2020 was a tough year for the restaurant industry. With the sudden shift COVID-19 brought, there was no shortage of challenges facing business owners. The changes many of us faced changed daily business operations and forced everyone to think on their feet. Faced with uncertainty and adversity, our industry adapted and innovated at an incredible pace, spinning up new channels and routes to customers overnight.
With the fast transition from in-person dining to global lockdowns, restaurateurs found new ways to reach their customers. We saw a rise in online ordering, curbside delivery, and other innovative solutions for delivering quality service to consumers. Without a doubt, last year proved that the food and beverage industry is built on innovation and creativity. And are certainly not out of the woods yet.
Having found new ways to reach our customers and new ways to work, how do we carry that success over to 2021?
As business owners review new channels, navigate yet another round of lockdowns and plan for potential reopening’s later in the year, how can businesses know which sales channels are worth keeping and which aren’t delivering the right ROI? And more importantly, how can business owners track the success of the changes they’re making in a time when things are changing every day?
We’ve identified the three most important focus areas restaurant owners will want to focus on moving into 2021, as well as specific restaurant KPIs to improve your online ordering and delivery margins.
Depending on the size of your business, different KPIs will hold more value than others. It can seem overwhelming when you’re first getting started to know which KPIs are worth tracking. We’ve pinpointed three major restaurant KPIs that every business should be tracking over the next year.
During the early stages of stay-at-home orders we discussed the importance of knowing how to optimize menu profitability with detailed reports and restaurant analytics. In 2021 that need won’t change, but the focus will shift to understanding that performance at a much more granular level.
In this new era of omnichannel ordering, restaurateurs need to regularly analyze their sales mix percentage by all their on-premises and off-premises channels.
As off-premise dining options continue to increase in popularity, restaurant sales channels will become more diversified. Breaking down all of your sales channels gives you the full picture of what is working and what isn’t. As you get more comfortable with your sales channel tracking, you can break down the performance of everything at a micro level – from individual aggregators to kiosks, tablets, and even phone orders.
Once you have an overview of all your sales channels, you can dig deeper into how your menu is performing. Start by calculating your average check size per channel and how each of your menu items performs on your different sales channels. Ideally, this information will be accessible to your team in real-time. Many business owners employ the use of restaurant menu software to collect all of this information automatically.
Restaurant menu software automates the collection of menu, pricing, and inventory data across all of your locations, allowing you to track daily profit and losses, updates on menu availability and stock, and much more in one centralized location.
As budgets tighten, the importance of managing costs becomes more important than ever. Normally, assessing the cost of goods sold would be measured at a high level across all food or drinks on the menu. But with omnichannel operations, we need to focus more closely at the real cost of goods sold in detail and by channel.
Your total cost of goods sold isn’t limited to just the items on your menu. It’s the total cost of running your business at every level. Things like the cost of materials, operations, and labor are all included. Keeping track of your cost of goods sold is vital for understanding your company’s gross revenue vs. your net revenue.
Driving costs down has always been important, but it’s imperative when you’re exploring new concepts and sales channels. If you calculate your cost of goods sold and realize you could afford to reduce costs, there are a few areas you can start with.
Labor can make up as much as 30% of a restaurant's overall costs, and with reduced on-premises capacity, it’s important to be strategic. The key is to consider how best to use current staffing resources to help service your new multi-channel operating model.
Our previous blog took a deep dive into monitoring and controlling labor costs, but in 2021 we need a hyper-focus on those costs by channel. To really understand labor costs by the channel, you need to monitor and explore labor costs to service the channel, kitchen production costs by channel, and delivery driver costs. Everything from the hours your business operates to the cost it takes to run your kitchen can be tracked and optimized to help reduce costs.
With an effective reporting system and attention to detail, restaurant managers can use real-time data and insights to make more informed decisions.
Managing cost and controlling food waste has always been a top priority for the food and beverage industry, but poorly managed restaurant operations can come at a huge cost.
You need to be diligent and mindful of your waste management metrics around meal production and distribution. Ensuring that every transaction you capture has a healthy bottom-line requires a specific focus on everything related to your business: from the menu, sales channels, packaging, and operations. When tracking all of these expenses, take note of the channels they’re being distributed through. These specifics can help you make smarter decisions about where to cut costs and reduce waste.
Don't be afraid to package differently by order channel, as every penny counts. The below is an indicator of the costs that can creep into the business on packaging alone. This could quickly leave you running at a loss when you start to factor in delivery aggregator or driver fees, which can already be as much as 30% of the meal price.
These are just two examples of ways to reduce your overall cost of goods. As you get comfortable tracking the numbers, make it a goal to get a full scope of your cost of goods. The more information you can collect about specific sales channels, the better you can inform decisions about where to cut costs in order to save money.
With more off-premises channels and delivery service levels to manage, kitchen display systems (KDS) are becoming a crucial part of monitoring and tracking how the kitchen is performing by every channel. Kitchen display systems can help monitor and set kitchen KPIs.
No matter how orders are received at the point of sale (phone, self-service kiosk, online POS system, mobile, cashier, tableside, etc.), their flow to the kitchen can be properly timed to ensure optimum delivery (boxed or plated). Automated timing helps ensure hot food is delivered hot, and cold food is delivered cold.
Giving accurate and real time visibility of production times by channel, the KDS sends menu items to different stations at different times, depending on each item’s preparation time, ensuring they’ll be ready at the same time and perfectly cooked when served to guests. KDS can provide service level reports on kitchen staff’s KPIs by channel. Service level reports offer valuable information that can be used to improve operations. When used together, these three KPIs can help your restaurant lower costs and improve overall operations.
Effective analysis of your restaurant’s data can go a long way in your operations’ ability to adapt quickly and seamlessly to new business conditions whilst helping you to minimize the costly process of trial and error. For more guidance on how inventory management and reporting, and analytics software can help identify and measure your new restaurant KPIs in 2021, request a complimentary assessment by our solution engineers today.