hospitality technology buyer's guide... hospitality technology - buyer's guide page 4...

Hospitality Technology Buyer's GuideInvesting in a hospitality tech partnership can help you improve productivity and profitability for your business. But how do you find the right solution?

Hospitality Technology - Buyer's Guide www.fourth.com

ContentsOverview (with example) 3

Questions to Ask 4

> Internal: Business Analysis 4

> External: Vendor Communication 10

> External Tech Partner Evaluation 11


Overview

The restaurant and hospitality industry faces many challenges. New legislation drives up labor costs, while the cost of goods — from lemons to linens — are on the rise, too. SaaS/technology partners are cropping up in the hospitality space to help increase profitability to offset these rising costs. The question is, how do you pick the right partner?

There are many great options out there, but this sort of solution is not a commodity purchase. The focus should be on things like Return on Investment (ROI), Total Cost of Ownership (TCO) and Future Proofing, rather than upfront cost.

Why? Because it is incredibly expensive (not to mention laborious) if you make the wrong decision, and picking the most attractive price tag could end up costing you a lot more in the long run.

Example

In preparation for the process outlined in this guide, let’s start with the following high-level example.

Let’s say you’re looking to improve labor cost, so you purchase a scheduling tool. The cost is, say, $100, which is significantly cheaper than the competing $300 scheduling tool. Based on the cost savings it seems like the right choice, and why would you not make that choice with such a large difference in pricing? Just as your menu pricing has variables including cost of ingredients, perceived value, overhead, and staffing needs, your technology provider’s pricing also has many variables. These costs include: product development, implementation, updates, ongoing support, etc.

Will you see a return on your investment of $100 per month?

The short answer may well be “yes!” Let’s assume you are spending $25,000 per month on labor. If the $100/month solution helps you decrease your labor costs by 1%, then that $250 return covers the cost of the solution and puts $150 back towards your bottom line.

But of course, it’s never that simple. There are other variables at play. How was that labor cost reduced? Did it negatively impact the guest experience? Saving $250 may be quickly eclipsed by lost revenue from negative reviews, poor service at non-peak times, and comps/voids to satisfy disgruntled guests.


Let’s have another look at the option — the competitor with the $300/month solution.

Because the solution has had more capital along the way, they’ve spent more time and money around development, specifically taking into account how staff is deployed to meet demand. The result is a superior product that makes it easier to craft schedules to meet demand.

Now, your team has a schedule that puts the right people, in the right place, at the right time. In this scenario, you can both reduce labor cost but also increase revenue, without sacrificing guest satisfaction — generating an overall savings of 2%. A 2% reduction on $25,000 per month equals a return of $500. The net here is $200/per month back towards your bottom line.

So what’s the right choice? A solution that puts $150 per month back to the bottom line, but puts your customer base at risk? Or a “more expensive” solution that puts $200 per month back to your bottom line and also increases guest satisfaction?

This is just the tip of the iceberg. This guide will help to identify these differences in the competitive, and often confusing, landscape of hospitality technology.

Internal: Business AnalysisBefore starting the search for a technology partner, the first critical step is an internal analysis. What does that look like?

You’ll need a full understanding of your specific needs, goals, and resources. Tzu Sun’s Art of War states, “If you know the enemy and know yourself, you need not fear the result of a hundred battles.” The journey starts with you.


Below is a list of questions for you and for your teams, around each aspect of your operation. Answering these will help guide you towards the right solution for your business.

Accounting:

• How confident are we in the accuracy of our numbers?

• How long does it take to resolve discrepancies/validate data?

• How quickly do we provide actionable data to our operational teams?

• How long does it take to generate accurate P&Ls?

• How much time per week is each team member across the organization spending on accounting?

• Do we currently have any accounting integrations?

• Does our accounting software address all of our company’s needs?

HR:

• Are we compliant with all current legislation?

• Do we have an action plan to maintain compliance on new legislation?

• How are we staying up to date on new laws?

• How much time are we spending on handling worker’s comp claims?

• Are we compliant in the way we handle sexual harassment allegations?

• In the event of a claim or audit, how long does it take to pull all the necessary reporting?

Payroll:

• How much time are we spending on payroll disputes?

• How are we tracking overtime for multiple job roles or multi-site employees?

• How are we handling wage garnishment?

• Do we know our actual costs on payroll per employee (end of year, consolidate all payroll cost, divide by amount of employees)?

• When employees have questions about their paychecks, how quickly and accurately are we able to resolve those questions?


Scheduling:

• How are we currently forecasting?

• How confident are we in the accuracy of our forecast?

• How do we measure our forecasting accuracy?

• Are we tracking punctuality of employees (e.g. scheduled for 5pm start but clocks in at 4:30, or 5:15)?

• Are we tracking time theft?

• How are our labor numbers compared to the averages of our competitors?

• How much time is spent managing changes to the schedule, and how are we communicating changes to employees?

• Are we compliant in the posting and changing of our schedules?

• How are we factoring in fixed tasks in our scheduling (i.e. prep work, opening, side work)?

Communication

• What is our current employee turnover rate?

• How are we communicating with our employees and how are they communicating with us? Is the platform secure?

• Have we defined what our company culture is?

• Do we have tools to maintain that culture?

• How are we handling and tracking maintenance requests?

Recipe Management:

• How do we track how profitable our menus are?

• How long does it take our chefs to create a costed recipe?

• How long does it take to track ingredient costs?

• When ingredient prices change, how do we ensure menu profitability?

• Are recipes shared consistently across each site? Are we able to achieve brand consistency?

• How do we track menu item popularity?

• Do we have access to accurate nutritional and allergen information?


• Are we compliant with food labeling regulations?

• How often do we do menu revisions?

• How often do we negotiate better vendor deals and change ingredients?

Recipe Publishing:

• Where does information about our menu appear (POS, Grubhub, online, apps, printed menus, menu boards, order guides, inventory lists)?

• How long does it take to change a menu item and update it at all locations?

• How accurately is that managed and what is the cost associated with mistakes?

Inventory:

• How often and how accurately are we taking inventory?

• What is our process for validating accuracy?

• Do we have a sheet-to-shelf system set-up and labeled?

• How many different team members are responsible for inventory management?

• How are we tracking waste (spoilage, staff meals, mis-rung item, comps/voids, theft)?

Ordering:

• How are purchase orders currently being created?

• Do we have established par levels?

• Are orders only being placed with preferred vendors?

• How many people are responsible for placing orders in each location?

• Are we ordering in bulk only to end up with waste?

• Do we look at existing inventory before placing orders? How do we ensure we aren’t over-ordering?

• Do we confirm in advance that we are only ordering ingredients needed for the current iteration of our menu?

Goods Receiving:

• Is the same person placing the order and checking in the order?

• Are we checking in goods based on our purchase order or the vendor’s invoice?

• How certain are we that what we ordered is what we received?

• What do we do to manage sub-standard deliveries?

• What steps are we taking to prevent costly rogue orders?

• How are we managing and communicating short orders?

• How are completed invoices managed through the business?

• How much time is spent reconciling purchase orders, goods receipt notes and invoices?

Vendor Compliance:

• How are we ensuring that vendor deals are being adhered to?

• Do we have visibility on vendor performance (frequency of mistakes, invoice discrepancies, etc.)?

• Do we have systems in place to ensure vendors aren’t “padding” orders or shorting deliveries?

Key Performance Indicators (KPIs) AKA “Company Goals”

• What are our total Cost of Goods Sold (COGS) percentages?

• How do our COGS stack up against the competition?


• What goals do we want to set for this week, this month, and this year?

• How are we going to achieve those goals?

• What obstacles are in the way of those achievements?

• How are we going to track performance against these achievements?

Technology

• Are we up to date on our technologies vs our competitors?

• Which current solutions are lacking, which ones do we need to add?

• Are we being proactive in preparation for our future needs (how quickly will we outgrow our solutions)?

• What manual tasks exist that technology or integrations can remove in each department?

• Are our systems able to communicate easily and effectively with one another? How much time is spent manually adjusting our solutions?

• In how many places does our data currently live? Can we consolidate to avoid duplication?

• How does our technology strategy support our business strategy?



External: Vendor CommunicationNow that you have a good pulse on the business, identified short and long term goals, and understand the challenges, you can start the shopping process.

Below is the buying guide for your technology partnership. The list is in order of concerns from the start of the process to the end, and categorized by importance.

Research

Devote one or more people to research the technologies currently available for the hospitality industry. They should then act as the project manager for the shopping process.

Narrow down the options based on not only your current needs, but also the anticipated needs over the next 2-5 years. Depending on those needs, you may need to find a solution that scales with you. With the upfront implementation costs, it’s important that you don’t immediate outgrow your new solution.

Find and speak to people currently using the solutions you’re considering. Make sure to talk to groups similar in size, concept, revenue and structure of your business. There are many variables to how businesses run and the more variables that you can remove, the more you can trust the opinions of your references on how a vendor relates to your specific operation. For example, if you have a 5-unit group which is all the same concept and a small above-store management team, your needs will differ greatly from those of a company with 10+ locations with a large above-store team and multiple concepts.

Avoid duplicate data and unnecessary administration! Find vendors that consolidate multiple offerings into one package to eliminate the cost and effort of managing multiple databases and systems.

Once you’ve narrowed down your search, it’s time to grill the companies.

Beware of the “white noise.” For the most part, vendors will say they do the same things as their competitors. Keep asking “How?” You should be able to drill down into the details of how the solution works — a cursory, general answer can’t cut it.


Tech Partner Evaluation

Below are some questions to ask to help guide you:

Company and Culture

• How long have you been in business?

• How many employees do you have?

• How many of those employees have a hospitality background?

• What is your current annual revenue?

• How much do you spend per year on research and development (R&D)?

• Do you have other clients similar to my group? Can I talk to them?

• What is the weakest part to your solution?

• What is the strongest part to your solution?

• Describe a struggle you’ve had with a client and the outcome.

• Will there be any type of executive support in this partnership? (Can I go over your head and if so, who will I be talking to?)

• How many clients do you have?

• How big are your support teams?

• Are the support people employed by you or outsourced?

• What are the hours of operation for support? What is my escalation path if I’m unhappy with the support I receive?

Platform, Analytics, Business Intellegence, and Reporting

• Do you provide a business intelligence tool?

• How accurate is the data provided?

• Do you integrate with other systems, including third-parties? How is data shared among them?

• What could prevent the data from being accurate?

• How many log-ins does my team need in order to get into the different aspects of the system?

• What steps are you taking to help break down technology silos?

• Is the solution customizable based on job role or person?

• Is it mobile friendly?

• Are there alerts built in and if so, can you describe them?

• Does the tool interface with third-party data such as my POS, Yelp, Facebook reviews, Trip Advisor?

• How quickly can your system generate reports?

• Will you help me understand what reporting I should be checking and how often I should be checking it?

• Is there continued learning provided at no cost after the initial sale? How?

• How much set up is required to implement the solution and get the dashboards and reports working?

Forecasting:

• How does your system generate a forecast? What kind of forecast is created (revenue or activity-based)?

• What variance does your forecast typically follow week to week with your current clients?

• How do you handle private parties, catering orders, reservations, etc. in your forecast numbers?

• Do you take into account fixed tasks in your forecast, such as inventory time, food prep, opening or closing duties, etc. that are not driven by revenue?

• How do you measure the accuracy of your forecasting?

HR:

• Do you have an HR solution as part of your offering?

• Are there self-service tools available in multiple languages?

• Are there rules built in to keep me compliant across the US?

• How do you handle applicant tracking to onboarding?

• How many places will my employee data have to live (e.g. HR, payroll, scheduling, POS)?


• How does HR integrate to scheduling, POS, payroll and accounting?

• How secure is your data storage?

• Should we part ways, who owns my data?

• Walk me through the process of terminating an employee.

Scheduling:

• How does your solution communicate with HR?

• How does your solution handle fixed tasks?

• Are there safeguards in your solution to keep me compliant with posting of schedules?

• Walk me through manager approvals of shift swaps. What does that look like and how do you track who generated the swap request?

• What types of approval processes for schedules can I put in place?

• How does your system handle requests from employees for time they are unavailable?

• Do you have any emergency functionality, such as an SOS button that alerts all staff if a location is short staffed?

• Does the forecast dynamically change day-for-day throughout the week?

• What information is used to build the forecast (e.g. sales data, public holidays, weather forecast, etc.)?

• What reporting exists to track my company’s goals? Is it proactive or reactive data?

• How does your scheduling solution communicate and calculate over multiple sites and employees with multiple job roles?

• How is tip tracking and tip pooling handled in your software?

• How is time and attendance tracked in your system?


Payroll:

• Do you offer payroll? If no, why not?

• Is your payroll service run by your company or outsourced to a third party?

• How and who do you integrate with for payroll?

• How is tip pooling captured and transmitted?

• How do you ensure accurate overtime pay based on multiple job role/ multi-site employees?

• How do you ensure people are paid for the actual time worked?

Communications:

• Do you provide a solution for company communication?

• Do you provide a replacement for Manager’s Red Books?

• Does your company include task management in your solution? If so, how?

• Does your communication solution include the ability for groups and collaboration?

Recipe Creation:

• How does recipe costing work in your solution?

• Is there a sandbox/practice area?

• How often does your solution update pricing in relationship to ingredient costs?

• Does your solution provide nutritional and allergen information? How? And how do you ensure accuracy?

• Are there approval levels available for menu changes and recipe creation?

• How does your solution handle multiple concepts and multiple locations that share ingredients? What does the database structure look like? Will I have multiple databases for multiple concepts?


Menu Publishing:

• Does your solution provide menu publishing? If so, how?

• If an ingredient is changed on a recipe, how is that communicated to inventory sheets, order guides, POS and customer facing menus in relation to items, nutrition and allergens?

• How do you help us ensure compliance with Food Labeling Regulations?

Inventory:

• Do you provide sheet-to-shelf inventory forms and are they available on mobile devices?

• How easy is it to change where an item lives on your solution? Can you show me?

• Does your solution allow the counting of prepped sub recipes? How is it calculated?

• Can inventories be separated by job role? For example, can I set it up so my bar manager only has access to take inventory for the items they are directly responsible for?

• Can a single item live in multiple inventory locations throughout the store and be counted/added up correctly for ordering based on par levels? For example, can I just order lemons, or do I need multiple duplicate items such as bar lemons, kitchen lemons, prep lemons? Moreover, how does that work for depletion?

Ordering:

• Can I order from multiple vendors with one click? Can you show me what that looks like, and walk me through placing an order?

• How easy is it to see what I have on back order to avoid double ordering?

• Does your solution show me what ingredients I will be short on based on current forecasted demand, or just par levels?

• Does your solution show me what I already have in stock to avoid surplus?

Receiving:

• Is an internal Purchase Order created on your software platform, or will merchandise arrivals be checked in on vendor invoices?

• If there is a discrepancy on the merchandise arrival, how is it tracked through the solution to accounting?



• If purchase orders are created in your solution, how does the person handling the arrival have access to those documents? Can they be edited upon arrival digitally to track short orders, credits and promo items?

Implementation:

• How long does your typical implementation take for my size of business?

• Will you provide me a “statement of work” that we can both agree and sign off?

• Is your cost based on a fully implemented project, or an estimated hourly rate?

• Will there be any in person scoping completed in my stores to identify the exact needs of my group and the potential ROI?

• Is implementation strictly remote (e.g. in weekly calls and online learnings)?

NegotiationBy this point in the process you and your team will have a pretty good idea on which partner seems to be best suited for your needs. When it comes time for pricing and negotiation, request a statement of work, a formal ROI (worst case scenario and best case scenario), and, of course, monthly pricing.

Decision MakingFinally, it is time to pick who you will partner with. Organize an internal meeting to discuss all of the pros and cons of each vendor. Remember to stay focused on ROI and not solely on upfront cost.

Below are some final considerations, in order of importance, to help you in this process:

• Do I trust my company’s reputation and revenue with the provider?

• Do I believe they will make good long term partners and continue to drive value to my business?

• Do I believe their ROI presentation? Did they take time to truly understand my numbers and business needs?

• Have they identified any potential obstacles and do they have action plans to overcome those challenges during implementation and after?

• Can I afford the cash flow drop until ROI has a chance to kick in? If not, can I negotiate payment terms?

We’d love to help you answer any and all of the above questions.

To learn about our fully-integrated solutions, give us a call at

+1.877.539.5156 | www.hotschedules.com

www.fourth.com


Call us at +1.877.539.5156 Visit HotSchedules.com

About HotSchedules, now powered by Fourth

HotSchedules, now powered by Fourth, provides end-to-end, best-in-class technology and services for the restaurant and hospitality industries. Their supply chain and workforce management solutions, coupled with the industry's most complete data and analytics suite, give operators the actionable insights they need to control costs, scale profitability, improve employee engagement, and maintain compliance. Headquartered in Austin, Texas, HotSchedules, now powered by Fourth, serves more than 7,000 customers across 120,000 locations globally.

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