Leverage Labor, Conserve Cash
Restaurants' sales are flat, so to save margins, they're spending less. What's your best bet for sales? Low-cost, quick-payback products like labor management software.
Regardless if your customers' hospitality POS (point of sale) systems are past their prime, the economy is most likely prohibiting you from selling very many major hardware and software upgrades. This, too, shall pass. While costly, whole-system upgrades and implementations can't be justified by restaurateurs right now, low-cost, quick-hit payback projects can. Show your customer how to save between 2% and 15% of total sales with a minimal software investment, and they might be a bit more receptive when you call on them. Just what fits the bill? Labor management software, for one thing.
Always Room For Labor Management Improvement
Pure-play hospitality POS VARs might not have enjoyed a banner year in 2002, but for labor management software integrator TimeManagement Corporation (Eden Prairie, MN), the hospitality market is healthy. "There is an inverse relationship between the economy and the products and services we market," explains Jeff Imm, VP of sales and marketing at TimeManagement. "We acquire increased visibility in a soft economy, because when the economy is down, labor management takes on new urgency. Labor is a controllable expense," he says. "Even a 2% reduction in labor costs can mean real savings." Conversely, Imm says the hardest-earned sales come when the restaurant industry is doing well. "It can be difficult to get potential customers to look at labor management solutions when they've got the money to go out and make the big investments. When business is good and money is coming in the door, that's when end users buy big-ticket items like POS hardware and software. We're not a big-ticket item compared to those POS systems, so when end users have money, we need to work twice as hard to get the value of our product across," he says.
Despite their value, labor management systems remain among the most under-used applications in hospitality. For the most part, restaurateurs don't take full advantage of their labor management applications. This is true of both those systems which are built into the POS software they're running and dedicated applications. The gap between functionality and usage might be blamed on many things, but it's most likely caused by a lack of end user education. The blame for this falls squarely on the VAR's shoulders. Labor management functions that are often overlooked by restaurants include POS station security, Web-based scheduling and reporting, child and fair labor law compliance, multisite scheduling, and labor forecasting. Most POS software programs with built-in labor management applications don't sport functionality this rich, but many retailers can benefit from it.
Products such as those sold by TimeManagement take the features of most POS-integrated labor management systems and raise them a level, most often by adding some sort of labor forecasting functionality. "Scheduling to the forecast alone results in savings of somewhere between ½% and 1% of sales on an annual basis," says Imm. Retailers who schedule to the forecast use software that combines employee skill set and availability data with transaction information and store traffic data gathered from the POS and traffic counting devices. With this information, the software produces labor schedules. "Peet's Coffee & Tea [Emeryville, CA] is a customer of ours," Imm adds. "They started scheduling to the forecast and instantly began saving 15 to 20 hours of labor per week, per store. That's a lot of hours to trim with only 13 to 15 employees per store."
Imm cautions that despite the quick savings, he finds many restaurants are reluctant to adopt dedicated labor management products because they've attempted to implement in the past and failed. "If a restaurant had a bad experience with a more cumbersome product, it's going to be a tough sell," he says. "You have to get end users past the point of indecision, where they're torn between either investing in dedicated software or using the built-in scheduling features of their POS solution." Worse, he says, is a prospect in the state of non-decision, one who can't get beyond the fact that they failed at a dedicated labor management install in the past. "These objections underscore the importance of ease of use," says Imm. "Features or functions that are difficult to execute won't get used."
Success Depends On POS Integration
TimeManagement's software can integrate with just about any hospitality software POS program without the requirement of hard code. The company has standard interfaces set up for Aloha, Digital Dining, GEAC Restaurant Systems, HSI, Maitre'D, Micros, Panasonic, Positouch, RPOWER, Restaurant POS, Sierra National, and Squirrel Systems. The program can run on a stand-alone kiosk-type monitor, typically the StealthTouch monitor from POS hardware vendor Pioneer POS (Walnut, CA), which it purchases through distributor Nimax (San Diego). The application can also be disguised in the colors of the restaurant's POS software program and run in that program right at the POS terminal. This route requires less up-front expense because the hardware cost is eliminated. Imm says TimeManagement installs the kiosk product in about 15% of its hospitality installs, while the rest run as an element of the restaurant's POS software. "Different end users are going to want different integration points for their labor management programs," explains Imm. Golf courses, for example, might need labor management at the POS station in the clubhouse and pro shop, as well as a stand-alone labor management kiosk for course maintenance employees in the garage area. A fast food restaurant with limited space and employees with similar job functions might choose to run the application solely on the POS terminal. "There's a wide breadth of what end users want, and it's critical to be able to configure it according to their demands," he says.
In any case, the accurate aggregation of data from the POS is critical to effective forecasting. To optimize schedules, labor forecasting software reaches into the POS database for data on factors such as table occupancy and sales, then analyzes the information to calculate the minimum amount of labor necessary to maintain customer satisfaction. Reports are then produced with scheduling suggestions.
If you can tout the virtues of your POS software product's labor management module, it may seem redundant to add a dedicated labor management solution to your core POS software offering. Indeed, even Imm admits that his competition in 90% of the deals it pursues are the very software companies with which his software integrates. But with the strength of a dedicated solution, a VAR has insurance. "It gives a VAR the opportunity to say, 'You don't like the time management tool in this POS product? I'm not out of the deal. I've got another solution for you,'" says Imm. As restaurants continue their search for margin maintenance, perhaps that "other solution" should be your lead sales tactic.