Understanding how to manage and pay tipped employees can be confusing - especially for folks opening a restaurant for the first time. Here's a great guide we found that may help.
Here's a nice article we saw highlighting the benefits of a cloud POS system (in this case, Revel, but we love Square, and Toast, and Breadcrumb, too) to restauranteurs. We agree with all of that, but would also add that the real benefit is from having your data in the cloud. Being able to take an order from your iPad in your living room isn't all that helpful. But having the order data from your restaurant available in real-time (along with your inventory, checklists, etc.) combined with powerful reporting tools can really simplify your job.
That's why every Peach app is available 24/7 from your phone. Because who hasn't wanted a real-time sales update while getting a haircut, or an alert about an employee approaching overtime while watching your daughter's ballet recital?
If you read Part 1 of this article, you learned how a great back-office system can turn data on voids into actionable information about a problem in your restaurant (and possibly a very expensive one!) In this part, we see what we can learn from coupon usage.
Everyone has coupons - whether in mailers, papers, mobile apps, or ones we just hand out, coupons are used as a marketing strategy to drive sales. So coupons are good. I always loved seeing coupons coming in; if marketing had placed them right it meant I was bringing in some new business, and maybe encouraging my repeat customers to start coming in a little more regularly.
Although, coupons are good, there are a few things that you should always be aware of. You want to watch the overall percentage you are discounting by. And if you are able watch for the percentage byserver, even better. I know sounds paranoid, but using your reports will help you identify when coupon use might not be as valuable as you want it.
True story time – major coupon drop, coupon percentage increased, "Hooray! We are making some good progress building sales!" But hang on, my projected coupon usage was only supposed to be 3%, but I am running 5%. Time to put my Scooby Doo cap on again, and yep - coupons had been delivered to the restaurant, and my very generous front counter had been giving almost every customer a coupon for their meal. Not quite the intended purpose.
I love discounts, and guess what? So does everyone else. Watching your discounts is going to very quickly help you identify when things may not be on the up and up. Remember Mary, our coleslaw girl. As we learned last time, everyone loves Mary, who works 25 hours per week. If Mary gives away one BOGO (everyone loves a good BOGO Coupon) every hour for a $4.99 Burger, that is $125 per week, or nearly $6,300 in FREE FOOD every year….Ohhhh, Mary!
Reports are just numbers, and you will only ever get value by diving more deeply into your data to really understand what's going on. And that means logical, clear reports that highlight just the data you need, with the ability to easily produce one-off custom reports to answer the questions raised when your standard reports pick up a whiff of a problem. Does your back-office software do that?
All that data that is collected in your POS contains some pretty powerful information.
Yes, of course it will show you how many smoothies or burgers you sold today and, yes, that is certainly valuable. It will show you that your total sales for the day were $2500, and also tell you that only $2475 was deposited and you have a shortage of $25 that day - again valuable.
But your data is so so much more valuable than just the first set of numbers that you see. Think of your data as one of the onions in your kitchen, most will only ever look at the skin of the onion, while there are so many more layers.
Over the next couple of blog posts, we'll dig a little deeper with some examples. Today, we'll start with voids: every day your POS can send your restaurant management system a list of voids. But what does a void tell you?
The obvious answer is that maybe the server made a mistake entering the order and needed to remove the item. Sure, that could be it. But here are a few other reasons that could be happening:
- I'm sure you don’t want to hear it, but let’s just put this out there - it could have simply been taken off so the customer did not have to pay for it. There - I said it. No wants to think this is happening, but it does and probably is.
- How about if you are seeing the same item voided over and over again? This could indicate several different issues: a problem in the kitchen, a problem with the server entering the orders, or even a problem with the product or recipe - maybe the customers simply don’t like it. Look for patterns.
A true-life example from a restaurant I was managing (no names to protect the innocent):
I was trying to build my sales, especially on Sundays. My sales were always very low on Sundays, and when I did have sales, it was usually larger family dinners. My inventory had not been good, so I was doing daily counts - my food cost was showing variances, but my sales were only slightly above what they had been. Using my reports, I started to look at the individual tickets, and noticed that I had tickets showing 10 guests, sitting for 90 mins, but the ticket size was only $1.98. Hmmmmmm, that didn't make any sense! Digging a little further, I discovered that items had been wrung in but then voided off.
After putting on my Scooby Doo hat, and a lot of digging through sales reports, I started to see each time I found this type of ticket, there was pattern:
- It was always late night
- It was always the same server and
- It was always the same team leader.
A final investigation determined that I had a lazy manager, who late at night would sit and talk to their friends while the crew ran the show. The server would take a large order, and if they paid cash, remove all of the items except for a cup of coffee or two, and was making some very handsome tips. True story….it happens.
No matter how you slice this onion, voids are bad, bad, bad, and if you’re going to use one, there should always be a documented reason why you're using it. A void means you are not getting any inventory credit, no sales are being driven from it, and always indicates a problem.
Next time, we'll look at coupons!
If you were to ask your employees about how they feel about inventory, what do you think they would say? After running restaurants for over 20 years, I think I can offer a few suggestions:
- It does not have anything to do with me.
- I just clock in and serve the food. I don’t control it.
- I get really tired of the managers talking about "Inventory, Inventory, Inventory".
- It means one night a week, I have to do everything because my managers need to count inventory.
The list can go on and on; but why do they not care?
- Do they not understand how it affects their position and job?
- Do they not understand that every time they waste, eat, or give something away, it has a negative effect?
- Has anyone ever involved them or explained how when a restaurant runs good inventory margins it affects their potential raise for that year?
Most managers would answer "no" to these questions…. come on be honest…. it’s the manager's job to run good inventory right? It’s the manager that is accountable for it, right?…. Wrong!!!!!!
A restaurant is a team, and a good team will run good numbers over time. Is it going to happen overnight? Nope. It’s a process, and good processes take practice, patience, and passion.
So let’s evaluate how your server who works 25 hours a week could potentially affect your inventory performance.
We are going to call our employee Mary (all names have been changed to protect the innocent). Mary works a regular schedule (because she is awesome), Monday, Wednesday, Friday, Saturday, and Sunday from 4 to 9pm.
In our imaginary restaurant we serve Fast Food Fish Dinners. Each of our meals is served with two ounces of coleslaw. (Seems pretty simple right?) Well Mary is a great server and takes a lot of pride in her work. Mary thinks that two ounces looks a little light so she always adds a little to make the portion look more presentable.
Mary’s customers love her.
Mary serves about 30 dinners a night, so that is 30 servings of coleslaw. Remember - each serving should be two ounces, but Mary always gives three ounces.
So, let’s do some math…. (Math? After high school?)
If Mary serves 30 servings per shift that is a recipe inventory of 60 ounces of coleslaw, but Mary is serving 90 ounces, so each night she is giving away 30 ounces. Mary works 5 days a week, so now we are at 150 ounces a week, and she works 50 weeks in a year. (We give two weeks’ vacation at our restaurant). 150 ounces x 50 weeks.
WOW! That’s 7,500 ounces or 468 pounds of extra coleslaw a year. If the cost of 2 ounces of coleslaw was on $0.30, that a loss of $1125. This is one employee, making one decision. That sure would have made a nice raise, Mary. And remember - Mary is well respected, she makes great tips, and everyone wants to be like Mary. What do you think that new server we hired last week (who Mary is training) is going to do with the coleslaw?
Sometimes it’s the smallest choices that have the biggest impact.
When costs go up, there is going to be less money for raises, less money to hire that extra hand. When costs get out of control, your customers ultimately suffer, because the business cannot afford to have enough staff - so now you are rushing, over worked, and making mistakes. We all know what happens when customers do not get the service they expect. You guessed it - less tips. Now Mary's wages just went down and she did not get her raise. What a horrible place to work! Our amazing employee Mary starts looking for somewhere else to work. If only someone had warned her of the dangers of coleslaw.
Here at PeachWorks, we offer a simple solution to all of these issues. No, it will not make Mary understand how inventory affects her, but we do offer tools to identify where the losses are occurring. PeachWorks cannot conduct your count for you, but wouldn’t it be nice to have great inventory controls and not have a need to count every week, but now only every other week or maybe even less often in less critical areas (that we can help you identify).
PeachWorks wants to help get managers out of the office and back to where they shine - in the dining room with your customers. We do it by offering easy-to-use tools that will help you quickly identify that you are losing 150 ounces of coleslaw each week. Setting you on the path to finding and fixing the problem areas.
Inventory is one of your biggest expenses. Why not let us help you break it down into manageable chunks, and help Mary understand what inventory means to her?