3 Simple Ways Restaurants Can Use Analytics To Increase Profit

Data is the new oil. If you are not analyzing POS data effectively, and your competitors are, you are falling behind in the market.

I get it. You have good common sense, even better social etiquette, and treat customers well. Your restaurant can manage pretty well without extensive data analysis, and you are right.

However, our goal isn’t “pretty well”. We want to optimize the guest experience and increase profits.

The problem with gut-feeling decisions is that, even though they always feel right, they can be wrong. Sometimes the correct decision is counterintuitive. Even the best gut-feeling decision-makers benefit by combining their skills with data.

So without further ado, here are three areas in your restaurant you can almost certainly improve by examining your data:

Employee Performance

How are your servers performing? Is the kitchen making delicious food? Are your business metrics motivating employees to better serve your mission?

Given technology, there is no reason that performance feedback cannot be real-time, especially with data reporting and metrics. You do not need to wait for annual or bi-annual performance reviews to see improvements in employee performance. They should happen a lot faster. Additionally, you should be targeting everyone for improvement, not just the bottom 20% of performers. Study the top 20% of performers, obtain best practices, and apply those best practices to everyone else, and especially the middle 60%. Often times, it is actually the middle 60% that has to best chance to improve because the bottom 20% has blockers outside their control.

Three ways to keep employees satisfied are to include them, to appreciate them, and to show them support during personal problems. Data reporting can help with all three of these by 1) increasing transparency within the organization so employees know everyone is graded on the same, fair, scale 2) indicating when management should express gratitude to employees for consistent, great performance and 3) identifying unexpected, sudden employee performance drop-offs which may or may not be indicative of a personal problem.

Sudden performance drop-offs need to be identified and addressed immediately. In the restaurant industry, retention is king. If it takes too long to identify when employee performance has dropped, employees may have already moved on to another location. You don’t want to be spending time and money constantly training new employees. Set up effective analytics systems and monitor them.

Finally, well-defined business metric reporting allows employees to see how they stack up against their peers, and, more importantly, to set personalized goals for themselves so they can continue to experience career growth. Metric reporting can be incorporated into promotion decisions and help support extra training discussions.

Operational Efficiency

How do guests like your menu? Is food getting wasted? How is your ambience? How is your table turnover?

Collecting data on operations leads to greater insights that will save costs and increase revenue. There are a multitude of ways to improve operations and unless you are quantifying them all, it will be hard to determine if you are making improvements over time.

Each of these operational efficiencies translates to a dollar amount. You don’t want to waste resources by not having clear ways to quantify operational efficiency, and the only way to do that is leverage the data.

Customer Understanding

Customer profiling. Target marketing. Understanding what drives your big spenders. What they like. How they feel.

You can guess at this anecdotally by having brief conversations with your big spenders from time-to-time. But by storing customer preferences, you can really surprise them by remembering everything, instead of just 1–2 details, and make them feel really special when they return to your venue.

It is also important to specifically target guests who had a bad experience. You need to be able to quickly identify and remedy outstanding issues so that future guests do not experience the same issue. Sometimes dissatisfied customers are quiet and, rather than make a scene at the restaurant, they will just leave without saying anything, and then tell people not to come to your restaurant later. Your best chance of identifying these customers so you can reach out before it’s too late is by studying the data.

By personalizing marketing efforts, making big spenders feel special, and mitigating dissatisfied customer risk, you are well on your way to increasing profits.

Good luck!

Thanks for reading :P