Technology
Smart technology helping restaurants cut food costs, waste
To stay afloat amid rising prices of food and labor, restaurants must use inventory management systems, handhelds, loyalty programs, menu auditing, QR codes and other restaurant-specific technology.
July 9, 2024 by Lindsay Petrovic — Corporate Vice President, Product Management, NCR Voyix
Labor costs are up, especially in states with minimum wages surpassing $15 an hour, and ingredient costs continue to increase, which means menu prices are climbing. The National Restaurant Association, for example, reported menu prices rose 4.1% in the last 12 months.
Restaurants are investing in smart technology to offset the cost of labor and food by simplifying operations, relying on loyalty platforms, cutting costs and doing more with fewer resources.
Smart technology simplifies operations
When dealing with squeezing margins, delivering the greatest value for the experience is critical. Real-time data can help reduce errors and improve the accuracy of the cost of goods sold. Thanks to real-time inventory access, information updates on sales and quantity of products give team members a glimpse into where deficits exist. This runs the restaurant more efficiently and helps future-proof operations as consumer preferences change.
Restaurants like Sbarro use this smart technology to compare profitability and efficiency trends across multiple locations and utilize insights to make key business decisions in real time and improve ROI. Saving franchises significant time and reducing the need for manual reporting, smart technology frees staff to focus on the customer experience.
In quick service, handheld devices can streamline operations and reduce cashier staff needed to complete orders. At the drive-thru, staff enter the lane, take orders rapidly and expedite the pace, as Chick-fil-A and In-N-Out have long displayed.
Look to loyalty
With the current state of inflation, cost-conscious consumers are paying attention to how they can save money, with upwards of 50% signing up for digital loyalty programs to cut costs. The mindset around loyalty is shifting. Whereas consumers once perceived these programs as a nice perk, they now see them as a must-have. In fact, earning and redeeming points can be a deciding factor on which brands they frequent.
In response, restaurants are investing more in their loyalty programs, providing personalized offers and tailored rewards, to capitalize on repeat customers and encourage revenue growth. Restaurants of all sizes (not just chains) must consider a digital loyalty infrastructure that supports infinite scaling and unlimited flexibility to launch programs quickly and experiment with innovation without technical or operational barriers.
International House of Pancakes created it's International Bank of Pancakes (IBOP) loyalty program in 2022, which has about 8 million members. The IHOP loyalty app is downloaded about 8,000 times a day, with members visiting twice as much as non-members and spending nearly 5% more.
Although many brands' loyalty programs emphasize discounts for money spent, programs are shifting to more personalized rewards focus. Further, beyond quick-serve/fast-casual brands, full-service restaurants are increasingly adding loyalty programs to boost sales and repeat diners, too.
Cut food costs and more
A restaurant can produce 25,000 to 75,000 pounds of food waste annually. Food waste is one of the largest sources of unnecessary costs, especially when restaurants toss away perishables before they can be used. Inventory management software can help kitchen staff know when to rotate stock and alert them when certain items are about to reach their "best used by" date.
However, cutting costs doesn't just happen by mitigating food waste or streamlining your back-house operations. Restaurants can take a hard look at current menu items and fine-tune food costs with creative menu planning.
Harness smart technology to conduct a menu audit that can identify the holy grail menu items, those that are cheap, easy to make and highly popular versus areas of concern, items that are expensive, difficult to make and both popular or not. An audit will allow restaurants to streamline their menu and focus on the right dishes, consistently giving guests good food that'll have them returning more often.
Along with simplifying your menu, restaurants should consider throwing the physical menus away altogether. Consider making the switch to digital menu boards, tablets or self-ordering kiosks as these are easier, less expensive to update and can allow staff to focus on more value-added services for customers. Additionally, these innovations can enhance the customer experience by offering personalized menus and dish suggestions.
Do more with less
Between inflation, including rising prices of food, and the increasing cost of labor, restaurants must find ways to survive and thrive, and that depends upon smart technology. This includes utilizing inventory management systems, handhelds, loyalty programs, menu auditing, QR codes, and other restaurant-specific technology.
Technology allows you to do more with less. And the right platform(s) make the difference between barely hanging on amid a tough landscape and your brand's success.
About Lindsay Petrovic
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