7 Things to Look for in Restaurant Management Software

Well folks, the good news is that there are comprehensive, all-in-one (or at least most-in-one) solutions to help manage your restaurant and save you money. But how do you know what to look for? Which features matter for your specific restaurant, and most importantly, how much daily lift is it going to require from you and your team? This guide covers all that and more.

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1. Invoice Management and Categorization

This is at the top of the list because it is the most important component and will impact everything else your RMS can do. Information from your invoices power nearly every other function in your restaurant. No invoices = no product expenses = no idea what’s happening financially.

There are two key things to think about when it comes to how an RMS tackles invoices and invoice processing. The first thing is how you input your invoices. Do they require you to manually enter the data into their software? Can you send in a photo? How often are you allowed to input them? Are you charged per invoice?

In our experience as restaurateurs, most of the time invoices got put into the system all at once at the end of the period. Three to four long, coffee (or other energizing substance)-fueled hours after an 18-hour shift and presto, the invoices were entered. Clearly, there are some drawbacks to inputting them this way. Number one being human error. Number two being it wastes the time of people who could be doing something more productive (like taking care of guests or, I don’t know, sleeping?). In short, it’s less efficient and way more mistake prone.

To combat this, choose an RMS that inputs this information for you automatically (like scanning it from a picture), and lets you submit the invoices daily. It also is a good idea to make sure any discrepancies are double-checked by an actual human before they’re uploaded into your system. Invoices get scribbled on or spilled on, and a tomato can be named a tomato about a million different ways. Who makes sense of these inevitable discrepancies, you or the system? Unless you want to spend hours double-checking invoices, look for a platform that employs real people, not just tech, to help make sense of the madness. Not all RMS platforms are created equal so understand the difference, and recognize that if you go the tech-only route, there will still be manual reconciliation on your part even though the invoices can be submitted digitally to begin with.

Information from your invoices power nearly every other function in your restaurant.

Your RMS should also be able to automatically categorize new items that show up in your orders without making you map them yourself, meaning if you order goat milk for the first time, your RMS will know this should be categorized with your other dairy products without you having to tell it that.

The second thing to think about when it comes to invoices is how that data is stored in the system itself. Many products out there today use machine learning to recognize and remember items from specific vendors that you order all the time, meaning those invoices get uploaded easy breezy, no problem. Let’s say you buy smoked salmon from ProFish every week, and it usually comes from Ivy City Smokehouse. The RMS stores the item based on what the invoice from ProFish calls it, “Salmon Smoked Ivy City”. What happens if next week ProFish decides that smoked salmon from Fenwick is looking a lot better, and they sell you that instead? For you, it doesn’t matter. Smoked salmon is smoked salmon (for the most part). If your RMS categorizes by vendor item, it’s going to show up as a new item (“Salmon, Smoked Fenwick Sliced”) on your inventory instead of being included with the Ivy City smoked salmon you still have on hand.

We know that categorizing by product and not vendor item is a crucial component of being able to understand how much smoked salmon you actually have, and that categorization can be made either by your RMS (ideal) or you and your team (not ideal).

Make sure your RMS categorizes your invoiced purchases as the same product, regardless of vendor, not as specific vendor items for you. This way when you’re doing inventory counts, for example, you’re counting any and all smoked salmon in your walk-in, not looking for every single brand of smoked salmon and counting that way, or spending extra time categorizing yourself. The goal of your RMS should be to save you time, not waste more of it.

Chef Geoff’s- Washington, DC. Information from your invoices power nearly every other function in your restaurant. Look for an RMS that processes invoices effiecently and accurately. 

2. Recipe & Plate Cost Management

Following invoices on the road to knowing what’s going on profit-wise in your restaurant, is step two: recipe and plate cost management. There are quite a few free plate cost calculators available online, which is helpful if you want a general idea about what you should be charging per menu item. But in our experience, it’s just not enough for restaurants and takes an unsustainable amount of upkeep because food costs are never static. So, what really matters for knowing your plate costs? Two things: the current prices for the products used in your dishes and how much of those items make it off the pass and onto the table.

Your RMS should be able to connect your most recent invoice prices per product to your recipes and update them in real-time. (See? We weren’t kidding about invoices being step one.) Because we love an example, let’s say you did plate costing for your bagel with lox brunch offering last month and calculated that the plate costs $3.35 per serving and you sell the plate for $18.50 with roughly 18% food cost. Suddenly another tanker gets stuck in the Suez Canal and there’s a massive salmon shortage! Price per pound of smoked salmon has skyrocketed from $16/lb to $35/lb. The horror!

Unless your RMS automatically updates your recipes with up-to-date invoice prices, you’d have no idea that the plate cost is now actually $7.30 per serving, making your food costs nearly 40%. (Do we even need to tell you that’s not good?) Real-time recipe and plate costs are essential to staying profitable.

You’ll need to input all your recipes into your RMS (or at the very least just the ones that use high-priced ingredients you want to track) to be able to calculate the plate costs. We’re not going to lie to you, this takes some lift when you’re first getting going. No way around it. But (!!) it’s worth it.

Finding an RMS that makes this process easier on you, like being able to segment your recipes into categories such as prep items, menu items, or having an entirely separate section for beer, wine, and liquor is definitely worth it. Separating items this way helps if you have multiple menu items that use the same prepped food, like homestyle potatoes. After you input your potato recipe and categorize it as a prepared item, you can create the other plates that use those tasty tubers by adding your prepared homestyle potatoes as an ingredient each time you cost out a new menu item that uses them. Every ingredient is accurately cost and more importantly it saves you a lot of time.

3. POS & Accounting Integration

Chances are if you’re operating a restaurant that is not cash-only, you already have a POS and/or accounting system in place. POS systems streamline things like communicating orders from the wait staff to the kitchen, tracking sales, processing credit card payments, labor and payroll (employees can clock in and out on them), and can even track customer trends like which menu items are your top sellers. An RMS also connects all of this data to your accounting system, and automates sales entries saving you or your accountants hours of manual work. Data from a POS can also provide insight into your actual vs. theoretical food usage. For example, you can compare how much ground beef you’ve sold with how much you have on hand based on your inventory counts. Look for an RMS that calculates the difference between the two, and gives you a theoretical vs. actual food usage amount so that you’re aware of where excess waste could be happening in your kitchen and can accurately answer the age-old question of where the beef is.

The amount of data that POS and accounting systems provide a RMS cannot be understated, so it is super important to make sure whichever RMS you choose integrates with the POS/accounting system you have in place. This can be an extra pain if you have a legacy system, or have a retail POS instead of a restaurant-specific POS. POS integration with your RMS should also provide you with P&L reports emailed to you each night so that you know exactly how yesterday went before you even get out of bed in the morning.

Open Road- Falls Church, VA. The amount of data that POS and accounting systems provide a RMS cannot be understated, so it is super important to make sure whichever RMS you choose integrates with the POS/accounting system you have in place.

4. Labor Management

If you want to understand the true profitability of your restaurant, you need to incorporate labor data and payroll. Payroll is usually done every two weeks, or four depending on your pay periods, which means you really have no idea if you’ve overstaffed until the period is over and it’s too late to do something about it. An RMS can help with this if it integrates with your payroll and labor management.

The first thing to look for in an RMS with labor management is how often it pulls data from your POS or labor software. Daily pulls mean you can receive up-to-date and accurate P&L reports allowing you to stay on budget with labor costs during the period, not after. Meaning you can make data-driven staffing decisions in real-time.

Another important aspect to consider is how your salaried employees are incorporated into periodic labor budgets. Hourly employees are pretty self-explanatory, as they will only be paid for hours worked on a given day. Salaried employees will be paid the same amount over time regardless of time worked, which impacts your budget too, so it’s important that they are also tracked in the labor management system. Be sure that your RMS can also implement different user permissions so that payroll information stays confidential as necessary.

5. Ordering & Payment Management 

Imagine a world where you could place new orders while seeing what you have on hand and where you’re at in your budget in the same place. Not on multiple clipboards or in 17 different email chains. Kind of amazing, right? This can be done with an RMS that offers EDI, or Electronic Data Interchange, which is just a confusing but fancy way of saying electronic or online ordering.

With EDI, you can order directly from major vendors within the RMS system and see current prices and product availability. Look for an RMS that generates vendor ordering guides based on past invoices that are set up for EDI, and you will no longer need to send separate emails or make phone calls every week to make orders. Even better, when you need to track those orders, you don’t have to sift through different threads just to see what you’re expecting. This is particularly helpful if multiple people make orders for your restaurant, as you can see every order made in the same place. You’ll also want to make sure that the order guides are customizable so you and your team can remove one-off items, and so you can set limits or alerts so you automatically know when items are getting low on stock.

When it comes to using your RMS to pay your invoices, look for options that are included in your base RMS cost and won’t nickel and dime you per invoice.

Going hand in hand with placing orders is everyone’s second favorite part of owning a restaurant: paying bills. (If you were curious, everyone’s first favorite part is taking inventory.) There are a few options restaurateurs have when it comes to paying invoices ranging from checks that are either handwritten or printed from an accounting system like QuickBooks, credit cards either on file with vendors or in person, using a payment platform like Bill.com, or using your RMS.

When it comes to using your RMS to pay your invoices, look for options that are included in your base RMS cost and won’t nickel and dime you per invoice. For high-volume restaurants, you can end up paying hundreds extra a month just to pay your bills, which is silly. Another factor to keep in mind is being able to make partial payments. Say you know that you’re going to get a $200 credit on an order, or only need to make a 60% deposit on a big maintenance bill. With partial payments, you don’t have to pay the full amount on the original invoice which gives you the freedom to manage your budgets in a way that’s best for you.

6. Budgets & Performance Management

Without an RMS, many restaurants fly blind throughout the period when it comes to how well they are sticking to their budget. This is traditionally because invoices, payroll, and sales data are processed together at the end of the period showing you how well the period went only after it’s already over, and you’re halfway into the current period. RMS’ solve this issue by showing you where you currently stand financially in real-time. The only way to make sure the information is up-to-date and accurate is with each component mentioned above being integrated along with the sales data from your POS.

Look for an RMS that can show this information both by dollar amounts and by percentage. It is also a good idea to find an RMS that will send you customizable alerts when high-volume or priced items go up in price. Knowing where you stand budget-wise in the middle of the period empowers you to make actionable choices to stay profitable. Multi-unit restaurant groups or concepts should also make sure that their RMS can show how different locations’ budget performances compare at the same time. It costs far too much to not be aware of financial issues as soon as they start to occur.

7. Inventory Management

We saved the best for last, everyone’s favorite, inventories. Depending on functionalities, an RMS can actually make inventories a little less painful (or at least a lot more worth it). Look for an RMS that takes information from your invoices to create customizable count sheets. There are a few different ways that the count sheets can be customized to make taking inventories easier. The first way is being able to adjust what metric the count sheet uses to match how your team counts products. Another customization is being able to create multiple sheets for different sections of your restaurant as necessary (kitchen, bar, etc.). Your inventory functions should also allow for multiple users to count simultaneously and have both mobile and print options.

When it comes to making inventories worth it, your RMS should be able to update your cost of goods on hand based on your most recent invoice prices. This means when you count how many pounds of chicken breasts you have on hand, your total costs are based on what you last paid for them, not what you paid three months or a year ago. This will give you an accurately updated look at what your food costs are within your budget in real-time, so it pays to do inventories more often. The inventory counts should also be integrated with your ordering, so that you can see when you’re getting low on specific items and can order them accordingly in the same platform.

Lastly, your RMS should suggest what you theoretically should have on hand based on sales data from your POS. This will never be entirely accurate, because food waste is difficult to track as it varies depending on who’s cooking and the quality of ingredients, but at the very least, big variances should alert you that something is off and should be investigated further.