How IT Outsourcing Can Relieve Today's Restaurant Industry Struggles

12/21/16 5:10 PM / by Alvaro Prieto

Alvaro Prieto

If you have ever worked in a restaurant or owned one, you are probably well aware of the fact that profit margins can be extremely low. 

how-it-outsourcing.jpgAccording to industry experts, in fact, average profit margins can be as small as three to 10 percent.  While more successful restaurants have been able to achieve margins of 20 to 30 percent, the inherent costs of running and maintaining a restaurant generally means that margins won't get much higher than that.  Newcomers to the industry that don't already know this will have a hard time being successful, as we continue to see failure rates over a 10-year period of around 70%.

There are many ways to increase profit margins in your restaurant, including reining in food costs, and lowering overhead related to operations, including staffing, and electricity and water consumption.  Today, more than ever, IT costs end up being a major drain on your restaurant's budget.  Take the rise of online ordering, for instance.  Increasingly, customers want to be able to order or make reservations online, and if you aren't equipped to do so, your customers may very well go elsewhere.  The trouble is, the vendors that supply those technologies and services often take a big cut out of your sales - sometimes up to 13.5 percent - which on its own, can exceed your overall profit margin. 

The fact is, IT is the cornerstone of any modern business, but many restaurants don't have the budget to invest in IT infrastructure required to run the business, or qualified staff on hand to make sure it's working right 24x7.  It's typical to find a lone "cowboy" running IT that is spread too thin, and simply doesn't have the proper expertise.  Often, the business is being run on a potpourri of different technologies that are poorly configured, and with no clear inventory or documentation available to reference when a problem arises or systems need to be updated or restored.  As you can imagine, inefficient and unstable operations like these will make IT itself a drain on a restaurant that is already facing an uphill battle to achieve a sustainable profit margin.

If this situation is all too familiar, you should consider outsourcing your IT to a service provider with specialized expertise in the restaurant industry.  In doing so, you can significantly lower labor costs on expensive IT professionals in-house by leveraging outsourcers with large and experienced teams on hand 24x7x365.  Outsourcers that have strong relationships with technology and telecommunications vendors can also negotiate better deals on POS systems, licensing agreements and required bandwidth capacities.  An outsourcer can also help you save on maintenance and support costs by proactively configuring redundant and standardized systems, and providing clear documentation and practices.  On the help desk side, you should look for a partner that can provide services 24x7x365 through experts like those in our Costa Rica-based customer support center.  In addition, you only pay for the services you use - support tickets, for example - and are guaranteed by strict SLAs.

In the end, the restaurant business is highly competitive and an extremely risky one to get into.  Most nowadays rely on sophisticated IT infrastructure to meet the demands of today's tech-savvy and increasingly finicky customers.  By working with an IT outsourcer, you can lower costs, streamline overall operations, reduce or eliminate potentially detrimental downtime, and ultimately focus on growing your core business, which is satisfying your patrons time and time again.

Alvaro Prieto

Written by

Alvaro Prieto

Alvaro is one of Auxis’ founders and leads our IT Services Practice, including both Infrastructure Transformation and Application Integration & Development. He brings over 25 years of technology and business experience, helping CIOs across multiple industries achieve Peak Performance in their IT operations through the design and implementation of agile operating models, processes and technologies. Some of his specialties include IT Service Management (Service Catalogs, ITIL, SLAs, Financial Management), Cloud and Data Center Transformation, large Software Implementations, among many others.