How to Invest for the Future When Profits are Down

When six years of growth for the restaurant industry are wiped away in a year, it’s no surprise that the National Restaurant Association is saying that 2020 was the worst year for restaurants. With more vaccinations, restrictions are lifting and diners are returning in droves. However, costs are not returning to pre pandemic levels. Wages, food, turnover, rent, utilities, and other operational costs have stayed level or increased as supply chain, labor and transportation disruptions continue to pop up.

Standard cutbacks will no longer be enough to trim expenses, and any operator hoping to regain their profitability will need to find new places to invest to find operational efficiencies. Many restaurants invested in technology in 2020 that improved their off-premise capabilities, such as online ordering, delivery partnerships, and menu revisions.

Operators should continue to optimize these investments. The research is pointing toward off prem only continuing to grow in popularity with guests. But this cannot be the only thing that changes in your tech stack.

Choosing to focus only on ordering and point of sale systems is like only finishing the middle of the puzzle. You may have the eye-catching technology guests will notice first, but lack the framework that provides structure and complements your front-of-house initiatives. Working to create a comprehensive restaurant technology ecosystem is critical to ensuring long-term success of your business.

Many operators say they are looking to bolster their back-of-house capabilities in the coming year. It makes sense to bring together comprehensive reporting, streamline labor, and cut waste to avoid bleeding profits as guests return. However, tech budgets are not aligned with operator need.

So, what are operators supposed to do when profits are down and budgets are squeezed?

Optimize What You Have

If you made the investment during the COVID-19 pandemic in an upgraded POS, online ordering, or other technology, you may have implemented just enough to get by. Start your investment in the future by ensuring the technology platforms you already have are being fully utilized.

Talk to your customer success manager and get a review of your configuration and use. There are likely features you heard about briefly in a sales process, but didn’t need to get through the pandemic. Now is the time to understand what is available to you and whether you are taking advantage of the platform in a way that makes the most sense for your business.

Ask what would help improve your guest experience and your employee experience and start there. Anything that makes it easier to build loyalty and retention should rise to the top of your priority list.

Find Areas of Consolidation

The next best thing to finding new capabilities in something you already pay for is finding out you can do with one system what you’re currently doing with several. For example, if you have separate software vendors for inventory, labor and scheduling, purchasing, and other operational tasks, you may be able to bring everything together into a single back-of-house platform. Typically bringing multiple functions under one umbrella will allow you to get lower pricing from one company than paying multiple disparate fees.

Think about what is most important to your business. Are your food margins still struggling to recover? Maybe employee retention is an issue. Or perhaps you don’t understand why some locations are performing so much better than others.

Those needs will help guide where you go next. You could tap into customer satisfaction tools included with your POS. You might need to find a more robust back-of-house platform to better manage costs. Maybe it’s time to invest in an employee app, so schedules are easier to manage. Whatever the need, start there.

Focus on Systems That Recover Money

When budgets are tight, make it easy for your decision makers to say yes. Look for restaurant technology platforms that drive revenue or improve profitability. This could be a number of different platforms, so look at what you need.

Is it better drive thru tech or smart inventory tools to keep tighter controls on food costs? For example, if you’re still taking manual inventory (every week if you’re lucky), you can find cost savings in implementing more intelligent inventory solutions. Even a couple hundred dollars saved per month on food will pay for the system. That kind of pitch is something that makes it easy for the CIO or CFO to sign off on a new platform.

Knowing where to put limited technology budget can seem difficult, but an analysis of your needs and opportunities helps make the best path more clear. Even though profitability will take some time to recover, you can still make investments in the future of your restaurant.