Tackling Rising Food and Labor Costs with Tech

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The National Restaurant Association revealed food and labor costs are the two most significant line items for a restaurant, together costing about 66 cents of every dollar in sales. Separately, small business network Alignable found 72 percent of the restaurants surveyed fear inflation could force closure within six months. 

While there’s no solving the food inflation equation and labor crunch, technology can help restaurant operators understand and adjust costs to better manage operations despite a difficult economy.

Reduce food waste and cost with robust inventory management 

The restaurant industry produced approximately 33 pounds of food waste per $1,000 of a restaurant’s revenue—and wasted food means wasted money.

Consider automating your inventory management processes to better track when stock is low and how much needs to be ordered. If you have versions of spreadsheets (or an overly complicated notebook system), think again. Food management systems, or inventory management systems, allow quick access to the cost of goods sold by tracking and managing sales trends and food costs for restaurants. 

Additionally, make sure your restaurant is enforcing a first-in, first-out (FIFO) model. Doing so ensures food stored the longest will be used before ingredients from a new shipment, cutting down on unused, expired or spoiled items.

The right technology can help measure, control, and reduce food expenses by understanding top costs and highlighting key variances to pinpoint areas of unnecessary spending. This helps restaurant managers make better-informed decisions around food ordering and waste.

Improve employee efficiency with kitchen and workforce management tech 

Short-staffed in the kitchen? Keep up with customer demand and maintain speedy service with a robust kitchen production system that helps back-of-house operations run smoother than ever. Look for technology that provides advanced routing rules to boost productivity and efficiency—this channels orders to the right stations and delivers a real-time view of problem areas in production and delivery.

Labor management tools can also help restaurants like yours better staff each shift. Using advanced analytics to compare scheduled versus actual labor to understand staffing requirements, management can better forecast needs and comply with labor standards.

Lowering overall operational costs is the smartest, most effective way to fight inflation. It’s all about doing more with less while working smarter, not harder.

Marry data and marketing to drive sales 

Savvy restaurants optimize marketing campaigns using experiential and transactional data fueled by their POS system. These insights allow restaurants to focus marketing efforts and tight budgets on high-value customers—increasing the average check size by recommending additional menu items repeat customers love. 

There is also a shift in rethinking loyalty programs to move past the punch card. Digital loyalty programs can provide valuable information like favorite dishes, the times and days customers frequent an establishment and whether they dine in or use pickup or delivery. This data and more enable operators to personalize orders and marketing efforts, which is crucial to success since 58 percent of consumers choose a brand based on personalization.

Today’s diners want connections built on hyper-personalized experiences. The more consumers associate a brand with meaningful interactions and personal treatment, the more likely they are to return frequently.

Drive success with modern restaurant technology

Legacy technology does not drive success in an inflationary and labor-constrained economy. This is likely one of the reasons the National Restaurant Association’s 2023 State of the Restaurant Industry Report found more than 4 in 10 operators plan to invest in equipment or technology to increase productivity in the front and back of house, streamline operations, and trim food and labor costs this year.

By combining data and marketing to personalize orders and interactions, restaurant operators can be well on the way to tackling and taming the increased food and labor cost beast and finding future success.

Jessica Bryant is vice president of Marketing for NCR Commerce. She leads marketing direction for NCR’s digital-first restaurant technology portfolio, including building a deep understanding of customers’ changing needs and requirements. 

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