Difference between Successful and Unsuccessful Business Owners and Role of Restaurant Management System (RMS)

Use of Restaurant Management System (RMS) in making fruitful strategic decisions

The common myth that circulates around social groups is that success is dependent on the amount of financial capital available for the investment. Up to some extent, it is true but analysis of the complete journey of an entrepreneur usually reflects that different kinds of other factors also contribute towards the achievement of complete success. A common question is; what kind of other factors?

In the present globalized era or we can say, technology-driven era, every business is dependent on factors that are directly or indirectly linked to the technology. Let’s take an example. Suppose individual A has an innovative idea about the Chicken Biryani Dish and an investment of Rs. 1 million. Individual A decides to open the Chicken Biryani at a good location, where it is expected that a total of 100 potential customers will buy the product of Chicken Biryani for Rs. 200 per plate. Till now, the above-assumed situation looks interesting because individual A is expected to achieve a high profit in one month.
Let’s do the math, one Biryani plate is equal to Rs.200, potential customers are 100 per day, then the monthly revenue will be Rs. 600,000 (Rs.200 per plate * 100 potential customers * 30 days per month). As a reader, you must be thinking that individual A has done great planning and successfully achieved a good revenue of Rs. 600,000 per month. Sorry if you feel offended, but your observation and conclusion are wrong about the individual A.

As a reader, you are looking at the bright side of the story but there also exists another side of the coin. Individual A may have generated a revenue of Rs. 600,000 per month but it’s not the net profit. Expenses like the cost of goods sold, selling and distribution, administration, and many other expenses will be deducted from revenue to determine the net profit. Just look at the inflated prices of the basic utilities like electricity and gas in Pakistan and along with this, rents of the restaurant and café at different locations have increased in recent years. So, overall, it is expected that the individual A net profit margin will be 20%, such as; net profit of Rs. 120,000 (Rs. 600,000 * 20%). Therefore, a net profit margin of 20% after paying for all expenses is not high in an industry like food.

Now let's discuss individual B or I would say the individual with an innovative approach. Individual B also has an investment of Rs.1 million, offers the Chicken Biryani Plate at Rs.200 in the initial stage to 100 potential customers per day. The scenario is the same but individual B supposedly earns revenue of Rs.800,000 from the same location. Now the question arises, is it that simple for individual B to earn higher profit from the same investment as compared to a competitor, individual A? Yes, but it requires some planning and a small investment on a technology-based tool.

Let’s say individual B invests Rs.1 million to open a Chicken Biryani restaurant at the same location but along with this, also invests in a Restaurant Management System (RMS) offered by Agile Leaf or any other company. Now the additional invested capital is just several 10,000s but the rise in revenue per month is by Rs.200,000 to Rs.800,000. Another scenario can also generate, such as; individual B earns the same revenue of Rs.600,000 but its earned net profit margin is 40%.
Let’s now analyze the ways through which individual B is successful to generate additional revenue of Rs.200,000 per month or achieves a higher net profit margin of 40%.

Successful Business Owner and Role of Restaurant Management System

The Restaurant Management System (RMS) offered by Agile Leaf POS is fully compatible to collect real-time data about the sales and then present it to the user in the form of visuals and graphics. The customization feature enables the user to adjust the RMS as per the requirements of the restaurant environment. As discussed previously, individual B can deploy the RMS to identify at what time of the day, most of the customers visit the location or at what time of the day, customers use the takeaway or free delivery option.

Suppose, the analysis of the data collected through the RMS helps to identify that during the lunchtime, most of the customers prefer to use the option of free delivery and at dinner time, customers in the form of groups visit the restaurant location and prefer to dine in. So, individual B can make a strategic decision based on the data collected. There can be several things that can be done to make the most of this information.
The strategic decision can be like; mostly professional executives and student visits at the lunchtime; therefore, individual B can offer the plate of Chicken Biryani at a discounted plate of Rs. 150. Discounted price attracts more customers from a market segment based on students and professionals. Therefore, it is expected that potential customers may rise from 100 to 150 per day.
This kind of strategic decision helps to achieve an additional revenue of Rs.200,000 per month. On the other side, individual B can also take another strategic decision, such as; the restaurant will only offer food through free-home delivery at lunchtime and dine-in or paid delivery option at the dinner time. This kind of strategy reduces restaurant total expenses and helps to achieve a net profit margin of 40%.
Therefore, the discussion is concluded as; data-driven strategies based on the collected information are important to become a successful business owner in the competitive food industry of Pakistan and perhaps every other industry as well.