offers the most benefits. One example is food & labor. These two areas are not only the two biggest cost centers for restaurants, but they are directly correlated when it comes to forecasting sales and expenses. Syncing these two areas can show returns for restaurants by optimizing costs and increasing efficiency.
