Managing a multi-unit restaurant operation is no simple task. To be successful, a restaurant manager has to juggle many priorities, including:
- Managing the kitchen and wait staff simultaneously
- Hiring and scheduling employees
- Purchasing food, beverage and supplies
- Processing deliveries
- Inventory Management upkeep and maintenance of the store
- Maintaining strong quality control and customer service
- Resolving vendor issues
- Ensuring compliance with food safety codes
For corporate managers, there are even more complexities to manage, including real estate analysis, leasing, store openings, legal, compliance and bookkeeping.
Current surveys show that the typical restaurant manager maintains 10-12 distinct applications and multiple spreadsheets during a given day and often gathers information from multiple sources for corporate managers. This fragmented approach makes it difficult for corporate managers to track performance, and the use of spreadsheets is inherently troublesome as they are often manually prepared and therefore error prone. At the end of the day, this approach sacrifices a manager’s ability to spend adequate time on the restaurant where he or she is most needed in exchange for information that is inaccurate. Logically speaking, this is not an effective use of manager time.
Other common issues which result from using multiple applications to manage key restaurant processes include:
- Front-of-house (FOH) and back-of-house (BOH) managers have zero visibility into processes that fall outside of their control and are not tracked in the particular apps they manage.
- Corporate level managers have limited access to available information in real time, which makes it difficult to use the information to make good business decisions.
- Misalignment of priorities across the various functions of the restaurant
- Corporate is unable to effectively manage teams with confidence due to the lack of timely, cohesive, multi-dimensional information.
- The accounting team has to rely heavily on manual processes to gather documentation for their processes.
All of these concerns ultimately contribute to an unnecessarily complicated period-end closing process. This leads to confusion among the management team as the expectations of operating managers, which are based on the data contained within their separately operated applications, are significantly different than the actual results reflected in the financials after they are released. This leads to concerns from management regarding the accuracy of food, beverage and labor costs that are reflected in the financials. The result is a significantly extended closing cycle and general lack of trust in financial reporting by operations, and the distribution of financials is delayed rendering them untimely and far less useful.
How does a restaurant improve upon the confusion, distrust and headaches?
Advancements in cloud-based technology have enabled restaurant groups to reduce the complexity of their store operations by consolidating many of the specialized applications and spreadsheets into a more simplified stack of applications. There are several restaurant specific platforms that offer nearly every function required in a single integrated platform. Such comprehensive offerings are fantastic; however, their implementation can be difficult, especially without significant corporate resources to support the software. The financial reporting capabilities of these all-in-one solutions offer is somewhat inflexible. A more flexible option is to use a more robust and versatile ERP/accounting system that has dimensional reporting capabilities too, such as Intacct. This can be coupled with a restaurant-specific, back-office system that feeds Point of Sale (POS) data into the accounting system. These more dimensional reporting capabilities allow users to generate valuable data in a single repository that can be simultaneously accessed by store managers, corporate management and accounting. This provides customized reports, accessible company-wide, that are required to analyze the entire enterprise, individual locations, individual processes at each location, intermediate regions or markets. If implemented and used properly, Intacct can generate transformational improvements to the enterprise. The manual entry of data is replaced with a polling software that allows for automatic download of daily sales and labor data in 15-minute increments throughout each business day. Rather than accessing 8-10 applications to manage key processes, teams can access all functionality such as scheduling, GL sales, accounts payable, inventory management, budgeting, forecasting and reporting through significantly fewer interfaces. As the result, processes are streamlined and simplified, enabling corporate managers at various levels of an organization to manage more consistently and systematically using information that is generated directly from the source.
By implementing a cohesive and fully integrated, enterprise-wide platform across all of its key processes, a company can break down silos and work toward achieving organization-wide goals within increased alignment and improved communication among its management teams. Process improvements include:
- Location managers function cohesively with data generated directly from all departments.
- FOH and BOH managers better understand the business as a whole.
- Corporate managers manage toward enterprise-wide goals with improved consistency and accountability.
- Accounting and operations are in better alignment, with cleaner data.
The result is a far more cohesive, team-oriented approach that is more agile and generally aligned with the overall strategy of an organization.
Below are some of the benefits of transformational changes that a restaurant group can achieve.
Accounting and Finance
- Elimination of 90 percent manual entry of accounts payable invoices by accounting through AP automation
- More consistent and accurate coding of invoices across locations
- Improvement in the completeness of vendor invoices using direct EDI integrations with vendors using EDI connections, which improve the speed and accuracy of purchase entries
- More consistent and accurate sales reporting replacing manual sales journal entries with system-generated entries created through direct connections with POS
- Hours required to populate general ledger entries and purchases are reduced by 40 percent
- Reduction in manhours and the overall cost of accounting
- Reduction in reporting cycle times with improved accuracy
- Improved timeliness of financial reporting
- Enhanced ability to effectively outsource the overall accounting function or any of its components to a third-party specialist without adding additional resources
- Improved consistency, speed and accuracy of weekly inventory counts
- Ability to more easily track and communicate shift profitability in near real time
- Ability to identify inefficiencies in ingredient consumption by comparing actual to theoretical usage
- Ability to identify improvement opportunities through cross-location benchmarking
- Improved precision and efficiency of sales forecasting based on current trends
- Ability to drive operational excellence by using available data to incentivize overall operational objectives (i.e., sales contests)
- Easier detection of employee fraud
- Improved monitoring of remote franchise locations using robust reporting and dashboards.
- Improved commissary tracking
- Reduced complexity of labor scheduling and resource planning
- Improved labor efficiency using forecast data to project expected labor cost percentages schedule their labor for each shift within budget, through data from budgeting and planning in the platform database
- Managers can set their scheduled hours for employees at a level that would meet budget if their forecast assumptions were correct, avoiding inefficiencies from over-scheduling employees relative to expected sales
- Monitoring of actual time clocked compared to the schedule for managers to identify excess costs drivers, such as early clock ins, late clock outs, potential overtime and more
- Pre-built graphical visualizations can be used to monitor hourly labor relative to hourly sales, identifying opportunities to lower headcounts as sales for the shift began to taper down
- Improved labor compliance
The Bottom Line
To achieve this type of transformational improvement, restaurant groups must be diligent in selecting the right application to fit both their current and expected circumstances. Careful planning around the configuration of the selected system is paramount to achieving the desired benefits. It is also important to create processes across the company that can ensure that the data being fed into is complete and accurate.
Finally, to achieve a successful implementation, it is critical that an appropriately skilled individual (either internally or outsourced) be designated as the owner of the implementation to ensure that there is at least one individual who is fully dedicated to the implementation and free from other significant responsibilities that will inevitably delay the process. It is often more efficient and highly beneficial to outsource the implementation and continued operation of the system to an experienced and specialized outsourcing partner. Leveraging a full-service outsourcing partner to perform both database management and to outsource the accounting function provides the most efficient path to success, especially when a dedicated accounting or IT department does not exist.
Bennett Thrasher’s Business Transformation Services enable your organization to elevate the financial conversation and make better decisions more quickly, confidently and strategically. For more information about continuous planning, visit www.btcpa.net or contact John Yeager at 770.635.5022.
Rob Lamb, Finance Executive and Business Consultant, e-Merge Solutions LLC, also contributed to this piece.