Boosting restaurant profits with digital technology
April 22, 2014— Ottawa, Ontario
When comptroller Gary Lamers was tasked with effecting savings and efficiencies at Cornerstone Bar & Grill in Ottawa, Ontario he identified that one of the key barriers to profitability was an outdated liquor, wine and beer (LWB) inventory system. Both the restaurant and bartenders had difficulty managing and accounting for inventory, since it was checked manually and inventoried only every week or so. This meant that at the end of a shift, bartenders would rely on the manual point-of-sale (POS) system to identify how much liquor they had sold. The restaurant had no way of confirming those reports until a physical inventory was taken days later, and no way of recouping the money if there was a discrepancy.
A 30-year veteran of the hospitality industry, Lamers knew that digital technology would bring the right ingredients to the mix. With the help of the Digital Technology Adoption Pilot Program (DTAPP) delivered by the National Research Council of Canada Industrial Research Assistance Program (NRC-IRAP), he selected the "best practice" solution for Cornerstone, one of 16 restaurants and nightclubs in the Ottawa Venues group.
Lamers chose Cornerstone as the first restaurant to adopt this system since it is one of the group’s largest, with more than half of its sales of $4 million annually coming from liquor, wine and beer. In addition, the staff grows from 25 to 125 in May for the summer months so that adds even more complexity to the operation.
Managing spirits with digital technology
After Lamers and NRC-IRAP Industrial Technology Advisors (ITAs) Liza Medek and Sy Symoom discussed the strategic impact of implementing a new system, they agreed that digitizing liquor management would be the ideal first step. "We helped Cornerstone decide how to get the best return on their investment," says Symoom. "Gary is a savvy restaurateur who brought a lot of value to the table—an important factor in effective technology implementation." Medek was also impressed by Lamers’ foresight in seeking IRAP assistance, given that restaurants are not typical IRAP clients.
Lamers points out that a well-laid-out plan was a critical tool in the successful adoption of the new technology, and DTAPP held him accountable for planning and reporting. "I had to show them exactly what I planned to do and how I would implement the plan."
With a scanner and bar-coded label, the digital LWB management system tracks every ounce of liquor from the moment of purchase through each sale to the disposal of empty bottles. This means that managers know the precise content of every bottle at any given time, and can do inventory both at the start of a business day and at the end. "Doing inventory nightly and reconciling revenue with usage reduces exposure to shrinkage, improving the bottom line," says Lamers.
"The project also raised staff morale," adds Medek. "The new system is much more transparent, allowing employees to question how, when or where a bottle went missing, thereby giving them and management better control over inventory."
Pushing the success envelope
Cornerstone’s results are just the tip of the iceberg, and will swell as they are rolled out to the other restaurants:
- Inventory losses at Cornerstone are down 15 percent
- Savings have increased by $200,000
- Bottom-line profit rose by 2 percent
- Beverage manager hired in each restaurant to manage the system
For Lamers, the LWB system is a launching point for introducing more digital technology that can be integrated into the POS system in food services as well. This would mean creating a new customized solution for the group.
"I would strongly encourage restaurateurs to look into digital technology, because it’s something everyone can use to advance the bottom line," says Lamers. He admits that, without digital technology, Cornerstone would not be so comfortably in the black, and knows there is "something for everyone out there."
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