August 24, 1998

The Right Back-Office System Can Maximize Profits

Today, many restaurateurs use computerized back-office systems to track and control the key areas of their business including sales, inventory and labor. And, of course, this information must be translated for inclusion in their accounting systems.

Often, however, these systems do not effectively "talk" to each other, requiring a piecemeal approach and so much redundant data entry that the promised benefits aren't always realized. Factor in the complexity of a multi-unit environment, and back-office management becomes a headache at best.

Unfortunately, it doesn't end there. Many operators have special needs. Examples include production kitchens or commissaries, warehouses, and catering facilities. Often, these are handled manually or by introducing additional non-integrated systems. Add to this the desire by most multi-unit operators to centralize vendor pricing, payables, receivables and accounting. The bottom line: Most back-office systems address the simplest, single-outlet restaurant environments, but not the complex needs of multi-unit foodservice operations.

The Solution? Centralize.
Instead of the redundancy and inefficiency of multiple systems, one or more at each outlet, the solution is to have just one system, centrally located but accessible from each remote location. This system should have all the functionality required, allowing the central control of all data and eliminating "upload/download" problems. It should also provide detailed reporting for each outlet, as well as consolidated reporting on every aspect of the business, from the purchase of particular items to the creation of balance sheets and income statements. All of this data would be "live", i.e., immediately available to those at the corporate office who need it, without duplicative data entry. The system and the 'data warehouse' would be one and the same.

Moreover, the cost savings for such a system would be significant - especially for growing companies. Instead of licensing new systems for each location, there would be one software license at the corporate level. Thereafter, there would simply be an incremental expansion to include each new outlet in the system but actual per-store costs would decline over time.

Many forward-thinking organizations are now implementing centralized back-office systems with excellent results. Users of such multi-site software report savings from 3 to 10 percent in food costs, clerical time reductions of 25 to 50 percent, and revenue and profit increases due to greatly enhanced data management.

The use of Internet technology has quickly become a hot topic for foodservice operators. Until recently, no software solution was available to make these systems Internet-enabled, providing private information on a public network. However, by using new communications technology and a secure firewall, automated restaurant systems can be hooked up to the World Wide Web using local servers. This eliminates the need to invest in wide area networks, satellite dishes or other relay methods, representing a huge savings, not only in equipment, but also in access costs. Instead of unwieldy daily uploading and downloading, data is available in real time while individual units continue to operate in the same way as before. This lets a store manager focus on the customer, without the need of daily transfers to the corporate office.

In today's business environment, faster access to more information is the name of the game. As end users update sales, usage and inventory information, data is automatically posted on the centralized system and immediately available. What this means is that every minute of every day, stock levels are exactly tailored to each unit's actual sales and advance orders.

All back office systems are not alike, however. Given the complexity of a multi-unit, multi-dimensional environment, the system must be flexible and functional enough to effectively handle the inherent difficulties and subtleties of diverse foodservice operators. For example, some organizations combine restaurants with retail and/or catering, while others require an easily scalable system, able to cope with expansion and change.

When considering a new system, therefore, interview a variety of vendors. Make certain the company you select has a proven solution, designed specifically to handle the unique aspects of your present and future foodservice needs. This must include an evaluation of the vendor's implementation process, as well as their training and support programs.

Finally, be aware that a completely seamless, integrated back-office system is not an off-the-shelf commodity. It can take two or three months to correctly implement one in a multi-site environment. But with a comprehensive, integrated and centralized back-office system in place, multi-site operators are able to greatly increase efficiency and profitability.

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