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One of McDonald’s biggest investments in its digital transformation journey was the purchase of Dynamic Yield Ltd., a Big Data company, for an estimated $300 million. While the company sold Dynamic Yield to Mastercard during the pandemic, the acquisition shows just how much Fortune 500 companies have grown to value data and the insights derived from it.
“We’ve never had an issue in this business with a lack of data. It’s drawing the insight and the intelligence out of it.”
Steve Easterbrook, President and Chief Executive Officer of McDonald’s
Just a decade ago restaurant data analytics were primitive and backward-looking. In fact, there used to be three major factors for a restaurant’s success:
- Location
- Location
- Location
All jokes aside, poor location was frequently cited as a major reason for restaurant failures.
In 2022, the situation is different: ghost kitchens have made millions of dollars, even though no client ever stepped foot inside their spaces. Under these circumstances, restaurant analytics dashboards are a go-to sight for top management in this segment. They drive decisions that help cut costs, attract customers, retain talent, and drive an average check.
With paper-thin profit margins in the restaurant industry hovering under 10%, cost-saving activities are as critical as revenue-making initiatives.
An overmanned outlet can do as much irreparable damage to your daily bottom line as an underpriced best seller, out-of-stock product, or bad weather. Now multiply those risks by 30 days a month.
The above factors are just a fraction of what can go wrong in the long chain of actions that form a restaurant business: from purchasing, marketing, operations, kitchen, finance, to manning and accounting perspectives. This is why more businesses turn to software solutions with extensive restaurant reporting and analytics capabilities to keep their outlets afloat and thriving.
What is Restaurant Data Analytics?
Let’s quickly define the term.
Restaurant Analytics is a set of data points, methods, tools, and visualization forms used in the restaurant industry to analyze, communicate, and enhance every phase of the catering process: from supply chain, through marketing, kitchen, operations, and delivery, to loyalty programs.
The data can be sourced from different files and systems, like Excel sheets, on-prem legacy databases, CRM, ERPs, IMSs, social media, and even IoT devices.
In the most advanced cases, all information is fed into a business intelligence solution to accumulate, clean and systemize it for further processing, visualization and near-real-time multi-channel distribution.
On a larger scale, all restaurant software solutions are part of the hospitality software development.
What Types of Analytics do Restaurants Need?
The data for restaurant reporting is sourced from a variety of SaaS and onprem systems, like human resource management tools, Point of Sale devices, inventory management systems, Customer Relationship Management software, and website analytics.
These are the type of data that helps drive fact-based decision making in the industry:
- Customer profiling [demographic, sales, trends, preferences]
- Menu engineering [food cost, best sellers, losers, labor-intensive items]
- Inventory management [vendors, prices, stock, turnover, waste]
- Human resources [shift manning, client and colleague satisfaction, review score, regular customer magnet, bonus system, turnover, labor cost]
- Operations analytics [reservations management, table turnover, event management]
- Sales analytics [daily sales, average check, items sold, best selling dishes, drink sales, top selling associate, food cost, number of covers and tables]
- Marketing stats [channel mix, sales per channel, reputation management, referral stats, ad spend, CTR, CPL, number of reviews, media mentions, social media following and campaign results]
- Accounting data [taxes, profitability, profit, cash flow, purchasing prices and increases, revenues, expenditures etc]
Now let’s see how this diverse data can help a restaurant drive more revenue.
How Restaurant Data Analytics Can Drive Revenue
Now that we’ve covered the types of data to collect, let’s discuss how to get more value from it. We’ve laid out 13 improvements you can make with data.
Right-Size Your Team to Demand With a Michelin Chef’s Precision
Labor cost is one of the major expenditure centers in the restaurant business. In an era where temping waiters are available at half a day’s notice, there’s no excuse to have a 1:1 server to guest ratio on the floor during slower days, weeks, hours.
Having too few associates serving the guests results in poor service, low ratings, a tarnished online reputation, and lost return business.
Statistics available for any restaurant with a POS or a table management system are sufficient for an analytical and reporting system to produce visualizations that can be used to drive manning decisions based on peak hours. Machine learning algorithms use predictive analytics to produce optimal manning level suggestions.
Optimize Your Menu For Balance Across All Budgets
Food cost is another significant expenditure center in the industry.
Getting it wrong either way leads to business closures: if your food cost is too high, your demise will be quick. If it is too low, customer dissatisfaction will kill your outlet sooner or later.
Do you know your best sellers? What about food cost and prep time?
Which dishes have the biggest food cost? Why? How many of them do you sell? Are they often a bottleneck in the heat of the peak hour? Can you substitute the ingredients? Vendor? Get rid of the dish altogether?
What’s your loss leader? Can you limit it to be available in the least busiest times only?
Do you have mostly prime ingredients for a fine dining restaurant? Can you use truffle oil to make a bestseller out of mac and cheese? Do you have a premium offering in a family style restaurant for special occasions?
A well-engineered menu is the chef’s job. Today, chefs need an engineer’s skill set in order to juggle all the stats and food cost ratios, while maintaining customer satisfaction. Analytics can help.
Improve Inventory Management
Vendor management and inventory management play into food cost as well as customer satisfaction. It’s embarrassing to let your customers know you are out of stock of a popular dish – as it’s popular. It gets worse — it is also detrimental to your bottom line.
Many analytics and reporting solutions for restaurants will sync data with inventory management and menu engineering software. This data exchange allows us to analyze, plan and stock just enough produce for the right period of time based on historic patterns.
Use UGC to Boost Brand Awareness
User Generated Content has some of the highest credibility ratios from a user standpoint. In many cases, social media sharing, comments, and hashtagging are classified as unstructured data. Yet, some marketing SaaS solutions let you create USG campaigns and track them quickly and effectively with hashtags and AI, which categorizes a comment as positive or negative.
This data can be further fed into CRM or ERP for further individualized activities by PR and loyalty program specialists.
Drive Upsells
Basket analysis helps Amazon recommendation engines drive a significant share of Amazon retailer revenues. McDonalds suggestions may seem as a boring script, but they are also based on analytics of people ordering certain items together.
Upselling works both ways: by offering items with higher margins as well as by offering add-ons. While team training is one of the most effective methods to drive upsells, hand-held POS devices may have upsell features that base their suggestions on big data and AI.
UEATs has an Artificial Intelligence module that offers upsells. Its customers appreciate its power:
The average basket size went up by 19% and the number of online ordering went up by 44%.
-Mandy’s
Motivate Your Team: More Carrot and Less Stick
There used to be boards with images of the best sellers at the back of the house and employees of the months at the front of restaurants.
Now managers have amazing restaurant performance analysis to scrutinize performance of each employee in terms of sales, upsells, guest satisfaction, and even colleague satisfaction. How can you drive revenue armed with those data points?
- Use the best seller’s pitches as a company-wide script.
- Exploit some healthy competitive spirit among regional branches or cities.
- Analyze which upselling strategy works best depending on the season, customer mix, and location. This lets you extrapolate best practices to all franchises.
- Involve your team in creating a gamified incentive program, upselling scheme, or chain-wide competition to drive engagement.
Acquire New Customers
Marketing data can be gained through social media, app download, website visits, and referral systems as well as historical client databases. Acquire new customers through social media by offering them a coupon or free delivery.
Later, Facebook Business Manager can pass the data for further client engagement, especially if the Facebook pixel is installed on your website and application.
Business analyst and strategist Paul Baron sees social media food sales as an emerging industry trend 2022, and customer analytics for restaurants is a huge part of this equation.
Rank High with Delivery Apps
Even though food delivery intermediaries like Uber Eats and DashDoor are seen as the restaurant’s best worst friend, they are an amazing marketing vehicle for beginners. While the platforms take a large commission, businesses get access to a sizable customer base in a few clicks.
Rankings come down to figures, so managers should keep an eye on metrics like food cost, commission, sales, peak hours, revenue displacement, and marketing costs to outpace the competition.
Eventually, loyalty programs and proprietary apps help catering businesses shift customers from intermediaries to direct channels with lower costs.
Polish Your Online Reputation Better Than Your Cutlery
Online reputation is a major new client acquisition factor, as 9 out of 10 clients check online reviews for a local business and 84% trust online reviews as much as a personal recommendation.
Actioned data analytics, [like demographic splits among the reviewers, server name mentions online, average ranking, complaint follow ups], – help to attract more genuine customer reviews and reduce the outcome of negative ones.
Nurture Loyalty Like You Nurture Your Regulars
Loyalty programs are all number games — with a pinch of hospitality spirit and lots of tasty food, of course.
Do you know your average check of a regular customer vs that of one-off visitors? What are the best sellers for your regulars? Do you have stats for different loyalty tiers and what can you do to better them? What’s your Birthday party offer? What’s the open rate for the same offer for an audience of different loyalty tiers?
Do you have a referral program? Do you have a procedure to say thank you for a Tripadvisor or Google review during the next visit?
When you have a software solution in your restaurant that collects all the data and provides you with statistics, make sure to request that your system integration company have a loyalty dashboard, as those are the most precious customers.
Restaurant Data Analytics Help Reduce Food Waste
Better food waste management is critical for the survival of humanity as a species, and restaurants have a lot to contribute. If you integrate all of the systems together – your menu engineering software with your inventory management system and POS — you have all the data you need to accomplish this mission.
The First in First out [FIFO] principle, produce that is close to expiry, average product turnover and vendor delivery dates all need to be scrutinized on a daily basis to drive food waste to a minimum, saving your bottom line and the planet.
Grow Your Average Check
Average check is another restaurant metric, a classic standard for comparing management’s success. It offers information about the efficiency of marketing, pricing, menu and food cost management, upsell programs, staff training, table turnover, and reservation management.
Do you know your average check for last year or the current month, or your budget and forecast KPI? How big is the spread between your best seller’s average check and your weakest associate? How do you bridge the gap?
Take Advantage of Restaurant Data Analytics to Drive the Group Revenue
Restaurant data analytics can also squeeze the most out of group bookings for birthday and bachelorette parties, get togethers, and anniversary celebrations.
Social media advertising allows you to target users with upcoming birthdays, and you have all the stats for demographic preferences to produce the most attractive offer. Reports will tell what works best: if you need to throw in a custom-made cake for a kids birthday of 8+ people, or a bottle of chilled bubbles for a romantic wedding anniversary dinner.
If your establishment happens to be in the location with expansive Hispanic communities, you’ll know to offer a Quinceañera deal as well as to create a Sweet 16 offer.
Usa data to drive a higher check, offer dishes with higher margins, staff the event adequately, and minimize revenue displacement.
Features of First-Class BI and Reporting System for Food Industry
A great software solution for customer analytics for restaurants is expected to do a few things:
- Integrate data from multiple sources in near real time
- Clean data from duplicates, irrelevant or incorrect stats
- Structure or interpret unstructured data
- Ensure timely sync of data between different software solutions
- Be decoupled enough that an update in one part of the system doesn’t translate in downtime for the entire solution
- Be accessible on mobile devices on cloud in real time
- Produce clear visualizations tailored for each layer of management
- Provide different levels of access
These are key features of an analytical software solutions for a restaurant:
- Inventory Management
- Food Costing
- Menu engineering / Kitchen / Menu Management
- Reservations / Wait list management
- Invoice Tracking & Accounting
- Employee Management
- Reports & Analytics
- Dashboard
- Waste Tracking
- Delivery analytics
While many modern POS and RMS tools will have extensive reporting functionality with visual graphs, charts and dashboards, bigger companies opt for custom analytical tools that integrate data from multiple sources.
Restaurant Data Analytics: Custom or Ready-Made?
Custom restaurant analytics and reporting software is not a choice for smaller players, as it requires upfront investment, time, and expertise to develop a solution.
For those who can afford all of these resources, a custom business intelligence system has plenty to offer, including:
- Vendor independence
- Data and insights integrity and ownership
- Cloud cost optimization due to initial baking of FinOps principles into the architecture of your solution
- Privilege of an innovator and market leader to set trends and reap highest profits at the early adoption stage
- Real-time analytics accessible online 24/7 and on mobile devices
- Restaurant predictive analytics features based on AI technology
Dev.Pro has ample experience in POS solution development as well as custom analytical systems.
Looking to design a custom restaurant analytics software or integrate all your systems into one mission control center? Consult our savvy team of software engineers.
