How can restaurants make real-time decisions with transaction data?
Business models for restaurateurs continue to evolve as the industry adapts to new consumer trends and technology innovations. Online and mobile ordering, curbside pickup, delivery services, and more have become commonplace for quick/fast-casual and table-service restaurants alike.
While many consumers are returning to in-house dining, the demand for delivery remains, leaving restaurants juggling multiple balls and sometimes competing priorities. Operators need to determine the best approach to blend traditional business practices and service styles, with the requirements needed to serve new hybrid models. The biggest challenges at present are managing multi-channel orders efficiently, optimizing kitchen operations in alignment with new service channels, and finding, training, and retaining top talent. So, how can restaurants make real-time decisions with transaction data, while enabling long-term strategy in a competitive market facing increasing cost pressures?
Let’s explore some key areas where restaurants have met new expectations, how technology has enabled change, and how brands are measuring success.
New menu items are a reliable tactic to attract new customers and keep loyal guests engaged with a brand. Keeping tabs on the performance of a menu item down to the channel in which it is offered and fulfilled is critical. This includes basic key performance indicators (KPIs) such as revenue, margin, customer affinity, and promotion redemption. In addition to the basics, brands need to think about and operationalize their ability to measure speed to market and forecast menu performance, taking into consideration upstream uncertainty and inflation. How fast a brand can pilot a new concept, forecast the business potential, and move to full roll-out confidently will separate winners from laggards.
With restaurant analytics across all sales channels, operators can dig deeper into how their menu is performing. Most operators start simply with volumes and profitability. Advanced operators are thinking about menu performance across multiple dimensions. Combining menu, loyalty data, operational performance, and financial metrics, where ideally this information can be made accessible in real-time. Many business owners rely on their restaurant POS system as the source of truth for all of this information and automatically flow it to various business systems and stakeholders as needed.
An additional view of menu performance considers consumer expectations for transparency on elements such as source ingredients and a supplier’s sustainability practices. Connecting restaurant systems to a supply chain management solution that offers two-way communication between manufacturers and suppliers gives restaurants the ability to confidently communicate nutrition and allergen information as well as mitigate the risk of waste, particularly in the case of a recall. Analyzing supplier performance in terms of risk is a best practice in consumer goods and is rapidly becoming an important aspect of restaurant KPIs as well.
In an omnichannel environment, restaurateurs need to regularly analyze their on-premises and off-premises channels to understand the mix and balance from a revenue, margin, and customer satisfaction standpoint. This insight will help guide priorities across staffing and technology investments.
In the case of off-premises dining, mapping out the customer journey from start to finish and then creating KPI dashboards for each channel will give restaurants a complete picture of what channels are working and what aren’t. For example, delivery aggregators are consistently under scrutiny from a margin performance KPI, but they are important channels for new customer acquisition, particularly for a ghost kitchen or virtual brand expansion. In fact, in some cases, shifting delivery out of an on-premises kitchen and into a cloud kitchen environment that is solely served through a third-party may be the most productive model. This approach removes complexity from a kitchen and reduces the need for guests to contend with a constant flow of delivery drivers lingering in the front of an establishment and taking parking spots, both of which can have a negative impact on the guest experience. Once restaurants become more comfortable with tracking sales channels, they can further break down performance at a micro level—from individual aggregators to kiosks, tablets, and even phone orders.
It’s important to avoid the trap of keeping on- and off-premises channels in silos. We saw this frequently in the early days of omnichannel retail. Ecommerce was managed separate from the store and ended up looking like the star performer which then led retailers to systematically shut down store fronts only to realize that the local presence was key to their online sales. It’s difficult to forecast that without having a holistic view of how customers interact with a restaurant across all channels. Modern consumer restaurant experiences should transition seamlessly between channels.
While restaurants expanded channels for online ordering and off-premises volume increased, most did not expand the footprint of their kitchen as they were operating with little to no on-premises demand. Now that on-premises dining is back to near normal levels, many businesses are finding that their off-premises demand is actually remaining constant, which aligns with findings of our restaurant trends research. That means brands must now potentially manage more orders with the same size kitchen, same setup or perhaps what was thought of as a short-term configuration. Measuring kitchen productivity, for example orders per station and their completion time, will help identify potential issues with staff, fine tuning promise times, and giving restaurants a better understanding of where they might need to consider a change in approach. A restaurant’s POS transaction data directly synced to a kitchen display system and downstream through to fulfillment (delivery, pick-up) will help guide an operator’s decisions. Layering in machine learning, an operator can automatically refine promise times by time of day, order channel, order size, and so on.
Mobile ordering and curbside pickup have become so popular over the last year that many quick-service restaurants have expanded drive-thru lanes and are continuing to offer curbside pick-up stations. Independent brands are also increasingly investing in location technology to streamline their pickup experience, giving customers a highly personalized journey as well as improving operations and profitability. With all the data connected to a POS, operators can again establish KPIs for everything from kitchen productivity to front of house staff.
Ultimately, restaurants are going to have to make some decisions on how to prioritize the most profitable aspects of their business. For example, restaurants have found people who order via the mobile app are often their most loyal customers. Therefore, they are served first because restaurants want to keep them the happiest but that’s potentially at the cost of deprioritizing walk-in and dine-in customers.
This is a critical area to get right because the fastest way to lose business is to keep customers waiting for an extended period. According to recent Oracle research, 80 percent of consumers will leave or consider leaving when they see a long line (more than 6 minutes of waiting). It’s straightforward to measure drive-thru and delivery throughput because the journey is nearly all digital—from order placement to fulfillment—but with on-premises orders operators likely don’t have a line of sight to how long someone has to wait from the point they walk in the door to when they are seated and greeted by a server. Handheld mobile POS devices can give restaurants a more complete data picture of a customer “analog” journey if they build the right business process and KPIs.
Brands such as Outback Steakhouse use mobile POS systems to take and deliver drink orders as they are escorting guests to the table. This results in a near “magical” experience where the customer gets their beverages within minutes of being seated. Measuring the time from table assignment to drinks, order placement and fulfillment, and finally payment is something table service restaurants should consider as they balance challenges with finding talent and meeting increased customer demand.
One important piece of technology that helps keep kitchens running smoothly is kitchen display systems. Kitchen display systems 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.), the flow of orders 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.
Restaurants are facing multiple challenges staffing their business. Labor can make up as much as 30 percent of a restaurant's overall costs, and it’s important for restaurants to be strategic. After having barely enough staff to cover work during the pandemic, some restaurants are now welcoming staff back, while many are still having difficulty recruiting new talent.
In order to maximize operations and profits, operators will want to find ways to accelerate the learning curve for new recruits in order to push them beyond the “basics.” That means finding new ways to reduce onboarding time and accelerate new employee performance and skill development so they can help drive more revenue for the restaurant.
Staff can often be the best vehicle for “upselling” customers and expanding profit opportunities. For example, skilled wait staff can suggest high-margin specials customers might like or a special bottle of wine that would pair well with a customers’ meal. Restaurants might consider bonuses for staff who sell specific “drinks of the day” or other special promotions. These prompts can also be automated in a POS so that even new team members hit the mark.
Restaurants must reimagine how they are managing and running their business, especially in light of new complexities and challenges within the industry. Restaurants who are able to best leverage analytics, digital tools and traditional POS to manage the technical and operational complexities of this post-pandemic age are the ones who will be the most successful.
Simon de Montfort Walker is the Senior Vice President and General Manager of the Oracle Food and Beverage Global Business Unit. Tapped for his deep experience in hospitality technology, Walker leads the business unit’s efforts to deliver innovative hardware and cloud solutions, enabling restaurants of all sizes to personalize the guest experience, streamline operations and grow their businesses.