Vet Cost Control Systems

Tips for choosing technology to help your catering operation be more profitable

By Mark Kelnhofer, MBA

Operating and managing a foodservice business has many challenges. Whether you’re running a restaurant, catering operation, hotel or casino, the right technology can assist you in becoming more efficient and profitable. Systems create more formalized processes and controls to increase the discipline of your operations. Deciding which cost-control system to purchase is not an easy task, however. To help you along in your research, here are some factors to consider during the vetting process:

Interfaces vs. Exporting

Think about all the technology that we utilize in our businesses with different purposes (see figure, right): labor management, catering, point-of-sale, back office, accounting, loyalty programs and many others. The issue becomes how the data we receive from the new cost-control system may or may not communicate with our existing systems. There is no one system to manage all aspects of running the business. An interface is a direct communication with other computers and databases. There is a relationship that exists between systems. The ability to export data from one system to another is not a direct interface. It is a manual process to move the data out, possibly reformatting the data, so that it can be read by the receiving system. This could take some time to do, and you may have to do it frequently. Ideally, true interfaces are what is desired. When researching and vetting any system, understand how the new system may or may not work with your existing systems.

Features and Field Vetting

It’s one thing to vet features of a new system, but another thing to vet the fields and structure of the database. When reviewing any system, get into the details of each part of the database. As an example, let’s review some of the data that you may want to have or know about on all purchased items for your operation:

  • Item description field length
  • Limitations, if any, on the number of unit-of-measures per item
  • General ledger coding and tax flags
  • Flags to annotate retail product, gluten-free, non-GMO, kosher, allergens and catch weight products
  • Purchase specifications (i.e., size, color, grade, average weights, etc.)
  • Primary and secondary vendor identification
  • Point-of-sale attachment if a retail item

As you can see, if you don’t look at all the details of the fields and capabilities, you may find out about shortcomings after you’ve made the purchase. The shortcoming may affect a feature critical to your operation. There are so many aspects of a system that you may review as well: recipe cards and costing, physical inventories, banquet event orders, etc. This requires more than just sitting in on a one-hour demo by the sales representative. Your decision needs to be made on data. The more research and vetting you do, the more satisfied you will be with your decision.

Involve the Team

To make the demo and vetting a success, involve all personnel that will be affected by the system. Identify any personnel whose hands are actually going to be touching the system and entering data. They may have some questions that come up as a true user that may not otherwise come up during the demo.

Maintenance Contracts and Customer Service

Understand the terms for all other services under an ongoing contract. It is not unusual that these contracts can last several years with a monthly subscription charge attached. Not only should you understand the service, but also how it is being delivered or how it is accessible to you.

Training Programs

Training on the new system is another critical area to vet. Today there are so many methods and usually some additional costs involved, especially for live on-site training. With live on-site training, you should anticipate travel and lodging costs as part of the package. Training in some cases is conducted via webinar and not live. Make sure to ask if there is a user’s manual available, and if it’s in hard copy or electronic form. This will allow you to possibly find an answer to an issue before contacting customer service for support. In many cases, this alone tells you something about the company you are vetting. If they have their systems and processes documented, you should become more comfortable about working with them as a vendor. There will probably be some additional costs for their time to train your personnel, so anticipate it. Review if these costs are based on the number of attendees or for total time spent.

Sunk Costs Versus Subscription Models

When costs are discussed, we need to know the total purchase contract that includes subscription model services (standard monthly fees) versus those items that require an amount paid up front, or sunk costs. In most cases, the sunk costs are those dollars going out the door for computer hardware and equipment up front. The subscription model is usually related to the computer software use and, in many cases, hosting. You should confirm how the subscription model is being assessed. It could be based on each physical location or the total number of actual users on the software. Identifying this could assist not only in your budget for the capital expenditure, but also could potentially identify who will eventually have access to the system.

Ask for and Contact References

Don’t be afraid to ask for existing customer references. It is your opportunity to interview a true user of the product, and you should take advantage of it. A prospective vendor should be able to provide you several existing company names and contacts of existing users that are similar in size and operation. If they don’t or cannot do this for you as a prospective client, a huge red flag has been raised.

The vetting of systems is a critical juncture for any company and should be taken seriously. In most cases, there is a substantial amount of invested cash at risk. Due to this, there is a lot of emotion around the decision, before and after. If the proper research and effort is not made, the cash that is dedicated to the purchase may not provide you with the return and efficiency that you expected. At the end of the day, systems that you purchase should drive the bottom line.