How Chain Restaurants Benefit from Better Data Reporting

Originally published in FSR Magazine.

The restaurant world is fast-paced, with new brands opening and others closing every day. The stakes are high for restaurants looking to scale up and add locations amid this fierce competition for customers. But if brands can’t track and maintain current employee and business data, how can they grow successfully?

Modern business philosopher Peter Drucker said it best: You have to be able to measure something before you can improve it. For today’s restaurant groups, this means they can’t identify their growth potential until they can pinpoint their strengths and weaknesses. Accurate data reporting is crucial to keeping a restaurant group up and running to face the challenges of competition, higher labor expenses, and Affordable Care Act reporting requirements.

Use Data Reports to Realize Your Growth Potential

Data reports paint a detailed picture of a restaurant’s operations, from menu sales to labor reports and payout details. If that picture isn’t crystal clear due to inaccurate information, the company’s decision makers will miss the opportunity to address complications before they become major issues.

Restaurant groups can ensure that they don’t miss a single opportunity to grow by implementing the following strategies to improve their data reporting:

Tackle turnover and control its cost

The increasingly competitive job market means that if brands don’t give their best employees reasons to stay, they’ll likely leave for greener pastures. Pulling reports that show employees’ work hours with their sales numbers will help identify outstanding performances. Restaurant leaders should reward high-performing staff with bonuses and pay raises to encourage them to stay and should monitor lower performers for signs of burnout.

Managing turnover isn’t just about retaining top talent, though. Restaurants must also identify costs associated with regularly gaining and losing employees, such as new hire training. Brands with multiple locations should identify which ones have the highest and lowest turnover rates and take note of what the managers at each location do differently. They should then compare those results to industry averages to ensure they aren’t experiencing anomalies. The way a restaurant group manages these additional expenses will determine its growth.

When turnover is inevitable, the costs can be mitigated by utilizing resources such as the Work Opportunity Tax Credit. If the data supports the need for a new hire, then that tax-credit program will help offset some costs that come with the hiring process.

Manage labor expenses with strategic scheduling

Minimum-wage increases mean potentially dramatic changes to labor expenses. According to an analysis by the National Employment Law Project, these minimum-wage increases have already taken effect in approximately 20 cities and counties across 18 states. Many more jurisdictions plan to make similar wage adjustments throughout the year.

To stay on top of their labor expenses, restaurant leaders should track employees’ work hours at each location and adjust them to minimize unnecessary overtime payments. If one waiter or waitress consistently works overtime and another doesn't come close, leaders should consider modifying their shifts to even out their time. After all, if their restaurants previously paid $7.50 an hour and the minimum wage is now $10 an hour, their overtime pay would be $15—twice the previous hourly rate.

Restaurant owners can also use their attendance reports to go a step further and evaluate their full-time employees versus part-time and seasonal workers. They should make sure their staffing levels and hours worked match their needs during both busy seasons and slower weeks. They must confirm that previous data is accurate by monitoring hours scheduled versus hours worked, then use it to create more efficient staffing schedules in the future.

Carefully curate general ledger reports

Multi-unit restaurants should have all their payroll and labor data integrated into their general ledger reports. These reports should also break down liabilities and expenses by category and location, giving insight into how funds are being used. Combining payroll, labor, and general ledger data into one location allows for better prediction of compounding effects on a business and more proactive, strategic decisions moving forward.

Creating general ledger reports can be complex, so utilizing data collection technology to streamline each location’s reporting is important. But according to the National Restaurant Association’s Mapping the Restaurant Technology Landscape survey, 32 percent of managers admitted that expensive start-up fees and difficult implementation processes made it challenging to incorporate new technology.

However, outdated and patchwork technology can lead to far costlier outcomes. Restaurant group leaders should evaluate potential solutions and should choose one that is scalable and easy to use. That way, they can ensure sales, inventory, staff, turnover, labor expenses, and other data is accurate so they can analyze it effectively.

In today’s environment of changing wage requirements and increasing work opportunities, accurate data reporting is something full-service restaurant leaders can no longer overlook. Focusing on turnover, labor expenses, and precise general ledger reports will help brands with one to 300 locations improve their data reporting, promoting successful growth.