How exception-based reporting can help restaurants

In any industry, information is power. But simply gathering data points isn’t enough. Learning how to understand that information, pinpoint key inputs, and wield facts to fuel decision-making is the real power. Exception-based reporting in the restaurant industry helps owners and operators identify irregularities and highlight patterns and detect loss areas that require extra attention.   

Exception-based reporting in restaurants   

Much like the phrasing suggests, exception-based reporting looks for variances in data patterns. In restaurants, that might mean identifying regional or by unit anomalies: 

• Excessive Point-of-Sale (POS) voids 

• Larger than normal or excessively frequent discounts 

• A significant rise or drop in sales 

• Inventory inconsistencies 

• Discrepancies between sales totals and register totals 

• Time clock manipulation 

Implementing exception-based reporting  systems 

In most cases, restaurant operators use reports generated by their POS and Back-of-House (BOH) systems to review sales and operations data and find exceptions. Armed with the results, you can then act on red flags by investigating video feeds, adjusting policies, creating new layers of oversight, or removing or retraining flagged team members. But before you can act, you need to integrate exception-based reporting into your current operational setup to identify each anomaly. Here’s how: 

• Define your objectives. Decide which areas you want to focus on. You might start with a known problem area, such as sales discrepancies, or focus on everything that affects one sector of your operations, such as staffing. 

• Select your metrics. Specify what data points you want to track and what numbers qualify as an exception. For instance, a labor objective might be best supported by tracking overtime and timecard anomalies. You might then set the report to identify clock-ins/outs logged more than 15 minutes before or after the scheduled shift time. 

• Leverage the right tools and tech. More on this in a moment, but you cannot effectively and efficiently adopt exception-based reporting without using the right software and management systems. 

• Train your team. Managers should know what exceptions they’re looking for and how to respond. All employees should be aware of current policies and how they can report legitimate exceptions that will eventually be flagged. 

• Review, correct, adapt. Set up a process for reviewing reported exceptions and taking corrective action as needed. Think short-term and long-term. It’s important to stop losses in their tracks, but it’s equally vital to identify recurring problems and learn from those exceptions to adapt policies for the future. 

Technology and tools for exception-based reporting   

The most important piece of the exception-based reporting puzzle, at least in terms of technology, is a system that can collect and organize detailed data from across multiple units and from a variety of systems. This should ideally include everyday sales transactions as well as “extras,” such as loyalty card swipes and gift card usage, and operational transactions such as drive-thru times, video monitoring, kiosk sales, and much more. 

You may also want to integrate data from: 

• Inventory management software that supplies data points about inventory levels, ordering patterns, and waste. 

• Labor management tools that closely monitor labor costs, employee schedules, overtime trends, and staffing levels vs. customer traffic. 

• Managerial software, such as loss prevention software for restaurants that acts like a team of detectives to analyze ticket-level detail about sales and help mitigate loss across multiple outlets 

• Security cameras, pairing ticket-level details with live streams from the time that losses occurred (or may have occurred) 

You might also benefit from other tech-driven tools that can assist with data analysis and pattern identification. AI and machine learning algorithms can take in enormous data sets and act on fine-tuned prompts to spit out highly precise reports and even make recommendations. Other platforms aggregate data from all sources to give you a single-dashboard overview of your business so you can make an informed decision and take appropriate action.   

Best Practices for Maximizing the Benefits of Exception-Based Reporting 

To get the most out of exception-based reporting, adopt standard practices across your franchised units and avoid pitfalls that could easily undermine your restaurants’ bottom line. 

DO: 

• Stick to SMART goals (specific, measurable, achievable, relevant, time-bound) and choose your metrics accordingly. 

• Know your baseline for each metric and which variances are acceptable. 

• Adjust regularly. This task is never finished and shouldn’t run without oversight and periodic review. 

• Invest in ongoing training to ensure BOH and POS transaction inputs are correct and that mistakes, such as using the wrong type of void or comp, aren’t accidentally skewing your transaction data. 

DON’T: 

• Try to fix everything at once. Instead, focus on your biggest or easiest-to-tackle area of loss first. 

• Set unrealistic goals. That includes making your thresholds too low or high, which could generate too many exceptions. 

• Silo your data systems. It’s better to bring everything under one dashboard, which can offer context and a more comprehensive view. 

• Take corrective action until you investigate all possible root causes of an exception. 

Key takeaways for restaurants considering exception-based reporting 

 Whether you’re trying to trim costs or improve customer service and sales trends, access to accurate and reliable data can help optimize every aspect of any business. Exception-based reporting can be transformative for restaurant owners. With so many tasks to juggle, knowing you have technology and a proven system on your side can help you deftly navigate the ever-evolving landscape of restaurant management.