Technologies That Help The Hospitality Industry Cut Costs And Increase Efficiencies
From entertaining guests and planning menus to monitoring employees, technology has dramatically changed the way the hospitality industry works today. Discover more about these key technologies and how they are re-shaping the hotel and restaurant business.
Technology has been a key driver of growth for the hospitality sector over the last decade. New technologies for jobs like real-time inventory access, seamless exchange of operational information and collation of key performance data, have transformed the hotel and restaurant business. And the biggest positive from this process has been the enhanced customer experience, leading to higher loyalty.
Thus, technology has increased profits for restaurants and hotels, and also helped in reining in costs on a long-term basis by reducing manpower and improving the quality of service.
Why technology is important?
No restaurant or hotel owner in today’s environment can afford to ignore technology. Almost every stakeholder we spoke to, talked about the crucial help technology has rendered in their growth and competitiveness. The benefits far outweigh the cost of technology.
Aroma Bakery had a problem of manpower shortages, so it opted for technology right from the production planning stage to billing. It installed CCTV cameras in its production unit to monitor employees during their working hours. The workers’ performance improved, as they put in their best efforts while being watched. To minimise wastage and maintain quality, Aroma Bakery uses a variety of other technologies too. It has imported specialised machinery for its various bakery products. It has also invested in an ERP solution for inventory management, supply chain management and other back-end operations.
“We are experiencing a good ROI from our investment on technology,” says R Ponnusamy, founder and managing director of Aroma Bakery. At Café Coffee Day (CCD), largest coffee chain, technology is used to regulate most of the supply chain operations. The company has two well-equipped roasting facilities in Karnataka.
It has installed new state-of-the-art packing machinery, which has helped in increasing the shelf life of roasted coffee beans, and significantly increased the packing apabilities and speed. Since the company has many vendors supplying it a variety of food and beverages, it has linked its supply chain to its vendors’ supply chain as well.
This has ensured the efficient flow of products and information across the chain. These efforts have helped CCD reap the benefits of true supply chain integration through lower costs, increased variety, higher sales volumes, and improved competitiveness.
Restaurant consultant, Chinmay Rege advises mid-market and budget segment hotels to reduce the ratio of employees per room. This can be achieved only by using technology, innovatively. “In the coming years, the critical success factor will be a control over costs and operating efficiency through the innovative use of technology—without compromising on the basic level of hygiene and security,” he adds.
Sajit Chacko, partner of AST Foods, which owns the popular Umerkot chain of restaurants in South India, says, “The stress of evolving customer demands and higher benchmarks being set for offerings, has led us to embrace technology. New and efficient inventory management systems, order taking systems, and machinery in the production line, have been our latest additions, and these have reduced the redundancies in various India’s process cycles.”
Identify your technological needs
Technologies are available for every function in the hospitality realm right from employee monitoring devices and point-of-sale management, to financial planning and day-to-day operational management.
The various hospitality-linked technologies can be broadly categorised under back office operations and front office requirements. Back-office technologies include software solutions for inventory management, financial reporting,menu management, security management, green technologies, labour management, data management, etc. Front office technologies mainly revolve around the point-of-sale (POS). Other solutions that can be of relevance include software for customer relationship management, restaurant management, online reservations, et al. Apart from this, online presence through the Internet, website, and social media platforms like Facebook and Twitter, help increase brand recognition.
But is adopting this technology a costly affair? Rege doesn’t think so. He says, today all technology related to hospitality is available in India at reasonable prices. Integrated software products for different needs can be availed at prices ranging from Rs 15,000 to Rs 2.5 lakhs. In such a scenario, you have to decide which aspects of your business will benefit from technology the most, and hence ensure you manage your tech adoptions within your budget.
Aroma Bakery, for instance, understood the need to deploy technology on a wide scale almost 10 years back. Since then, it has grown rapidly by investing on hardware equipment for production, and in software tools to maintain service quality.
Advising small players to do the same, Ponnusamy says, “Raw material costs fluctuate daily. We must know the production costs for each and every product and batch, to properly manage our resources. When small players begin to calculate this, they will be automatically forced to adopt technology.”
Key technologies used
Currently the most popular technologies being used are accounting systems for back office needs and the Internet, along with POS solutions for front office solutions. These systems are found in over 90 per cent of the establishments in the industry. K Ramakrishnan, president, Marketing, Café Coffee Day, says “The two key technologies we use are POS for our café operations and ‘SAP IS Retail’ for the back-end warehouse supply chain requirements. Besides, our Cafés are Wi-Fi enabled. We also use Facebook and Twitter to understand and listen to what our consumers have to say. It serves as an excellent tool to receive reviews on what we do and how we can make the café space more fun and exciting. We use these inputs to refresh our menu, look and overall feel,” he adds.
How modern restaurant technologies work?
Technology in the restaurant industry starts right from the kitchen itself. Modern restaurants use appliances that have integrated timers and digital temperature gauges, which eliminate the need for separate timers or inaccurate temperature settings. Other latest technologies used in restaurants include:
Touch screen POS: Point of sale systems now have a touch screen display to allow cashiers and servers to input orders. It automatically sends the order to the kitchen without the need for a call or a manual dining ticket. The latest POSs can even send separate dining tickets for different food preparations, for an order.
Stock and time clock management: These two components can be directly integrated in the latest POS terminals, allowing employees to clock in and out of any POS. The central computer keeps tab of the hours worked. It also allows computers to keep track of food and dry stock, based on the orders that are coming back through the POS system. It alerts the server, if a particular ingredient is out of stock.
Technology also helps accurately measure the exact amount that goes into a fryer basket or in portions/ servings. This helps in maintaining the same standards each time an order is placed.
Modern financial control tools allow managers to make balance sheets, statements of cash flow and income. There are advanced softwares available, which help the management get a clear view of the finances involved in the day-to-day running of the restaurant.
Many new technologies are also knocking at the door of the Indian hospitality industry. Internationally, these tools are already in use to improve efficiency. For instance, client server technologies (CST) offer great advantages to mid and large sized multi-property hospitality chains.
They allow owners to effectively integrate disparate systems like multiple computer platforms or software, accumulated over the years. They simplify report generation and MIS (management information system) support, making these functions more efficient. Players that are in expansion mode and are trying to overhaul their IT infrastructure can use these solutions to reduce their IT costs and improve staff productivity.
Software as a service (SaaS) or pay as-you-go services (where software such as ERP solutions are made available on demand over the Internet and users are required to pay a monthly rental based on the time and nature of use) have also emerged as another cost effective way of handling data and processes over the Internet. Here, companies can reap big dividends by effectively cutting down on their system maintenance costs.
Green technology is another option, players can look at. It helps improve sustainability in areas like energy efficiency through the use of solar power for cooking or water heating. Solid waste management, plastic and paper recycling machines, rain water harvesting, and water efficient technologies, are other green technologies. If deployed in earnest, restaurants and hotels can reap long term benefits,besides scoring high on environment friendliness and brand image improvement, among customers.
Stay updated about the latest technology
Technology is constantly changing and improving. Decision time frames are getting shorter. What is relevant today will become obsolete in three to five years’ time. So, one has to be always on ones’ toes to know about the next generation of technologies. As Café Coffee Day’s Ramakrishnan shares, “We keep upgrading our technology to support the growth of our business. Last year, we upgraded the SAP supply chain management system from version ECC 5 to ECC 6 IS retail.”
CCD, also has a number of technologies in the process of being adopted or deployed; like analytical tools, integrating POS machines to the coffee espresso machines, integrating POS devices to the Electronic Data-Capture (EDC) machine, bio-metric devices at cafés for attendance, and touch screen POS systems.
As new avenues like SaaS options, social media marketing tools and green technologies open up, it’s advisable to implement these early in a phased manner. Attending industry forums, and trawling the Internet to stay abreast with the ever evolving technological world, is necessary.
There are obvious barriers to investing in technology like the general resistance to change, lack of funds, and the inability to quantify benefits. But, if these are evaluated for the long-term benefits that technological upgradation results in –i.e., overall business efficiency— it will not just make you more competitive but will also enhance your market share and profitability.
Written by Onkar Pandey Friday, 3 December 2010 02:46