4 ways to tap into data for better decision-making
By Mike Shipley, director of analytics & insight solutions, Fourth
For some restaurant managers, the idea of using data in their day-to-day operations is a foreign concept, but in today's highly competitive environment, the right data is exactly what's needed to make the strategic decisions that add up to a successful operation.
And the good news is that with advanced analytics platforms, managers have instant access to the insights they need — no number-crunching needed. Data is helping smart restaurateurs and managers to drive better decision-making with two key types of insight — internal benchmarking and external benchmarking.
Restaurant managers can compare their own data over time, across brands, and across categories to identify opportunities for improvement. On a corporate level, regional managers can benchmark data across locations in a specific area as well as look for operational opportunities.
For example, a restaurant manager can look for spikes in his wastage levels over time, which could indicate overstock of certain ingredients. The insights can be delivered to the manager with suggestions on the cause of overstock — such as over-ordering or over-estimating demand for particular menu items — and the platform can offer data-driven options for correcting it. The manager can even set parameters for orders to be submitted or adjusted automatically.
Managers can also compare their own data to what's going on in the marketplace as a whole. For example, a manager may notice that inflation on his meat products is running at 8 percent, while the market is seeing an inflation rate of only 6 percent. This insight gives him the support he needs to go back to his suppliers and renegotiate his prices.
So what does data-driven decision making look like in action? Restaurant managers looking to maximize profits can use advanced analytics in these four ways:
1. Demand forecasting
One of the biggest challenges a restaurant manager faces is predicting demand. Overestimate and you run the risk of wasted food and underutilized staff; underestimate and you face the possibility of shortages and inefficient service, both of which can lead to unhappy customers.
Too often managers rely on gut instinct based on past experience and accumulated knowledge about their customers when it comes to predicting demand. While some experienced managers have honed their predictive skills over the years, overlooked factors can lead to undesirable results. For example, if a large portion of your seating is outdoors and next week's forecast calls for daily showers during the lunchtime rush, how will that affect your traffic?
With the right analytics platform, managers can create a custom analysis incorporating a wide variety of factors, including past sales patterns, weather, local events, customer feedback, and even social media sentiment to predict demand with a high degree of accuracy. Advanced analytics platforms can recommend actions to ensure the appropriate amount of food and the right level of staffing is ready; they can even provide scenarios to predict what would happen if certain actions are taken or if certain variables change.
Returning to the above example, what if the rain forecast changes over the course of the week? Your data platform can alert you to the change and suggest adjustments — or make them automatically within your prescribed parameters. Managers can then move forward with confidence in making decisions about purchasing, staff scheduling, promotions, and other key variables.
2. Supplier management
Supplier relationships are the lifeline of every restaurant, and the right data can help answer the questions that lead to successful supplier management, such as
- Are your suppliers delivering what you order at the contract price, or are they sending substitute products that are more expensive?
- (for franchises) Are all your restaurants buying from approved suppliers at the negotiated prices?
- Are your suppliers' prices in line with what others are charging for the same products?
Busy restaurant managers seldom have time to sit down and analyze their purchase history with each supplier, and as a result, inefficiencies can slip in unnoticed. Your analytics platform can keep track of those interactions for you and send an alert when the price paid for a specific item falls outside the normal range. And with external benchmarking, your platform can show you the average inflation rates for certain items in your area and detect whether your supplier's rates are in line with the norm.
3. Labor management
The right data platform can not only ensure that you have adequate staff to meet demand (see Demand forecasting above), but also help you and your employees schedule intelligently.
Rather than keeping track of a whiteboard and trying to juggle each person's availability and preferences, managers can use data to automate and optimize their scheduling. For example, a manager can be alerted ahead of time if scheduled staff is inadequate for meeting the predicted demand in a given time slot and make schedule changes within the dynamic dashboard.
4. Price optimization
Pricing is another area that's all too often left up to the manager's gut instinct. Here again, data helps us fill the gaps. Managers can, for example, look at their analytics to compare popularity and profitability across the menu. If a high-margin item is extremely popular, the manager can argue that it may be less price-sensitive than other items and consider a price increase. With less popular items, the manager can see just how much he can lower the price and still generate a profit.
In today's highly competitive environment, experience and instinct are no longer enough to ensure optimal decision-making. Managers must base their actions on what's actually happening with suppliers, staffing, pricing, demand, customer sentiment, and a host of other variables. Keeping track of it all manually would be a full-time job, and fortunately, they don't have to. Today's advanced analytics platforms bring the insights directly to your point of work, allowing you to make data-driven decisions when and where they're needed. You can be confident that those decisions will lead to smoother operations, higher margins and happier customers.
Topics: Systems / Technology