EXCLUSIVE RESEARCH: Integration & Visibility: Keys to Future-Ready Restaurant Accounting

Restaurants are complex businesses as they are a hybrid of production and service – producing product while also needing to deliver on customer experience. Even relatively small operations with revenues of less than $50 million a year have multifaceted supply chains that could change on a weekly basis depending on any number of factors. Third-party delivery and online ordering aggregators for off-premise dining are contributing to an environment where restaurant in-store traffic might be down, but sales are up. Add to this an equally complex workforce with a mix of salaried, hourly and tip-earning staff. All this results in a proverbial soup of potential accounting nightmares that could make the most skilled financial experts take pause. The bulk of software budgets goes to back-office/enterprise software (55%), outpacing CRM and front-of-house software (45%), according to Hospitality Technology’s 2019 Restaurant Technology Study. During a recent meeting of the HT and Restaurant 365 Restaurant Accounting Innovation Council, executives agreed when examining IT budget splits that about 50% of overall IT budgets go to the enterprise and roughly 15% of that is allocated for accounting. Despite the intricate inner-workings that directly affect restaurant accounting, this focus on back-of-house software does not translate to restaurant accounting. Often brands do not provide adequate or appropriate technology support to the accounting specific area of the enterprise. This results in inefficiencies and untapped opportunities. According to data from the 2019 Restaurant Technology Study, many restaurant operators look to the POS to offer accounting functionality. About two out of five (44%) reveal their POS has this capability and 23% say accounting is a must-have or good-to-have feature for the POS. Recently, HT, with support from Restaurant 365, conducted a survey of nationwide restaurant operators from a mix of segments, ownership models and sizes to get a sense of the current state of restaurant accounting and sentiment. The research reveals that a majority (60%) of those polled are using Excel as the primary system for core financial purposes. Instead of using an automated solution, Excel tends to make accounting manual and inefficient as it was not built to handle the complexities inherent in the restaurant business landscape. The number one issue respondents using this particular solution admit to having is the lack of or inadequate integration with other systems (50%). Other points of frustration, according to respondents, is that there are too many points of entry and therefore failure (40%) as well as inadequate reporting and the inability to customize (30%). About one out of five (20%) restaurants using this specific system say that they feel challenged by the fact that the data is not quantified. Having a central source of data is a key concern for restaurant operators, including members of the Restaurant Accounting Innovation Council. Bruce Nelson, CFO, Nova Hospitality Group, recalls his frustration from a period when his company had data flowing from multiple different sources. Any anomalies that occurred from the store level to the restaurant, required investigation. Since then, the company implemented Restaurant 365, and Nelson says one upside is having one bucket from which financials, payroll and inventory information is pulled. On the other hand, a mistake in one area affects everything else in that bucket. So companies must ensure complete accuracy when entering data points. Having data in one ecosystem eliminates the need to navigate through multiple platforms, which takes time and delays impact decision making. “If you can reduce the time you need to spend gathering information in order to make decisions in real-time, you’re going to improve operations and financial results,” Brandon Keith, CFO, World Famous Fare, states. “It’s about finding efficiencies like reducing manual entry at the store-level or in your office. Rather than manually entering invoices or trying to move data back and forth – it comes down to getting information into one bucket.” One solution for this is to have systems in the cloud. According to the 2019 Restaurant Technology Study, 54% of restaurants say that back-office systems are already in the cloud or will be in two years. More than a quarter of restaurants (27%) say that corporate enterprise software is already in the cloud, and 51% are considering moving above property. To examine operators’ satisfaction with accounting software, restaurant executives were asked to rate how well or poorly the current system meets their needs. Slightly less than a quarter (24%) believe their needs are completely met with the system they have in place, and 46% say the current system mostly meets the needs of the enterprise. None of the respondents claim that systems don’t meet their needs at all, but 30% say systems either only somewhat meet needs (22%) or don’t meet needs very well (8%). Of this unsatisfied segment that claim current accounting software doesn’t meet needs very well or only somewhat meets needs (30%), more than half (53%) plan to change accounting software in 18 months. Those that profess dissatisfaction, but are not making a change, cite several reasons, including lack of budget (43%), a recent upgrade or a lack of time or manpower to incite a change (29%). Chief among the reasons for stagnation however is the belief that the current system is “adequate” (57%). Operators Put High-Priority on Visibility for Accounting Upgrades For those that are not satisfied with a merely tolerable accounting system, upgrades are on the horizon. We asked this group to identify pain points and components of a next-gen accounting system they feel are non-negotiable. Overall the greatest frustrations of operators with their current accounting systems is crystallized in the top three selections which include inadequate integration (40%) and reporting capabilities (36%) and too many disparate systems for data entry (32%). This data shows that many operators feel systems and software would serve them better if they help with the basics: keeping systems streamlined and giving a single view of enterprise data. The selections align with strategic goals for technology investments cited in HT’s 2019 Restaurant Technology Study. The industry at large is hyper-focused on data – improving guest and business analytics is a top strategic goal for technology investments for 40% of restaurant operators. Other key objectives, according to the study, include reducing operating costs (25%), increasing employee efficiency (29%), automating services/operations (21%), and reducing disparate systems (15%). The complexity of restaurant systems has grown exponentially, as software as a service models have increased, and restaurants often find themselves “bolting on” software to existing systems to achieve specific functionality. This may offer some benefits, but problems arise as Frankenstein systems develop that are not integrated and do not speak to each other. Having too many systems also emerged as a top challenge for operators from national multi-unit restaurant companies in HT’s 2019 Restaurant Technology Study with 19% citing it as a primary concern. On average, respondents use applications from three different vendors to run the back-office. One out of three have more than that however, with four or more systems. More than a quarter (26%) have five or more to power accounting functions. Functionality that operators consider necessities for incipient accounting software purchases are driven by the need for integration and visibility. Of those looking to make a new buy, 75% say that having a cloud-based system is key, in part due to the cloud’s ability to provide that complete view of enterprise. Comprehensive yet comprehensible dashboards is a requirement for the full set of operators planning accounting purchases. Being able to see data in an easy-to-understand way is only one piece of the puzzle that often is a stumbling block for restaurants. The other component is the availability of reports around the clock in order to be able to take appropriate and timely action. Real-time reporting capabilities is a firm must-have for 88% of respondents. Other non-negotiable items on the list include robust integration: 88% prioritize integration with supply chain/invoicing, another 88% with payroll, and 75% with POS. CONTACT INFO: (949) 652-7800 https://www.restaurant365.com/

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