Guest Post: 91% Invests in Back of House Digitalisation & Automation. Where to start?

In ‘The Future of Restaurants Report’, Square already predicted that 91% of restaurants have made, or plan to make, investments in kitchen automation technology.

Restaurant businesses without an ePOS or online ordering system, it’s hard to imagine. Without these solutions, the data they use to keep their operation on track would be hidden in dozens of spreadsheets spread across the company. That is an unworkable situation.

Oddly enough, more often than not, that situation is perfectly normal in the back of the house. Compared to other departments, professional kitchens are digital wastelands.

Even in multi-site enterprises, spreadsheets and email still rule the roost. And they hinder growth massively. Excel spreadsheets are slow, chaotic, hard to update, and prone to errors because of the many manual actions.

But that’s about to change.

In ‘The Future of Restaurants Report’, Square already predicted that 91% of restaurants have made, or plan to make, investments in kitchen automation technology. Keep in mind, this report came out in 2021, weeks before the pandemic hit the world.

Real-time insights

In retrospect, the prediction that digitalisation would take off in the hospitality sector was obvious.

You only have to look at related industries to realize that data-driven management has become the norm. The supply chain manager at Tesco doesn’t walk around the warehouse with a clipboard counting cans of tomato sauce. F&B inventory management simply is too all-encompassing to try and tackle it manually.

And too big a responsibility to be shouldered by an individual with a spreadsheet. In a time where CoGS only go up, and scarcity is a reality, food businesses need real-time insights into their stock to protect their margins. Digitalisation enables management teams to navigate peaks and troughs in the supply chain and avoid losses.

€8,400,000 per year

Multi-site restaurants monitor menu engineering, food cost management, inventory control & procurement in a closed-loop system like Apicbase to avoid losses.

In an industry with razor-thin margins, having a firm grip on the back of house processes can mean the difference between “having room to grow” and “barely making ends meet”.

Foodservice outlets that buy too little will have to disappoint customers. The ones that purchase too much see their CoGS (and carbon footprint) explode while margins shrink.

So when it comes to digitalisation and taking control of procurement, the food and beverage industry can’t afford to fall behind. The impact on the bottom line is too significant.

Pieter Wellens, chief technology officer of F&B management platform Apicbase, gives an example:

“One of our customers has 20 locations. Per location, their F&B purchases average 35,000 euros per month. That adds up to 8,400,000 euros per year, a lot of money. Those aren’t numbers anyone would feel comfortable managing in a spreadsheet. This client uses our software to track, automate and improve the entire back of house cycle — menu engineering, food cost management, inventory management, and procurement.”
Theoretical ≠ actual margin

Ultimately, digitalization and automation are about being in control. It’s about knowledge. While restaurant owners know exactly what each customer has ordered, they only know approximately how much those orders have cost them to prepare.

Their monthly P&L will show a profit, but not whether the margins could have been higher. You can’t link the P&L to individual menu items. A P&L doesn’t tell you if the dish margins match the target margins.

“The chief quality officer of a fast-casual chain told me last year that 100,000 euros of F&B inventory value had vanished, massively inflating is their food cost percentage”, Carl Jacobs, CEO of Apicbase, says. “The CQO had no clue what was going on in the back of the house. Were the products wasted; was it a case of over portioning; pilferage…? He didn’t know.”

If you are looking to expand the business

When you understand your spending in detail, you can start optimising for growth.

An expression says: when the water in the river is high, nobody worries about the invisible debris under the surface hindering the flow. In a restaurant environment, that debris is the hidden and avoidable costs that are pulling on the bottom line like an anchor.

Food businesses with a clear understanding of where all the money is going can move quickly when things start to go wrong and get the KPIs back on track. Companies that are looking to expand have to understand their spending in detail. Only then can they start optimising for growth. Think of it this way, scaling up when the numbers are in the red only means you’ll bleed out faster.

Data-driven management — where should you start?

The goal is to get complete visibility of the restaurant back of the house and outlets.

The digitalisation of kitchen processes begins with a central database for your recipes. That way, you can automate KPI calculations, which saves your employees hours per week on admin. Plus, staff in newly opened locations have immediate access to recipes, ingredients, and cost calculations. Having a recipe database will help you scale faster. It speeds up onboarding new staff without overloading the current team with extra work.

Next, you link suppliers to ingredients. That way, every location can order directly from pre-approved suppliers. Then, you integrate your ePOS-system, so stock levels are updated automatically. At this point, you know who purchased what, when, and why. Finally, you incorporate production.

Now you have complete visibility of your entire production and supply chain at every location. And you are managing the operation based on real-time numbers. Your inventory levels, recipe costings, procurement details are no longer locked in slow spreadsheets. And, instead of scanning tables for discrepancies, you can focus on optimising operations and profits.

This technology isn’t only available to McDonald’s

In the past, end-to-end solutions like this were only available to McDonald’s and the like. They have the resources to develop their own complex software solutions. Today SaaS companies (Software as a Service), like Apicbase, offer equally powerful but more user-friendly tools for an affordable subscription plan.