The Affordability of Technology
By Matthew Starobin
The question we hear most often is "can I afford technology?"
It's really two questions wrapped up in one. The actual questions are:
1. Can I afford the dollars?
2. Can I afford the time?
These are important enough to cover in separate articles. By the way, I'll limit this discussion to back-of-the-house software (like inventory control, recipe/menu costing, etc.) because the front of the house is more specialized, requires hardware, and costs much more.
So, the question is can you afford the dollar investment in technology. Now remember that in the first article I told you that my audience is independents and small multi-unit operators. Therefore, I won't go into ROI equations and breakeven analyses. I don't understand them either! Still, this is a business decision, and represents a strategic, long-range commitment.
Here is a breakdown of the solutions that are available, the costs, and the potential pitfalls:
Spreadsheets/do-it-yourself: The cost is zero dollars (the reward!), but mistakes can happen, and the results are usually simplistic. Fine for counts and extensions, but anything more, is too big a stretch.
Custom programming: An expensive alternative. This is usually cost prohibitive unless you have a huge R&D budget.
"Off-the-shelf" software: These are "shrink-wrapped" programs that address specific needs. There are a number of available products on the market, ranging from several hundreds to thousands of dollars. What you don't get is customizing for your specific requirements, or something that matches 100% of your needs. What you get is a (hopefully) well-designed program that matches most of your needs.
Vendor supplied solutions: Software that many broad-line distributors are providing for free in exchange for purchasing commitments. Generally, these solutions are centered around ordering and some light inventory control, but don't usually allow for competitive bidding/multiple suppliers. The cost is right, but the limited functionality may not be suitable for your operation.
All-in-one: These are bundles solutions from POS companies that include both front and back-of-the-house. The cost varies widely, but you can expect to spend more than $10,000.00. Can be a good choice if you're in the market for both solutions at the same time. The risk? A single supplier may not be skilled at developing both POS hardware and back-of-the-house software.
As you can see, there are many choices and a wide range of costs. You'll need to evaluate the savings that the solution delivers. Time is money, especially in food service where there's never enough time in the day as it is. So spending $1,000 to save $1,500 in food costs doesn't seem like a bargain. But spending $1,000 to save $10,000 in food costs is quite a bargain.
Finally, you need to know your operation well enough to gauge what the potential savings are. If you want to knock a few points off your food cost, you probably need some sort of software to help identify and manage problems. Otherwise, you'd already have the food cost you want!
Next time, we'll look at the time commitment required to implement technology. With a strong understanding of the dollar and time commitment, you can make a quality decision.
Matthew Starobin is President of At-Your-Service Software, Inc., a company dedicated to increasing technological acceptance in the hospitality industry. He can be reached via email (matt@costguard.com), telephone (914) 337-9030, ext. 11, or you can visit the web page at www.costguard.com.
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