Restaurant Management Software for SME Restaurants

Introduction and Background

The restaurant industry was originally created out of necessity to feed people who were forced to be away from home, and the industry still satisfies that need today (Chmelynski 2004; Brech 1998; Pentecost 2002). Unlike most other industries, the restaurant industry in the 21st century is distinguished in many countries by containing the largest number of people who have, at some point in their lives, been employees in some capacity (Boggs 2007). According to Boggs, there are a number of reasons for this trend. He asks, "Why are so many people drawn to this industry?" and answers that "It is romantic, creative, active, and fun-filled. It is one of few industries where an employee can enter at the bottom with no skills and leave at the top highly successful. Knowing how to cook is not even a prerequisite for being successful in this industry!" (2007: 36). This point is also made by Thiers (1999), who emphasizes that although many of the jobs in the restaurant industry "do not require high skills or command high wages, many do, and some of the lower-skilled jobs like travel clerk or kitchen worker can be stepping stones to more responsible jobs and better income" (32). Minorities in particular have taken advantage of the high level of mobility in the food service industry to achieve executive positions in recent years (Scott 2002).

Notwithstanding the ease of entry and high level of mobility within the restaurant industry, it is not easy work by any measure, with daily schedules of 12 hours for restaurant managers not being uncommon (Royle & Towers 2002; Lucas 2003). In addition, there is also a fundamental need for so-called "people skills" to succeed in the restaurant industry over the long term (Douglas & Zivnuska 2008). Boggs also notes that success "requires leadership, tenacity, hard work, flexibility, and a true love for people and the foods that tantalize them" (2007: 37).

Like almost every other industry, the food service industry in general and restaurants in particular have benefited enormously from the innovations in information technology introduced in recent years. Although the goal of every good restaurant — to deliver high-quality cuisine and beverages to customers prepared in the manner they want and when they want it — has remained essentially the same, the management of these establishments has become increasingly complex. This complexity results from increased competition as well as local, regional, and national regulations that require compliance with a vast array of health codes (Abernathy & Hart 2004; Phillips et al. 2006), personnel issues (Gubman & Russell 2006), constantly changing governmental regulations concerning smoking in restaurants and bars (Dunham & Marlow 2004), and, of course, taxes (Boggs 2007).

Moreover, from a public relations perspective, the extent of restaurants' compliance with food health regulations is becoming increasingly available to consumers through the publication of potentially damaging inspection results in online governmental venues (Almanza, Nelson & Lee 2003). This makes the need for effective and responsive restaurant management practices that can address food safety issues in a timely fashion more important than ever before (Jenkins-Mclean, Skilton & Sellers 2004; Nicola, Ray & Hatcher 2000). Restaurant managers represent the front line in the delivery of food service in a hygienic environment wherein consumers can enjoy the ambience and service without worrying about the safety of the food and beverages being served (Jenkins-Mclean et al. 2004). According to Bezich, "Governments [are] under pressure from taxpayers to cut taxes. However, taxpayers do not want to see any reduction in enforcement, particularly when it comes to health and restaurants" (1999: 23). Changing restaurant employees' routines and habits in substantive ways is an especially challenging enterprise that requires ongoing emphasis and oversight by top management to ensure that all employees adhere to proper practices (Kassa 2001).

Moreover, like many other businesses, restaurants are faced with constant changes in consumer preferences and tastes that require timely responses in order to remain competitive (Seidman & McCauley 2009; Farello, Mitchell & Alldredge 1999). The delivery of food and beverages to the customer's table is just part of an overall complicated supply chain, making effective enterprise systems a necessity rather than a luxury (Neely 2002). In this dynamic environment, restaurant managers around the world have sought information technology solutions to their management needs, and the market has responded with enterprise systems that can help administer operations more efficiently. Compared to other industries, however, relatively fewer off-the-shelf software solutions have been developed by vendors that specifically address the types of needs that many restaurants routinely encounter — a problem that was the focus of this study.

Satisfied customers are essential to the survival of restaurants. Because restaurants are staffed by human beings, the opportunity for failure is high and the costs associated with even a few mistakes can be devastating. According to Gibbs, "Customer service is key to the food service industry" (2006: 43). As many restaurant patrons can readily testify, dining experiences have been less than satisfactory in many cases — with incorrect orders being provided, inordinately long waiting times, and surly wait staff who do not provide the level of customer service required to ensure repeat business and word-of-mouth advertising that can be the lifeblood of many small- to medium-sized enterprises (SMEs). Reeves and Hoy emphasize that, "Given the tremendous dissatisfaction with service and the brutally competitive environment in which restaurants operate, restaurants that are able to differentiate their service from that of their competitors will gain a significant competitive advantage" (1999: 53).

This is an especially salient point for full-service restaurants that are being edged out by their lower-cost fast food competitors (Rashad, Grossman & Chou 2006). For example, the results of a study by Brech (1998) concerning the percentage of meals consumed outside the home determined that fully 93% of respondents indicated that fast food was selected for their evening meal at least once or more times every week; in addition, 84% reported having convenience foods at home for their evening meals at least once or more times per week; and almost all respondents (99%) indicated that their families prepared home-cooked evening meals at least once or more times each week, with 70% preparing four or more evening meals every week (Brech 1998). According to Brech, these trends do not leave much time — or money — available for dining at full-service restaurants. Respondents "reported their families ate at cafeterias, family or chain restaurants, or fine dining restaurants only once or less each week" (Brech 1998: 21).

This is not to say that the number of full-service restaurants has declined in recent years. To the contrary, during the period between 1972 and 1997, the number of full-service restaurants increased by 35%; however, the number of fast food establishments more than doubled during this same period (Akst 2003). It was not until 1995 that consumers spent more at fast food establishments than they did at full-service restaurants (Pardue 1999).

Not surprisingly, given the highly competitive nature of the restaurant industry, many full-service restaurant managers try to distinguish their offerings from lower-priced fast-food competitors in several ways, including ending menu prices with ".00" rather than the ".99" used by cheaper eateries (Parsa & Naipaul 2007). Another way restaurant managers can differentiate their service is by providing top-flight service, food, and beverages that will compel customers to return and to tell their friends and families about their dining experience. In today's highly competitive marketplace, achieving this level of customer service requires more than intuition and experience. Fortunately, restaurant management software can help managers achieve this level of customer service in ways that have not been possible in the past.

The overarching aim of this project was to support restaurant owners and others interested in how restaurant management software can support the management of small- to medium-sized restaurants in terms of sales processes — such as order taking, table reservation, billing, and inventory control. In addition, this study examined the scope of various restaurant management systems in order to determine which is best suited for assisting all employees' operations and managers' or owners' decision-making processes. This study can be applied as a supportive resource to create refinements in existing restaurant management software. This primary aim was supplemented by several key objectives:

1. To deliver current research on the issues and situations of SMEs competing in the restaurant industry, including restaurant processes in both front and back offices, as well as representative restaurant computerized systems, to develop an improved understanding of how these applications can facilitate sales operations.

2. To conduct a cost-benefit analysis and GAP analysis concerning the use of restaurant management systems and the current and future state of the restaurant.

3. To determine and discuss possible solutions to improve the performance of restaurants.

4. To evaluate the triggers and barriers of implementing restaurant management systems.

5. To analyze and build the requirement specifications for optimum restaurant management software systems.

6. To draw relevant conclusions and provide recommendations for the future implementation of restaurant management software that can be used as a best practice guide by restaurant managers.

Although many entrepreneurs aspire to restaurant ownership, success stories are the exception rather than the rule, and new restaurants come and go so fast that many consumers have trouble keeping track of what is currently available. Boggs (2007) emphasizes that fully 90% of new restaurants are unsuccessful. These failure rates may be even more pronounced during periods of economic downturn, when people tend to eat at home rather than spending scarce money at a full-service restaurant, or spend what discretionary income they have at inexpensive fast food outlets. The fast food industry now accounts for almost half of all food dollars spent outside the home (Van Giezen 1999). According to Van Giezen, "Over the past 20 years, [the fast food industry] has accounted for a larger proportion of food budgets, reflecting, among other reasons, greater spending power and changing lifestyles prompted by the increasing participation of women in the labor force and the rise of one-person households" (1999: 25). These trends have held true in countries besides the United States, including the United Kingdom (Hall 2003).

In order to entice people to patronize their restaurants, full-service restaurant managers need to develop a competitive advantage that can help them not only survive during economic downturns but grow their businesses as well. For this purpose, restaurant management software has been developed in recent years that is "easy to manage, modular yet simple and easy to update; point-of-sale software is designed allowing smaller restaurants to install basic systems and software functionality with the ability to upgrade by switching on built-in modules as and when business dictates" (Software shows accurate record for your restaurant & bar 2010: 3).

The scope of this study extended to restaurant management in a number of countries, but with a specific focus on the restaurant industry and small- to medium-sized restaurants competing in the United Kingdom.

Because customer satisfaction is the key to success in the restaurant industry, identifying opportunities to improve the processes that provide superior service represents a timely and valuable enterprise. Although savvy restaurant managers recognize this fact, many may not know how to achieve superior customer service given the paucity of best practices in this area, particularly as they relate to the integration of software solutions into restaurant operations. In this regard, Vernon defines best practice as "ways of conducting business processes that are generally agreed to be the most efficient or effective" (2002: 21) and suggests that identifying best practices in the restaurant industry can help deliver superior customer service. According to this authority, "Best practice has come to be associated with an ongoing management style that focuses on processes. The idea is that an organization should not be stymied by being oriented towards people or product. The argument is that best practice in processes is what delivers improvements in the most important business indicator, customer satisfaction" (Vernon 2002: 21).

This study used a five-chapter format to achieve the above-stated aims and objectives. Chapter one introduces the issues under consideration and provides relevant background information, including a statement of the problem, the importance of the study, and its scope and supporting rationale. Chapter two provides a review of the peer-reviewed, scholarly, and popular literature concerning restaurant management and restaurant management software systems. Chapter three describes the study's methodology, including the study approach, the rationale in support of the selected methodology, the analytical context, and limitations. Chapter four consists of an analysis of the primary data collected during the research process, and chapter five provides the study's conclusions, a summary of the research, and recommendations for software solutions for restaurant managers today.

Review of Related Literature

This chapter provides a review of the relevant literature to describe the current environment in which restaurants compete and the factors that affect restaurant performance. A discussion of front and back office restaurant processes is followed by an analysis of various restaurant management systems currently available.

Although more and more people have been dining out and spending larger percentages of their disposable income on food consumed outside the home, in many cases these meals are so-called "fast food" obtained from facilities that feature drive-through windows rather than full-service restaurants (Thiers 1999). In addition, many restaurants are faced with inordinately high turnover rates that adversely affect their ability to deliver high-quality customer service and that also require restaurant managers to expend scarce resources on recruitment, hiring, and training of new hires (Mardanov, Sterrett & Baker 2007). According to these authorities, "Due to the nature of the restaurant industry, [restaurants] tend to experience a large degree of turnover and employee job dissatisfaction because of supervisor issues and availability of same-type jobs located within the industry" (Mardanov et al. 2007: 38). Besides being characterized by inordinately high levels of employee turnover, the restaurant industry has traditionally been highly competitive, and this aspect of the industry remains especially true today (Roberts, Lohrke & Frownfelter-Lohrke 2004).

Despite these constraints, there is money to be made if full-service restaurant managers know what customers want and are able to provide it in a timely and consistent fashion. Shields and Shelleman report that "Restaurants are an important sector of small business with projected sales of $187.4 billion for full-service restaurants in 2008. With more [consumers] eating meals away from home, restaurant sales in 2008 were expected to grow 4.3% over 2007" (2008: 48).

The research concerning the factors that affect restaurant performance largely dates from the past two decades or so. Several studies conducted during the late 1980s and 1990s focused primarily on those attributes of the dining experience that determine customer satisfaction (Knutson 1988; Davis & Vollmann 1990; Dube, Renaghan & Miller 1994; Kivela, Inbakaran & Reece 2000). More recently, researchers have examined the precise linkage between customer satisfaction and restaurant performance, emphasizing the manner in which satisfaction affects customers' repeat purchases (Sulek & Hensley 2004; Soderlund & Ohman 2005; Cheng 2005).

A study by Gupta, McLaughlin, and Gomez (2007) examined the association between customer satisfaction, repeat-purchase intentions, and restaurant performance. Using data from a national restaurant chain, the authors constructed a series of mathematical models that predict how the level of customer satisfaction with certain attributes of guests' dining experience affects the likelihood that they will return. The model shows how guests' "comeback" scores and other variables affect restaurant performance — specifically, sales and entrée counts. Robust and statistically significant, the models showed that restaurants that pay attention to food quality, appropriate cost, and attentive service have the greatest chance of increasing guests' intent to return. That intent to return, in turn, is a chief driver of increased sales (Gupta et al. 2007).

Front office. According to Thiers (1999), front office operations in most restaurants are the primary responsibility of the restaurant managers. These managers "run the show in restaurants" and their front-office responsibilities include: (a) coordinating all aspects of food preparation and keeping the restaurant running smoothly; (b) ordering supplies; (c) selecting and pricing menu items; (d) hiring and supervising employees; (e) maintaining restaurant equipment; and (f) administrative tasks such as payroll and scheduling hours. In addition, Thiers notes that "Restaurant managers usually are assisted by an assistant manager and often an executive chef" (1999: 33).

Back office. Jafari reports that "The back office refers to the location of those procedures not carried out in full view of the customer. Work is allocated to the back office on the basis that there is no requirement for a direct contact with the guest. Developments in computing technology are blurring the distinctions between front and back office activities" (2000: 48).

Definition. For the purposes of this study, a restaurant management system refers to a computer-based system that integrates and automates all of the operations of a restaurant that are not directly required to be performed manually (for example, food preparation and serving).

Conceptual model. Although some aspects of restaurant management remain manual — such as order taking, passing orders to the kitchen, and delivering food to the table — recent innovations in restaurant management applications have streamlined the process greatly. The conceptual model for these applications involves features such as touch-screen menus, remote ordering and printing, automated billing, and guest account organization and staff supervision capabilities (Software shows accurate record for your restaurant & bar 2010).

Hardware devices. Restaurant management software applications vary in design and function, but most feature some type of point-of-sale hardware device that allows users to capture all relevant data concerning the sale, including food items purchased, credit or debit card information, inventory control, and so forth.

One of the more interesting issues to emerge from the literature review concerned how few studies and articles have been devoted to this topic, and how quickly leaders in this specialty industry have faded from view. This suggests that there remains a lack of current information concerning which systems work best in which locations. Nevertheless, some indication of the off-the-shelf and customizable attributes available can be gleaned from the representative restaurant management applications reviewed below.

Optimum Control (http://www.tracrite.net/restaurant.php) offers a range of features including food recipe costing, inventory control, purchasing and ordering, and catering and buffet planning. Food recipe costing allows managers to determine the optimum selling price on every menu item by setting a desired cost percentage, build menu items and batch recipes quickly, develop new menus in minutes, identify portion costs and yields for precise recipe management, and identify how price changes on each menu item impact overall food cost. Inventory control features allow managers to manage inventory in a fraction of the time, slash inventory count and valuation time using printed count sheets or Windows Mobile-based PDAs, and know closing inventory values instantly using FIFO, Last Cost, or Average Cost methods. The purchasing and ordering module allows users to update stock levels and price changes, detail general expenses, request credits for returned stock, purchase multiple pack sizes from suppliers, and export purchase transactions to many popular accounting systems. The catering and buffets module enables managers to plan and cost out an event, calculate costs based on selling price or cover price, print confirmations with detailed lists of everything a client has ordered, and prepare a shopping list for the event.

Aspen Systems, Inc. (http://www.aspen-systems.com/) is a self-described leading developer of fully integrated enterprise solutions for the food industry, including applications that can be used in restaurant settings. The company has a proven track record of performance with food management systems installed in more than 200 locations in North America. Aspen emphasizes that all upgrades and improvements to existing systems are designed to be fully integrated without additional modifications to the legacy system, thereby providing a significant return on the initial investment. All add-on modules share the same "look and feel" so they are simple to learn, and they are able to communicate with each other so that data is transferred seamlessly when and where it is needed. The company has been in business since 1988 and states that its product is specifically designed for efficiency and reliability in real-world settings by streamlining data processing methods with no software interfaces needing to be revised (About Us 2010).

Point of Success Premium (http://www.pointofsuccess.com/) offers a comprehensive set of features including order entry via touch screen or mouse, order tracking with real-time manager statistics, employee timekeeping for payroll processing, caller ID integration to find existing customers and create new customer accounts easily, employee scheduling to control labor costs, table management with table map for reservations and wait lists, credit card/gift card/loyalty card processing, fingerprint login for secure employee clock-in and financial transactions, online ordering for take-out and delivery, inventory management handling vendor ordering and cost reporting, delivery management with order status and driver queuing, and central office reporting for chains, franchises, and independent eateries. The system also integrates with video surveillance systems for more effective security through detailed transaction information embedded in security video.

HOSPOS by Restaurant Pos (http://www.restaurant-pos-software.com/) offers a quality and choice of features designed to meet the needs of both the smallest restaurants and large-scale national and international chains. Restaurant Pos offers a free 60-day trial rather than the usual 30-day period. The advantages of a modular approach mean that a business only needs to pay for the specific software it requires and can purchase further modules in the future. The software is developed using (vb.net) n-tier technology, allowing software modules to be added when new functionality is required, and bespoke software modules are available on request. Available modules and add-ons include Stock Management, Kitchen Management, Employee Reporting, Reception Management, Take Away Till, and Restaurant Till. The Kitchen Management module monitors all kitchen activities: every item request from the till menu is displayed to the Kitchen Manager, and as a requested item is prepared, an acknowledgment is sent to ensure the item is received. The Restaurant Till module (also referred to as Front Office Management) sends orders from customers to Kitchen Management and receives messages advising item status. The Reception Management module allows booking of a room, hall, or table within seconds. The Employee Reporting module manages all employee information and automatically manages attendance records, including arrival and departure times, and can evaluate employee performance through sales data.

Aplomb Technology (http://www.tootoo.com/d-rp24950594-Bar_Inventory_Restaurant_Management_Software/) provides a Windows-based restaurant management software package with a graphical user interface covering restaurant operations, inventory, accounts, and employee management. Restaurant features include item category management, menu cards, bill generation, table reservation, and reports. Inventory features cover item categories, item masters, item usage tracking, and purchase registers. The accounts module includes a full chart of accounts, ledger, expense and receipt entry, journal entry, cash book, trial balance, and balance sheet. The employee module includes employee master records with photographs, allowance and deduction masters, leave and loan registers, payroll generation, and attendance tracking. The application also provides analytical reports including daily and monthly sale graphs for both the restaurant and bar inventory, daily sale reports, checkout reports, and expense reports.

This chapter provided a review of the most recent literature available describing the environment in which restaurants are competing today as well as the factors found to directly affect restaurant performance. The foregoing was followed by a description of front and back office restaurant operations as well as an analysis of various restaurant management systems identified as being readily available from online vendors.