Chicago ’98: What’s Cool and What’s Not

By Robert Wagner, CPA

The National Restaurant Association’s Restaurant Hotel-Motel Show in Chicago is impressive for its sheer size and breadth. It is all things to all operators – from pizza to quick service to fine dining and stops in between. The show is huge with 4 ½ miles of aisles packed with every imaginable vendor. Taking in the show can be a mind-numbing, foot-punishing experience. However, it is the single best way to see the current offerings from vendors to the foodservice industry.

At this year’s show from May 16-20, there emerged a picture of the trends in restaurant management systems. A management system is that loose collection of hardware and software that collects, sorts and records restaurant sales, payroll, inventory and accounting data. A good management system provides the crucial data such as daily sales, cost of sales, inventory levels, and weekly P&L’s needed to run a restaurant.

Typical Restaurant Management System

P.O.S. System(Point of Sale) . ................................................. Back Office System...........................Accounting System

Most restaurant operators try to cobble together a management system using P.O.S. terminals, computer spreadsheets and inexpensive accounting software. That system can work fine for one or two stores. But as a company adds stores, it soon outgrows its homemade management system. Never fear. There is an army of vendors anxious to assist you when you’re ready for a new, improved management system. Like any technology-driven business, these products and vendors are constantly evolving and reinventing themselves. A survey of the Chicago show turned up the following trends:

Computer Operating System – DOS is dead and Windows 95 is cool. But the "real" operating system – the one we will all be using in the next few years – is Windows NT. For improved security features and software stability, NT is the one.

Computer User Interface – Text-based systems are out. Graphical user interface (read Microsoft Windows) is in. This trend applies to P.O.S. terminals, back office software and the accounting system.

Point of Sale – Everyone is pushing color touch screens. Monochrome screens and keypad data entry is out. Steve Fox of ARC, a back office system developer, predicts color touch screens on every terminal – including kitchen and back of the house – in the next few years.

Choice and Open Architecture – These were the most overused and misunderstood buzzwords of the show. Each vendor from one end of McCormick Place to the other reverently and earnestly uttered them. Every vendor asserted that their software and hardware was modular allowing a restaurant operator to pick and choose the component parts that best suite his/her needs. To achieve this nirvana of "customer knows best" virtually everything at the show is based on Windows software and Pentium PC’s. So the savvy operator can choose a P.O.S. from one company and a back office system from another and expect them to work together perfectly. Right? Not true! This is one time actions may never catch up to the hype.

Vertical Integration – While vendors talk customer choice, their behavior belies a different approach. P.O.S. vendors are buying or developing back office systems as fast as they possibly can. Already ReMacs, Aloha, Squirrel and Micros are offering (or promising) sophisticated new back office packages that tie into their P.O.S. hardware. You can bet the other vendors won’t be far behind.

Weekly P&L’s – Weekly profit and loss statements at the store level have been around for a long time but the new back office programs make the process more efficient and accurate. Weekly P&L’s are a great tool for keeping managers focused on sales, food cost and payroll where they can have the greatest impact. Weekly P&L’s will soon be part of every serious back office system.

Internet – In a few years, use of the Internet by restaurant companies will explode. One of the first serious applications will be for ordering, vendor invoicing and bill payment. For example, a restaurant will order on-line and receive almost immediate delivery. The vendor will then post the invoice on the Internet where it can be downloaded by the restaurant’s bookkeeper, reviewed and posted for payment. The advantage to the operator is faster shipment, fewer out-of-stock items and – here’s the real time saver – automatic posting to your accounting system. Bookkeepers will be freed to focus on more important issues. Much of the software shown (or promised) in Chicago is designed with the Internet in mind.

Constant Inventory Updates – Today only the largest operators have accurate daily inventory levels and food costs. The latest back office systems constantly track inventory and foods costs. Such systems immediately decrease inventory the moment an item is sold and increase inventory when product is received. With the new back office systems, even smaller restaurant operators will have immediate access to inventory levels and cost of sales.

At the Chicago show one could just glimpse a future where restaurateurs will realize the true promise of computers and software as tools rather than obstacles to efficient and insightful management of their businesses. Here’s hoping the rewards will be worth the wait.

Robert Wagner the managing member of Robert Wagner & Company, LLC, CPAs. The firm provides tax and accounting services to restaurants, bars and hotels. He can be reached at 404-874-7000, fax 404-874-1132, email: rwagner@bellsouth.net.