What is restaurant operations management?
Running a restaurant only yields successful results when a clear and actionable playbook is in place to guide your team. These data-based guidelines for managing your kitchen, front of house, finances, and day-to-day functions are the keys to proficient restaurant operations management. They enable you to consistently review and execute your plans to ensure you’re never missing out on any areas of opportunity.
Front of House
Operations management varies between the different facets of your restaurant. For example, a few aspects of managing your FOH entail the following: forecasting labor and setting efficient staffing levels, training staff to properly merchandise menu items based on contributing margins, and ensuring that your overall guest experience meets your restaurant’s objectives for service, ambiance, and quality.
Back of House
Operations management – very broadly – for the BOH is about minimizing expenses while producing dishes that meet your quality and profitability standards. Concepts like proper portioning, waste and theft management, menu engineering, vendor management, and proactively maintaining equipment are just a few of the everyday items on an operator’s mind.
Then there are the finances, the backbone of any decision for restaurant operations in either your FOH or BOH. Having an explicit knowledge of your books by regularly reviewing your financial statements is the only way operators can make educated decisions to fatten up their bottom line. Throughout this article, we’ll explore and summarize our best practices in restaurant operations management.
Examples of successful operations management in action
First and foremost, it’s critical that every management team has regular operational reviews (we recommend quarterly). These reviews assess how your restaurant is currently performing against key performance metrics (KPMs), review your break-even points, and compare your budget to your actual expenditures (i.e., a Budget vs. Actual). A few Items that should be in review for an operator’s Budget vs. Actual include:
- Vendor Spend
- Fixed & Semi-Variable costs
The next step of an operational review is to set strategic goals, tactics to achieve said goals, and how you’ll measure your success (GTM) for the future. RASI teaches that goals should be SMART (specific, measurable, attainable, relevant, and time-bound). You’re guaranteed to find opportunities to grow revenue and cut costs if you follow this process!
Period End Audits
Beyond operational reviews, your team should also run financial audits at the end of every fiscal period. In this process, you examine your performance over the most recent period, focusing on the following:
- COGS (cost of goods)
- Analysis of your balance sheet
- Reconciliation of your banking records
You can easily remember these categories by noting that they spell CLEAR, which is precisely how you want to view your fiscal health! Review the period trends for each category mentioned above and compare them with historical year-over-year trends. You can review this article on best practices to financially close out a period for more on period end reviews!
How Period End Audits and Operational Reviews are your data-based guidelines for success
Maintaining a consistent cadence of operational reviews and period end audits gives you the insight you need to make changes that improve your bottom line. You may learn that you can reduce inventory costs and food spoilage by keeping less product on the shelf in the back of the house. And you’ll know exactly the amount to stock based on prior sales and purchase trends. When planning staffing levels in the front of the house, you may learn that sales trends suggest a redistribution of staff from weeknights to weekends, with fewer shifts midweek and more starting Friday night. Exactly how many shifts? The data from your reviews will guide you in the right direction!
How tech-enabled restaurant operations management can help increase profitability
Utilizing the right software is a powerful means to get the most out of your restaurant management and operations efforts. Software can aid you every step of the way, from examining sales and labor trends to budgeting and forecasting. RASI has built an integrated financial accounting and payroll solution that provides the leverage to gather actionable insights from a summary level all the way down to the source data, in order for operators to make operational changes that fuel profitability in your restaurant.
Complete financial clarity
The most significant gains in operations management come from having complete clarity into how your restaurant is performing and the opportunity to reflect on how it can be improved. With regular operational reviews and period end audits, operators have the information to make substantive changes to how the restaurant does business and set ambitious yet achievable goals. Good financial reporting enables proactive, educated business decisions.
Improvement of management team
Additionally, having a clear picture of your restaurant’s financial health and performance empowers operators to train their management teams to take financial accountability within their specific functions of the restaurant. When you work with managers to set departmental goals, provide them with pertinent information on their execution relative to previous goals. Even more important, keep them in the financial loop as the numbers come in. By doing this, you’re positioning your management team to take ownership of their roles. You also help the restaurant succeed on a more collaborative level.
Selecting the right software to get the most out of your operations management
By now, you know that software can help achieve successful operations management. But which software suite to choose? Here are a few basic requirements:
- Hospitality-specific software: Purpose-built software and hospitality-specific accountants are the one-two punch to successful restaurant operations management. This unique combination enables restaurateurs to become powerful using industry-specific reporting and guided financial analysis.
- Comprehensive financial reporting: Staying on top of the key metrics needed to proactively manage your restaurant is critical for success. Weekly financial statements give you a clear view of the health of your business. This ensures business decisions are made in a timely and accurate matter.
- Real-time insights: It’s helpful to know how well your operation has performed in the past. It’s even more powerful to know exactly how you’re performing in the present. You need the analytics and instrumentation to fly the plane while it’s still in the air.
- Integration with source data (your POS): The software you use to help manage your restaurant operations should be integrated with your Point of Sale System. The only way to retrieve source data without manual imports and exports of files is through integration. It’s critical to know that your data flows seamlessly from your POS directly into your accounting system.
You need solid data that you can trust, presented through a clean user interface. When you combine that with proper operations management practices, like operational reviews and period end audits, you’re in a position to make lasting improvements to your restaurant. Moreover, you’re actively setting the guidelines for success.
We freely admit we’re a bit biased here. We think we’ve built the most powerful operations management solution for the restaurant industry. RASI’s software ticks every box. Our team of experts is ready to assist your team in becoming more powerful and profitable! Contact us today for a free demo.