The Problem: Not Enough Insights
The client is a polished casual restaurant chain with hundreds of locations across the United States and worldwide. Although the client had a great deal of data available about its operations, they were unable to consistently use it to their advantage in several situations.
Operational / Managerial P&L
The profit and loss statement is one of the most important indicators of a company’s financial health. For the client, however, the Accounting P&L generated at the end of each fiscal period was the only financial line of sight that restaurant managers had available.
Naturally, this was a problem since the Accounting P&L only contained performance data after the period had closed; the client’s restaurant operators lacked the “intra-period” information that they needed in order to affect business outcomes
Concerns such as ingredient inventory, food costs, front and back of house labor, utilities, and repair and maintenance can all vary from week to week and from day to day. Without being able to see these vital pieces of information within the month, there was no way for the client to make better decisions to improve their monthly EBITDA results.
Food Cost Management
The company’s overall food costs had been rising significantly in recent months and it was putting pressure on profitability, yet the organization did not have any knowledge into what ingredients, menu items, and restaurant locations were causing the most negative impacts.
Without a platform in place to understand these ingredient inventory levels or variances in usage and waste, the client struggled to keep its food costs under control.
Beyond its own expenses, the client was also not managing its servers well. Guest scores were highly variable due to the lack of standards surrounding hospitality.
As a result, high-performing servers were often “rewarded” with slow shifts at the beginning of the week, while low-performing servers were given in-demand weekend shifts. These inconsistencies led to a high degree of server turnover and less than optimal sales performance.
The Solution: Smarter, Data-Driven Processes
Operational / Managerial P&L
Datavail worked with the client to develop a process to combine actual data with algorithms, creating weekly P&L statements that gave directionally accurate estimates of the restaurant’s financial performance.
The model combined both statistical forecasts for certain line item expenses coupled with real time actual data for sales, cost, and labor to arrive at forecasted P&L operational results. In doing so, the client was able to make better managerial decisions for each individual restaurant during each week, realizing millions in EBITDA improvement.
Food Cost Management
Together with the client, Datavail built a food cost management platform and set of managerial tools that could measure and manage food costs / dish level margins at each of the client’s restaurant locations.
For example, the platform could identify ingredients whose ingredient prices showed the most variability at different restaurants, and then calculate how shoring up these variances could positively impact the restaurant’s P&L. All told, these cost-saving measures majorly improved the client’s bottom line, to the tune of multi-millions in gross margin improvement.
In order to better assess server hospitality, Datavail and the client created a 5-point server scorecard that touched on the most important behaviors to evaluate servers across all restaurant locations: beverage sales, tip percentage, dessert/appetizer percentage, comp percentage, and table turnover rate.
Servers with the highest scores were rewarded with better shifts, while servers with lower scores were penalized or managed out. By improving employee retention and guest satisfaction rates, the client realized millions more in savings and combined increased sales productivity.
By partnering with Datavail, the client achieved annual savings in the tens of millions and had better line of sight about its current and future performance. No matter the company’s size or industry, organizations of all stripes can improve their operations and mitigate costs by using their enterprise data to their advantage.
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