A Restaurant POS Feature That Can Help You Manage Price Inflations
The USDA is reporting the highest rate of price increase since 1981. An entire generation has been born and raised since inflation has been this bad. This means across-the-board price increases in a range of 6.5% to 7.5%. Even though that number is the highest it’s been in more than 40 years, it could be painting an overly positive picture. A closer look at individual categories shows price increases in eggs at 20% and annual increases in beef at 25%. Alarmingly, animal feed prices have also increased 25% since last year indicating that meat prices will continue to rise.
Hoping things will get better is not a strategy. You need powerful tools that can help you make informed decisions to navigate your restaurant through the coming storm. What can your POS system do to help minimize and manage the additional costs associated with inflation?
Reporting is Key
To know how inflation is impacting your business, you need to understand how your restaurant is performing. Reporting is essential to monitor business performance in a good economy or a bad one. Good reporting enables you to make better business decisions, project future results and drive improvements. With the information you gain from good reporting you can improve team performance by uniting everyone in pursuit of a common goal. Running a business without good reporting is like driving at night with no headlights on, you might make good time, but you will end up in the wrong place.
Let’s look at 3 key performance indicators that will help you run your business smoothly:
According to RestaurantOwners.com, the average restaurant food cost percentage is between 28% and 32% of total food sales, with peaks up to 45% for restaurants that specialize in steaks or fresh seafood. High food cost does not necessarily mean low profitability. Restaurants with food costs over 40% can be some of the most profitable. But food costs need to be managed well.
You should always know your best and worst-selling menu items. While you can’t predict future sales with certainty, knowing what is selling and what is not selling can protect you from overstocking items that don’t sell.
A good restaurant POS system integrated with a kitchen display system can also limit waste by improving communication between the customer and the kitchen. With the cost of ingredients skyrocketing, you don’t want to waste money on orders that get returned simply because the kitchen didn’t understand the customer’s request for a dish.
2. Menu Pricing
With inflation rising so rapidly you need to be able to review and adjust menu pricing quickly based on the item cost you are getting from your vendors. If the cost for your best-selling ingredients goes up 10% overnight, you need to be able to adjust, even if you can’t make it to your restaurant.
A good mobile reporting/mobile management system can allow you to track your pricing from your vendors and adjust menu pricing as needed. Then you can track sales by order type to know what impact that price increase has had.
Other POS features you should look for are the ability to focus in on these key business indicators:
- Net sales
- Check averages
- Sales by period
- Tracking items
- Sales by order type
Maintaining a near real-time knowledge of these crucial indicators will keep you from being surprised at end of year reporting time.
3. Labor Management
Food costs aren’t the only metric you need to track. Labor management is a major fluctuating cost that can get many restaurants in trouble. Knowing who is working when and how your staff handles the peak rush hours can give you the valuable insight you need to make sure your restaurant runs smoothly. It’s easy to rely on certain members of your staff who you know will perform well, but overtime gets expensive. A full-service restaurant POS system can notify you when your staff is close to accruing OT.
Other useful metrics for seeing how your staff is performing are voids, discounts, and returns. Knowing who is clocked in when you have the most of these reportable metrics can help you better manage your shift lineups and make sure top performers are working with your less experienced staff to help navigate potentially tricky situations with your customers.
The right POS system will deliver all the information you need to navigate this harsh economy right to your fingertips. Use it wisely and you can effectively manage restaurant inventory costs. You can’t control the factors affecting restaurant price inflation, but you can make use of powerful tools to give you the information you need to keep your business running at peak performance.