Running Restaurants is Getting Harder – Part 3

To read part two click here

Labor cost is another issue that is going to affect restaurant operations. We can’t just look at labor as bodies and do we have enough. We are going to have to redesign our entire operations strategy to minimize labor and operating complexity so we can operate with fewer people in the future. We were all trained to freak out when we saw a server at $2.85 standing around on the clock imagine how that is going to be when your waiter costs you $15 an hour.

Labor cost is going to affect our make vs. buy decisions on menu items, the complexity of our menu items, and how we serve guests.

Daily restaurant operations from cooler temperatures to dining room cleanliness and everything in between has been an area devoid of data for decision making.  This is crazy because it is our operations that drive sales not the other way around. The reason for this is because there hasn’t been a way to easily collect, store, and aggregate/report on this data, until now.

The invention of the smartphone and tablet have given us the hardware that we need to collect data easily from around our locations. Platforms like OpsAnalitica with our ability to capture, aggregate, and report; allow restaurant managers to look at how operations are running across all of their locations.

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With our advanced reporting engine, you can merge your operations data with your cost and sales data and for the first time you can see how operations affect costs and sales. This increased visibility is a game changer for the industry.

There are things in your operations that you think you know today that with data we could show you you’re wrong. They look to be causal because you don’t look at them every shift, every day, consistently. When you capture data points consistently across your locations, and you can compare those data points to costs or sales you will see that there isn’t a correlation.

We are seeing that people are leaving money on the table or not realizing their full sales potential because of small operations issues that aren’t being paid attention to on a daily basis. Once again because these issues happen in real time and because they aren’t being tracked in a format that allows them to be analyzed they get missed in the fog of running a restaurant. People have operational issues that they don’t even know exist, and often times the solution doesn’t cost any additional money.  The solution is a slight change in how they do something and they can get out of their own way.

In a lot of ways, it’s like flying a plane with no instruments.  You can see what’s in front of you, but you don’t know where you are going.

Don’t fool yourself either, every penny and dollar of cost that you can wrench out of your operations cost is worth it. Walmart has been able to be consistently the low-cost leader and one of the largest companies in the world because of their focus on efficiency and cost control. If Walmart used the same back office and fulfillment infrastructure today as it did even ten years ago, it’s prices would be much higher. Do you know how they do it; operations data!

They know everything about every part of their business, and they track it. Like our industry they use technology like registers to capture some parts of the data but they have also had to go out and invest in other systems to capture other forms of operations data. They use their data and analysis advantage to win on the playing field.

The same is true for restaurants who are operating on the edge of efficiency. They get every penny of waste out of their operations, and they can use those profits to press their advantage in the marketplace.

What is crazy is that you see that profit advantage every day; here are some examples:
* Getting the endcap location in a strip center vs. being stuck in the middle. That takes cash flow
* Redesigning a website or implementing mobile ordering or curbside pickup
* Expanding number of locations
* Advertising
* Being able to keep prices lower than competitors which create a marketing advantage

It takes money to grow and when you are running efficient operations it is easier to generate the capital needed to push your competition around in the marketplace.

In conclusion, the restaurant business is getting harder because there are more outside factors that are determining success at the unit level. At the same time the tools available to operators at the unit level are getting more advanced and cheaper, giving restaurant manager’s huge advantages over their predecessors.

We have always been an operations business, I think for a lot of people, that was limited to executing on service and food. Our business will always be about taking care of the guests, but it has expanded into creating management systems that will allow you to capture data and make data-driven decisions vs. gut decisions.

Gone are the Mel’s Diner days where Mel yelled at the waitresses and cooked eggs. Mel today would be sitting at a table with a tablet trying to figure out how the avian flu was affecting egg prices and redoing his website and menu.


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Tommy Yionoulis

I've been in the restaurant industry for most of my adult life. I have a BSBA from University of Denver Hotel Restaurant school and an MBA from the same. When I wasn't working in restaurants I was either doing stand-up comedy, for 10 years, or large enterprise software consulting. I'm currently the Managing Director of OpsAnalitica and our Inspector platform was originally conceived when I worked for one of the largest sandwich franchisors in the country. You can reach out to me through LinkedIn.

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