Searching for the best ways to maximize profits, reduce loss, and retain staff in your franchise this year? In this quarter’s newsletter, we offer several suggestions on how to do just this, along with 4 restaurant industry nuances your payroll provider must know.
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Top tips to turn a profit during COVID
Since mid-March, restaurant operators have been asked to survive on 50% of their capacities or 50 guests; whichever is fewer. They’ve had to reduce their menus down to only those items that can be transported. And, they’ve had to sell their souls to the likes of Door Dash and Grubhub, who for a mere 25% service fee, will gladly provide a lifeline to homebound guests.
Despite being closed due to stay-at-home mandates, operators were subsequently directed to use their PPP funds to immediately rehire staff, many of whom found it safer and, in some cases more profitable, to remain on unemployment.
Finally, several states threw their chips in the middle and allowed restaurants to reopen their dining rooms so long as new guidelines were followed for plexiglass barriers, socially distanced tables, server masks, hand sanitizers, and rigorous cleaning regimens.
The uncertainty regarding how long the restrictions will last is creating anxiety for both operators and their team members. The last time they had no sales and cost history, no brand awareness, no consumer base, and limited cash was when they first opened. It’s essential they draw from that experience and use the same tools to navigate through the pandemic.
Here are the top 3 back-to-the-basics tools for an operator to turn a profit in the restaurant industry’s current state:
1. Break even analysis:
Often overlooked, the Break-Even Analysis (BEA) enables an operator to determine the minimum sales and cost structure for staying afloat. Unlike a budget or a pro forma, a BEA combines both the operational sales and cost targets as well as the balance sheet (specifically, debt servicing) obligations to demonstrate the bare minimum necessary to achieve profitability. It shines a bright light on the existing opportunities based on actual performance and enables you to model them in order to achieve profitability.
Pivoting a brand requires a budget; it’s the Michael Jordan of restaurant operations survival tools. In fact, operators who utilize budgets consistently yield 6-9% higher net profits than those without them. They simply aren’t optional. Restaurants may have gotten away without a budget in place when they first opened, but don’t think twice about going without it during these uncertain times. A budget will enable an operator to make changes quickly and avoid spending unnecessary money on ideas that aren’t working. Furthermore, a branding pivot is necessary right now, and it requires a budget as well as the same unshakable tenacity and optimism with some hard-earned treasure in order to regain guests’ trust.
3. Staff training
Just like when a restaurant first opens, training is about instilling confidence. Higher staff confidence instills the needed trust from guests that their dining experience is safe. Wearing a mask, adding plexiglass, and closing sections all have an irrefutable psychological impact, so training for the new normal enables a team to adjust to the myriad of necessary changes that will help to pivot a restaurant’s brand.
Learn about how RASI’s seamless integration with Delaget simplifies your finances and empowers you to make better, more informed business decisions.
Pro tip: Traditionally, determining revenue targets has been based on Revenue Generated Per Square Foot (RPSQFT). This has enabled restaurants to determine how much money the operation can deliver based on its physical structure.
This traditional approach will not work as long as the restaurants have limited dining capacities. They wind up overstating the potential revenue and lead to making some really bad decisions. We found that when we changed the model to Revenue Generated per SEAT (RGPS) we were able to accurately determine both sales and cost targets with far greater accuracy. This also allows the operator to consider the necessary reductions that the operation needs to make to its Labor dollars and COGS related purchases.
Most importantly, however, RGPS enables the operator to clearly see how much revenue is needed to make up for the exact number of lost seats. This allows the operator the ability to determine whether closing in-house dining and focusing on delivery only provides the business with the greatest chance of survival.
Why on-demand pay is popular for quick serve restaurant franchises
Rain’s pay on demand platform can work in any industry – but they’ve seen a lot of traction in the quick serve and fast food industries, which does not come as a surprise.
One thing they’ve learned from partners is that fast food and quick serve franchises don’t have time to prioritize payroll and benefits. They’ve also found that using Rain to provide a financial wellness benefit can result in increased productivity, employee retention, and job applications.
Financial wellness apps, especially on-demand pay apps like Rain, can:
- Provide pay cards for free, so you don’t have to handle them
- Eliminate your internal wage advance policy and the hassle that goes with it
- Add on-demand pay to your benefits package (with no fees for you)
Improving employee productivity with financial wellness
It can be hard to motivate a minimum-wage employee to pick up an extra shift or stay a little late – but, we get it – you can’t afford to give everyone a raise. What you can afford to do instead is stop making them wait two weeks to collect the money they’ve earned. You can do that through an on-demand pay platform (also called early wage access).
Early wage access reminds your employees exactly what they can earn by picking up an extra shift or working an extra hour. In some cases, that extra hour might mean the difference between being able to pay a bill in full or not. If they have Rain, they can log in after their shift and withdraw wages instead of having to wait for payday. In return, they are less stressed and more productive at work. Plus, employees who feel respected are more likely to wear a smile in front of customers. Having a robust benefits package is a huge step in showing your respect.
Blue Shield of California believes that “a healthy, productive workforce is a strong asset that powers the business’ bottom line,” and we believe financial wellness is a huge part of that.
Reducing turnover & increasing job applications
Franchise groups often run into the unique problem of a disconnect between the group, the brand name, the individual locations, and the employees. When the franchise group offers a strong benefits package, employee loyalty can shift from the brand or their location to the franchise group as a whole – ultimately resulting in happier employees who are more likely to stick around.
At the same time, hiring can be tricky because your franchise group name is probably unknown and can be confusing. Job seekers probably think they’re applying for the company brand name. Then, they see your franchise group name on their job application and get a little confused. However, if you’re able to tie a strong benefits package to your name, YOU become the company that job seekers want to work for. You might even start seeing an increase in job applications when you can cite things like “on-demand pay available” on your listings.
What KFC, McDonald’s, and others are doing
Some major fast food and quick serve corporations have introduced their own financial wellness programs (but they don’t include on-demand pay, as far as we know). The KFC Foundation has launched a financial education program, and McDonald’s, Taco Bell, and Chipotle are offering tuition assistance.
Rolling out these programs likely took a lot of time and effort from their corporate offices – and that’s time franchise owners don’t typically have. Rain’s financial wellness tools are already built for you, so all you have to do is sign up.
Making a difference in quick serve and fast food
Fast food and quick serve corporations have been under fire for lack of employee benefits or fair wages. Franchise owners have a unique opportunity to create strong, healthy work environments for their employees, even if it is against the standard for the industry. On-demand pay is a great example of a benefit that doesn’t cost the franchise anything while providing a useful service for employees.
Quick serve and fast food employees who are making minimum wage and working part-time might have a hard time making it from paycheck to paycheck. Giving them access to Rain means you’ll never again have employees calling out of work because they can’t afford to put gas in their car or hire a babysitter. It also means your employees will be less stressed, more productive, and happier in their positions.
By signing up for Rain, you can be a part of the movement towards better benefits for fast food and quick serve workers.
3 Reasons you need to upgrade to a cloud video surveillance system
Historically, upgrading your video surveillance system required steep upfront payments and significant time for your IT team to complete the setup. With the cloud, updating your video surveillance becomes faster and more cost-efficient. While upgrading the cloud is easier and less costly, cloud video surveillance also provides three major benefits over traditional systems that are often overlooked until it’s too late.
1. Need for remote access
You might have installed your video surveillance system at a time when you didn’t think remote access to your video data was a priority. Traditional DVR and NVR systems are designed to be viewed on premises and run on a desktop. Attempting to remotely view video from a DVR or NVR typically results in a significant impact to the image quality and load times. The ideal solution for remote access is a modern, cloud-based video surveillance system, which has been built to be accessed from any desktop or mobile device.
Remote access using an internet-connected, traditional video surveillance system is not only unreliable, it also places your business at risk. While you can install and configure a firewall to monitor for potential attacks, this takes a toll on your IT team’s resources.
With the right cloud-based video surveillance system, protection against cybersecurity vulnerabilities is built right in. With the Eagle Eye Cloud VMS, cameras are never directly connected to the internet. Both the Eagle Eye Bridge and the Eagle Eye CMVR provide a physically separate network port for cameras so that your cameras are never directly connected to the general business network or the internet. Remote access to your video is always secure and your video data is fully encrypted, during transmission and at rest.
2. Protection against loss & damages
It’s common practice to have a video surveillance system to deter criminal activity, leveraging the video to quickly resolve instances of theft or vandalism. However, savvy criminals know they can hinder investigations and greatly reduce their chances of being caught by stealing or damaging the video surveillance system.
Redundancy can counteract the loss and damage of the DVR/NVR system. Cloud data centers offer triple redundancy, ensuring that even if the bridge or CMVR is stolen or damaged, the data is backed up to the cloud, so you can still access your video.
3. Ability to scale
Expanding locations, increasing users, adjusting resolution or extending retention periods; these are just some of the reasons that might demand a scalable solution. Traditional systems make it difficult to do this and lack the infrastructure and flexibility to meet these needs. Cloud-based solutions, on the other hand, make it easy to centralize your video surveillance across multiple locations, increase users as needed, and adjust retention or resolution in real time.
The Eagle Eye Cloud VMS is also compatible with a broad range of cameras (over 3,000 IP, analog, and HD over Coax cameras) so you don’t have to replace your cameras until you’re ready. With a subscription-based model, you only ever pay for what you actually use.
Upgrading your video surveillance solutions is a strategic initiative that takes careful planning, but it shouldn’t place a burden on your business. With a cloud-based solution, you can streamline the process of upgrading and scaling your technology, while ensuring minimal strain on your IT resources.
Are you ready to upgrade your video surveillance system to the cloud? Learn more about the Eagle Eye Cloud VMS.
The importance of digital tips & payments for restaurants
COVID-19 has caused consumers to shift away from using cash and embrace contactless, digital payments. But with less cash on site, how do restaurants that promise same-day payments of cash tips as an incentive for recruiting and retaining employees handle this? The answer is digital tips—the fast growing trend taking hold within the restaurant industry.
Recently, Branch VP of Product, Ahmed Siddiqui, wrote a piece for Hospitality Technology outlining this movement and the major benefits of transitioning to digital tips and payments. These benefits include:
1. Minimizing risk and trips to the bank
With consumers primarily paying via digital methods, there’s been a shortage of cash on-site at the end of the day. This has caused many restaurant owners and managers to begin making frequent trips to the bank in order to pay out their employees at the end of their shifts. With digital tips, you can reduce time spent and risk of transporting large quantities of cash between locations. Simply pushing tips, mileage, and wages to an employee when they clock out is more convenient for you AND your team.
2. Saving money (and paper too!)
The restaurant and hospitality industries traditionally have higher levels of workers paid via paper checks. This can quickly become time-consuming and expensive. With digital tips and payments, you can skip the paper checks and get your employees paid—even if they are unbanked or underbanked.
3. Offering employees a compelling benefit.
Allowing your employees to quickly and easily access their earnings is increasingly important to meet their basic financial needs and unexpected emergencies. Digital tips and payments not only helps employees but also stands out as a compelling benefit and differentiator for attracting and retaining talent.
Check out the full article on Hospitality Technology for more benefits and information.
Ready to get started? Learn more about how Branch offers Delaget users a free way to adopt digital tips and payments.
Fill out the form to view the ebook, “4 Restaurant industry nuances your payroll provider must know”
4 Restaurant industry nuances your payroll provider must know
Beware. Not all outsourced payroll vendors are equipped to handle the nuances of the restaurant industry.
Before you renew or secure a contract with a payroll provider, read this ebook to make sure you’re choosing the best provider possible for your franchise.
Included in the ebook is a list of valuable restaurant-specific questions to ask to make sure your current or future restaurant payroll provider is able to meet the unique demands and challenges of the industry.
Additionally, you’ll learn more about these four critical restaurant payroll components – and why it’s important your outsourced team knows how to handle these issues:
- Point of sale (POS) integration
- Borrowed employees
- Tip handling
- Bonuses and overtime