Technology in Restaurants Invoicing Unlocks Key Margin-Boosting Data

Amid ongoing economic challenges, technology in restaurants’ line-item invoice data can help improve buying decisions.

This, according to restaurant management software company MarginEdge, which automates invoice processing and announced a $45 million Series C fundraise round last week.

On the heels of the cash injection, CEO Bo Davis told PYMNTS the company plans to expand its network of vendors and restaurants in a move to digitize the process end-to-end, whereas historically the business has been bogged down in pen-and-paper accounting.

“If you think about the restaurant, it’s got, say, 25, 30, invoices coming in. They’re buying on average, 500-600 different things — from napkins and spoons, to bleach to tuna,” Davis said. “All of those items’ prices are changing. And so, [we] extract the line-item data — rather, your percentage costs, which is how restaurants traditionally have managed their food costs, they can see item by item [where] they need to focus.”

Indeed, with food prices rapidly rising, these kinds of capabilities can be critical. United States Bureau of Labor Statistics (BLS) data reported Tuesday (Dec. 13) that restaurant prices are up 8.5% year over year, and consumers are feeling those increases.

Research from PYMNTS’ September study “New Reality Check: The Paycheck-To-Paycheck Report: The Inflation Edition,” a collaboration with LendingClub, which drew from an August census-balanced survey of nearly 3,500 U.S. consumers, found that 51% of consumers noted “very or extremely considerable” increases in the price of food from restaurants in the previous 12 months.

Read more: New Reality Check: The Paycheck-To-Paycheck Report: The Inflation Edition

Across back-of-house tech providers, Davis noted that the overwhelming trend is an “absolute move towards trying to simplify and lower labor cost,” as restaurants struggle with retention and wage inflation.

Indeed, nearly half of restaurants are having trouble hiring and retaining employees, according to data from the 2022 edition of PYMNTS’ “Restaurant Readiness Index,” which drew from a survey of 519 managers of quick-service restaurants (QSRs) and table-service restaurants. The study also found that about one in three restaurants’ level of service has decreased as a result of staffing issues.

Get the study: Restaurant Readiness Index

Additionally, research from the October edition of PYMNTS’ Restaurant Digital Divide report, “The 2022 Restaurant Digital Divide: Restaurant Apps And Websites In The Spotlight,” which draws from a census-balanced survey of nearly 2,000 U.S. consumers, confirms that the majority of consumers have been feeling the effects of restaurants’ labor challenges. In fact, 57% of restaurant customers who primarily order dine-in believe that the restaurants that they visit have become increasingly understaffed, as do 71% of pickup customers and 68% of delivery customers.

Read the report: The 2022 Restaurant Digital Divide: Restaurant Apps And Websites In The Spotlight

Davis argues that digitizing back-of-house payments can also help prevent restaurants from losing profits to fraud, leveraging the learnings of other industries to do so.

“The amount of check fraud that occurs in the restaurant business [in the] traditional paper process really is ripe for disruption,” Davis said. “We’re applying what has happened in lots of other verticals to the restaurant business.”