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July 10, 2019
5 Reasons Why You Need a Restaurant Management Software Solution in 2019
Everybody has a different reason for getting into the restaurant business, but shuffling paper and maintaining spreadsheets usually isn’t among them. Yet that is how much of a chef or restaurateur’s time is spent: manually entering invoices, taking inventory counts with paper and a clipboard or reviewing sales results from a point-of-sale system and trying to reconcile them with the purchasing and food cost data kept separately on spreadsheets.
Ideally, restaurant management system software should speed up and automate that process. Early versions of such software were little better than the paper-based systems they replaced, retaining a heavy reliance on manual data entry. That’s changed with advances in technology and cloud computing. The right restaurant management software can actually free you from manual processes and provide up-to-date information needed to proficiently manage your restaurant. Here are five key benefits you can achieve and should demand from an RMS solution.
1) Eliminates manual invoice processing
Historically, restaurant managers have had to enter invoice information manually because they’ve had no alternative. Whether they used pencil and paper or a computer-based accounting system, someone had to write or type the information. That’s either a time sink or a labor cost, and it leaves the door open to errors.
Today, however, that large manual effort is no longer needed. The right restaurant management system (RMS) will take over the tedious task of capturing data from your invoices and receipts. By allowing you to take photos of everyday paperwork, an RMS frees you from data entry! The software then captures and organizes line-item purchase data within 24-48 hours. That data is available immediately for live cost reporting, and invoices and payables are automatically transferred to your existing accounting software.
2) Maximizes profits per plate
When you create a dish, you carefully calculate your costs, tweak the recipe and calculate a portion size and selling price based on your food cost, labor and competitive situation. Once that price is set, it can be difficult to track how and when the recipe costs change. It’s also a challenge to monitor whether staff are using the correct portions to achieve the desired profit margins.
The right RMS solution eliminates this guesswork. It can track ingredient prices in real time, thanks to the rapid capture of invoice data from your purchases. Real-time monitoring of what you pay for ingredients and what you charge for the food you serve tells you immediately if your margins shrink.
That was a game changer for Todd Enany of New York City’s Sunday in Brooklyn. To get full leverage from his RMS, Enany and his team entered all their recipes into the system so they could track both recipe costs and ingredient usage. “I would never have been able to get those recipes done without the software,” he says, “and it helps me quickly identify ingredient price movement in our recipes. [This] allows us to understand what’s happening on the plate and how it affects the bottom line.”
Top-quality restaurant management software offers great recipe management tools for creating, pricing and sharing recipes. This was crucial for Stephen Lyons, corporate executive chef at Clyde’s Restaurant Group (CRG) of Washington, DC. CRG operates the revered Old Ebbitt Grill and 11 other units in the Washington area. Old Ebbitt and the other restaurants in the group have ever-changing seasonal menus and extremely high sales volumes (Old Ebbitt alone served 1.5 million meals in 2018), and managing more than 500 recipes across multiple units with a paper-based system just wasn’t working.
“We now have a system running on Kindles that shows ingredients, procedures and pictures,” Lyons says. “It‘s easily navigated, searchable and shareable across locations.”
3) Identifies actual ingredient usage versus target usage
You should expect your RMS solution to integrate all the purchasing data with product sales data from the point of sale (POS) system. Combining purchase and inventory data with sales data lets you compare actual usage of ingredients against expected usage, highlighting any variance that might indicate portion control or other issues.
If your POS shows you sold 120 bottles of beer in a given period, your RMS should be able to tell you whether that’s the actual number of bottles you’ve ordered and used. Similarly, if your recipes, portion sizes and sales data have all been set up in your RMS, you can know whether you are using more of some ingredients than you’d expect based on sales. This information is invaluable and can help you zero in on potential issues of waste, theft, portion control and other forms of shrinkage that can erode your margins.
4) Gets your ordering right
The best RMS platforms not only help you manage inventory and how you are using it, but they can help you streamline the ordering process as well. Ordering too much of anything ties up money, and over-ordering perishable ingredients leads to waste and higher food costs. Ordering too little means running out of popular menu items during service — representing a potential loss of revenue — and can force you to make emergency purchases and pay too much.
For Chef Geoff’s Deluxe Hospitality, a DC-area operator with nine units and multiple concepts, their RMS made a complex ordering environment manageable. The company, which uses hundreds of ingredients across its locations, leveraged its RMS to consolidate purchasing and negotiate better pricing from its vendors. It has also set up price alerts, letting partner Chris Tracy know when products are invoiced at a higher-than-agreed price due to substitutions or vendor errors. “It can add up to a lot of lost money over time,” Tracy points out.
Chef Geoff’s also treats two of its own units as commissaries, and the other restaurants can seamlessly order desserts or fresh pasta from sister sites as if they were outside vendors. Their RMS allows them to manage the order guides from their commissary kitchens so that all units have current lists of the products they can or should order in-house.
5) Makes you scalable
When you’re a small operator, one of the big challenges you’ll face in the early stages is just scaling up your operation and revenues to the point that you won’t burn out from having to do everything yourself. Bringing in an RMS to streamline your oversight process can keep you from being eaten alive by paperwork and help you avoid that common cause of restaurant failure.
With the added control you get from a leading RMS, you can also manage growth into multiple units or concepts. A good RMS makes it easy to standardize your purchasing and sales reporting across all locations for accounting purposes, and lets you compare budgets and P&Ls in one place. Operationally, you can easily implement standardized inventory and ordering systems across restaurants.
Rediscover your love of the business
By lifting the weight of paperwork from your shoulders and putting critical operating information at your fingertips, the right RMS can help you streamline back-of-house operations and regain your love for your restaurant. MarginEdge is the only restaurant management software system that fully automates the flow of invoice and sales data, saving you tons of time and money. With the elimination of manual processes, combined with real-time information and analytics from MarginEdge, you can manage effectively plus refocus your attention on your food and the customer experience.
To learn how MarginEdge can help you ditch the paperwork, reduce costs and streamline your restaurant’s operations, contact us to get a free demo.
- The Culinary Pro: Calculating Food Cost
- Accounting Coach: How Do You Calculate the Cost of Carrying Inventory?
- Cornell Hotel and Restaurant Administration Quarterly: Why Restaurants Fail; H. G. Parsa et al.