How is digital technology cutting cost in the F&B industry
restaurant digital technology

In a middle class, family it’s not uncommon to compare an incredibly wasteful expenditure to having tea in a 5-star hotel. The analogy means that a milk tea made of water, sugar, tea leaves, and ginger available at a tea store at 5 to 10 rupee is often sold at INR 500 in a 5-star hotel. Eating out in India too often is rebuked as an extravaganza, with the comparison being made the same item can be made at home at a much cheaper cost. 

There is often a myth that the restaurant industry keeps an exorbitant profit margin on the product they sell, but only F&B business owners know how far this is from being true. The restaurant industry, especially a newly opened unit, has to struggle with the ever-increasing cost eating into profit margins.  

Cost for an F&B business includes renting the premises, obtaining the list of licences, interior designing, menu designing, branding (logo, registration of copy, rights), the cost of recruiting staff, etc. In addition to the said cost, additional expenses include sourcing raw materials, storing this material, arranging logistics required for food ingredients, and the workforce to handle the supply chain. In addition to the above, food businesses incur losses sometimes due to over-stocking, pilferage and substandard goods. 

If we consider the operation of an F&B business in India, the approx expenses of the components will be as below:- 

Cost of ingredients and raw materials – around 30% 

Staff salaries and 20 to 25%

Rent of the premises – 10 to 12%

Operational cost like electricity – 5%

Overhead expenses – 10%

Profit percentage – 15 to 20%

When it comes to new business, this 15 to 20% of the profit is diverted to recovering the cost of setting up the business. 

For a business to be successful, it has to be price competitive without compromising quality. 

Technology can provide solutions to many of the perplexities faced by the F&B industry in optimising resources. The main ingredients of COGS (cost of goods sold) in the F&B sector are labour, purchase, rentals, marketing, utility etc. There is a limit to controlling money spent on components like rent, yet it’s possible to manage purchases that form fully variable costs by experience and expertise. The best way to manage COGS is to have strong vendors as your channel partners.

SupplyNote provides a platform for reliable vendors from which restaurants can choose the supply vendor as per their service standards. This platform has options for F&B business across verticles.

Inventory management has long been a thorn in the flesh of the Restaurant and Beverage business. Technology can help businesses reduce wastage and fix supply chain delays; this is where end-to-end solutions providing platforms like SupplyNote comes into the picture. SupplyNote operates as a software-as-a-service-based (SaaS) platform for restaurants and suppliers, helping them connect.  

There are still some in the F&B industry and vendors channel partners who are hesitant of using technology but doesn’t something new always evokes scepticism. As the digital revolution sweeps worldwide, we must acknowledge that lack of technology will become the future liability. 

Platforms like SupplyNote has democratised the process of doing business for the F&B industry and its suppliers. It gives the industry the ability to choose from the number of quality supplier options; on the one hand, it also provides more suppliers with an even play on another. 

As technology keeps on evolving as per customer requirements, so will we at SuppyNote. Your feedback and suggestions have helped us come a long way.  

For those using our platform, your feedback helps us grow. For those who have not used us, what’s stopping you… do book us an appointment with our sales team. 

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