About the author💡Stephen Burns is an accomplished Operations Manager with extensive experience in the hospitality sector. He has a proven track record of scaling businesses, revenue growth, managing complex operations, and leading cross-functional teams. Stephen currently works with NolaClan, streamlining their stock management functions across the group including venues such as House, 37 Dawson St and 9Below, and has previously worked with Rocksalt and was the Head of Stock Management and Procurement at Press Up Entertainment.
Inefficient, manual processes can cause a huge hit to your profits. Why? Because with manual operations, you don’t have access to real-time data.
If you’re not using the most accurate and up-to-date data to handle operations, you risk:
- Missing key opportunities to cut costs in real-time
- Using inaccurate information to make decisions
- Overspending on ingredients and labour costs
So what’s the solution here? How do you improve your manual processes and ensure you use accurate, real-time data to manage your restaurant?
Keep reading to find out. I’m going to show you the real cost of manual operations (based on my own experience in the industry) and how to overcome the challenges.
Where do you typically find the biggest profit leaks across venues?
Before we get to the solutions, let’s take a step back and look at how inefficient manual processes can impact your bottom line.
From stock-taking to labour management, manual processes can really make your life hard. I’ve seen it firsthand. When I think back to the earlier days of my career, I spent hours manually pulling sales performance data, creating reports in Excel, and tracking inventory.
As they say, time is money. All those hours I spent manually gathering data could have been better spent elsewhere.
And the errors… One of the biggest time constraints with manual processes is entering information correctly — especially when managing multiple venues.
I remember spending a lot of time in front of a computer, entering in delivery dockets or stock counts with many of the tasks involving double jobbing or taking up needless time, safe to say it’s not a process I would want to get back to. In many cases a typo or an incorrect excel formula would mean inaccurate data. We’re all human, so errors are unavoidable. But if you’re handling data manually, accuracy falls to you.
And if you want to make smart and informed decisions to improve your bottom line, you need accurate data.
Food waste is another culprit, unrecorded waste, staff food, staff coffees are all affecting your margin and your bottom line. You need to record these if you really want to maximise your profitability across food and beverage. You can easily build all of these into your costs to ensure you are covered.
A reliance on a manual ordering process can also lead to orders not being managed efficiently, which leads to excessive food waste (for example, over ordering ingredients). Not only is this bad for the environment, it’s terrible for your profits.
Side note: I’ve also seen managers on the ground falsifying stock count figures to hit target margins where stock variances are not investigated or managed. If they had too much stock, they’d remove it from the stock count to hide their overordering. If they had too little, they’d add more.
Just something to bear in mind when using manual processes — sometimes you’re relying on the credibility of management to ensure that these figures are as accurate as possible.
So, what’s the solution? How do you improve manual operations?
The short answer is to use restaurant technology. But I know you’re here for the long answer, so let’s break it down.
Restaurant technology has evolved over the last few years, with more features and benefits for restaurant operators. Tools like Nory, for example, streamline everything from inventory management to staff scheduling, freeing up time for you to focus on the bigger picture — successful growth.
But how exactly does software improve your manual operations? Let’s find out:
- Reduce the need for manual data extraction. Using technology frees up time. You spend less time manually handling processes and more time on the ground, building relationships with staff and customers. In a competitive industry, these personal connections set you apart and boost loyalty.
- Access real-time, accurate data. Technology provides instant access to your most up-to-date performance. In a matter of clicks, you can see sales per hour, labour costs, inventory prices — the list goes on. Instead of manually trawling through figures and retrospectively reviewing performance, you can do it instantly with real-time technology.
- Predict customer demand. Typically a feature of AI-powered systems, technology allows you to analyse historical data and external factors (like the weather or local events) to predict footfall. As a result, you can optimise your inventory orders and labour schedules to ensure profitability.
- Manage supply chains and inventory costs in one location. Keep track of your stock levels and inventory prices in a central location. With Nory, for example, all the ordering and invoices are updated daily. During my time at Rocksalt, this meant we could catch a price increase from a supplier pretty much instantly. As soon as we spot it, we can react to it immediately.
- Spot errors instantly. If something’s not right at one or more of your locations, technology can instantly spot it. This means you can nip things in the bud before causing too much damage to your bottom line. As a result, you’re more likely to ensure success as you expand.
What are your non-negotiable KPIs for multi-site operations?
Key performance indicators (KPIs) are essential for not only tracking financial performance, but also for measuring the effectiveness of your operations.
Say that you switch from manually recording inventory to using an automated system to track it for you. You can use KPIs to track progress before and after implementing the new system.
This shows you if the new software is doing its job and highlights the benefits of switching from manual to digital. If numbers aren’t being hit, it highlights the need for improvement.
So what KPIs should be on your radar, especially if operating across multiple sites?
It varies. A good KPI for one restaurant might not be for another. The key is to identify which metrics matter most to your restaurant. If you’re trying to optimise labour scheduling, tracking labour productivity and profitability are good places to start.
To get started on the right foot, here are some of my suggestions:
- Labour cost percentage. Calculate the ratio of total labour costs in relation to your total restaurant sales. This KPI helps you understand how much you spend on labour relative to your revenue across every location.
- Gross profit (GP) margins. Set an ideal profit margin percentage to monitor profitability across venues. Some businesses still follow the 30-30-30 rule, 30% on wages, 30% cost of sales, 30% overheads, leaving 10% profit. Find what works best for your business.
- Cost of goods sold (COGS). Track your COGS to get an accurate picture of what you spend on each menu item. With these insights, you get greater control over your restaurant costs, and can make better decisions on menu pricing, vendor selection and overall inventory management.
What should you do if performance drops in one location?
If you’re tracking KPIs across locations, what do you do when one of them drops?
The first port of call is to pinpoint why performance has dropped. If you’re using technology, you can review sales, labour costs, and other data to identify the cause of the blip.
I’d also recommend going to the venue and observing the operations yourself. See what’s happening on the ground and make sure that teams follow your standard operating procedures (SOPs).
If you can’t spend time at the venue, talking to management is another good way to get a better idea of why performance has dipped.
How do you approach performance variations between sites?
This is a good question. If you’re managing multiple sites (or planning to expand to new sites), how do you approach performance variations?
Ideally, you want the same numbers across all your venues. If you find that one of your sites isn’t hitting your KPIs, you may have a problem. But as soon as you spot it, you can dig deeper to find the cause and put things right.
Again, this is where technology shines. It shows your performance in real-time so you can hop in and make changes if things aren’t going to plan.
It’s not always possible for sites to hit the same KPIs. Location, customer base, supplier costs, and labour costs can all impact individual site performance. In this situation, it’s worth reviewing KPIs on a site-by-site basis.
Here’s what I’d suggest:
- Collect and analyse key KPI information. Gather all the performance data for locations and compare each. Look at sales, wages, COGS — anything that helps you compare KPI performance.
- Benchmark and compare data. Consider external factors or trends that might influence performance. Is construction work impacting footfall? Is the restaurant understaffed? Has a new competitor opened up nearby? Look at the bigger picture to try and pinpoint the cause of underperformance.
You compare the data and conclude that there’s no obvious reason for one of your venues to underperform. There aren’t any variables or trends that point to why this is the case, so how do you proceed?
When I’ve been in a similar position, I like to visit the site. Get a feel for their operations, talk to staff one-on-one, and see for yourself if SOPs and best practices are being followed. Being there in person gives you valuable insight into the daily operations, which could impact KPI performance.
What reporting frequency and structure works best for multi-site management?
I’d suggest weekly. Daily is too often when managing multiple sites, and monthly means you might miss key opportunities for improvement. A weekly report allows for a quicker reaction to any possible issues.
Again, technology is useful for this. Instead of manually pulling reports every week, you can schedule reports to generate automatically. The data is accurate and up-to-date, meaning you can make quick and fast decisions to improve operations at a site level.
How do you empower site managers to drive profitability?
I’ve said it before and I’ll say it again — people are your most valuable assets. Giving staff the skills and confidence to run an efficient operation will help your business. Trust me, I’ve seen it happen.
Here are some of the ways I suggest empowering your site managers:
Develop trust and empowerment
You need to trust that managers know what they’re doing. Putting your trust in them empowers them to make their own decisions, which helps them feel confident in their choices to improve profitability.
When things go well, let them know you’ve noticed their hard work. It’s a good morale booster, and it reassures managers that they’re making the right choices.
You can’t control everything. Mistakes will happen, and it’s important not to berate managers when this happens. Instead, try to understand where and why the mistake was made and provide support to ensure it doesn’t happen again.
Provide continuous feedback and support
Your role is to provide feedback to ensure they have the necessary resources to make smart choices. Providing continuous support helps them run the best operation possible. Push for lean operational procedures, encouraging them to ask:
“Is what we’re doing providing value to the business, and ultimately the customer?”
By keeping this in mind, operators are more likely to make profitable decisions that boost your bottom line.
Build relationships with staff
I’ve always stressed the importance of relationships in building a strong team. Taking the time to connect with your staff, even if just for a few minutes at a time, makes a huge difference to their morale and performance.
When employees feel valued, they’re more dedicated and motivated to help your restaurant succeed.
Improve your operations and boost your bottom line
When it comes to manual operations, there are three main culprits for leaking profits: inventory management, supply chains and purchasing, and food waste. Not to mention, the endless hours spent manually creating reports and adding data (which some of the time, isn’t even correct).
Using restaurant technology is one of the best ways to combat these challenges. It provides accurate data in real-time, automatically generates reports, and allows you to track performance across sites in a central location. Spot errors instantly and jump in to make changes to boost your profits.
For more advice on how to boost your bottom line, read through the other blogs in Nory’s Operator to Operator series:
