An Analysis of Business Analytics
What Are Business Analytics?
More so than other industries, restaurants faced numerous challenges throughout the Coronavirus pandemic. Diners of all sizes were forced to alter operations to maintain profitability and still comply with regulations. With only 40% of restaurants making it past their first year before the pandemic, the industry already faced numerous challenges. The pandemic only made everything more difficult. Successful owners employed a set of best practices and information technology to navigate these tough waters. Two of the more useful tools are big data collection and business analytics.
So, what exactly is big data analytics or business analytics? Data analytics is the process by which restaurants utilize data science and statistical analysis to analyze historical data. With effective information systems, owners can drill down into business data and identify patterns and inefficiencies. This helps to make data-driven business decisions that are based on fact, rather than instinct or guesswork. Throughout tough market conditions and economic challenges, restaurants utilize data analysis to achieve business success and minimize errors.
While business intelligence helps optimize data collection, restaurants need a way to further analyze data. This enables teams to forecast future events so they can use resources properly in real-time. Predictive analytics helps improve social media digital marketing, understand customer preferences, and identify waste. It also helps pinpoint new revenue streams, such as online ordering. In short, business analytics is the key to gaining control of obstacles that are outside of an owner's control.
How Are Business Analytics Used?
When utilized properly, a business analytics program can be leveraged to reliably forecast future events concerning customers. Furthermore, restaurants can use machine learning and computer science to accurately predict market trends. This helps to generate more efficient processes that result in greater profit. Here are some of the top uses of business analysis in the restaurant industry -
- Analyze Various Data Sources - Data sources may include social media platforms, POS systems, the company website, or a reservation system.
- Find Patterns Within Data Sets - Patterns help predict future trends and access insight into customer preferences and behavior.
- Monitor KPIs - Owners can assess real-time changes in patterns to centralize data and improve current decision-making.
- Make Decisions Based on Current Insights - Restaurants can use data to back up decisions, ensure everyone is informed, and improve employee performance. This helps increase overall operational effectiveness and the company culture. It can also increase profits and customer satisfaction.
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Types of Business Analytics
Though the latter is the most common use cases of master business analytics, there are four main methods to conduct BA. All four are implemented piece by piece, and the first stage is the simplest. There isn't any better or worse method; restaurants may use different ones depending on their needs. These methods include -
- Descriptive Analytics - Use of historical data to identify key patterns and trends. Restaurants can review what occurred in the past and use that information to optimize future decision-making. Requires knowledge of data mining and data aggregation techniques. Helps drill down into customer behavior and tailor marketing campaigns accordingly.
- Diagnostic Analytics - Drills down into historical performance to identify the circumstances that affect specific patterns. An analytics master uses data mining and discovery to identify the root cause of an issue and then creates algorithms to classify the results.
- Predictive Analytics - Used by industries such as health care, law enforcement, government agencies, and mainstream businesses such as restaurants and retailers. Includes the use of statistics to predict future outcomes. Requires knowledge in modeling techniques and machine learning. Sales and marketing teams may use predictive analytics to predict customer needs and opinions based on social media information.
- Prescriptive Analytics - Utilizes historical performance data to make recommendations of specific actions to take in the future. Restaurants may use prescriptive analytics to match potential menu items to customer preferences and industry trends.
The Importance of Business Analytics
The astronomical rate of technological advancement makes it challenging to keep up-to-date with best practices. The digital revolution has led to the creation of various information systems, which are transforming business operations. From managerial duties to the structure of a company to marketing campaigns, BI and BA are revolutionizing businesses. With new challenges facing the restaurant industry, the importance of analytics data and an analytics program will only continue to grow. Here are the top 5 benefits of business analytics.
- Improves Performance - Business analytics enables restaurants to drill down into what's working and what isn't. For example, an analyst may use BA to determine why inventory orders are not matching consumer needs. A restaurant can then take those findings to optimize inventory management and order top-performing items. This helps to save money, increase efficiency, and minimize waste.
- Enables Faster, Accurate Decisions - Restaurants can stay up-to-date with market trends with the help of BA. They can use insights to identify customer preferences towards the restaurant and the competition.
- Minimizes Risks - Because restaurants use data to better understand day-to-day operations, they can predict and prevent future risks. This saves money, maximizes efficiency, and minimizes unnecessary errors.
- Facilitates Innovation - Restaurants use BA to know exactly what customers need and want. This enables them to curate the perfect menu and pricing structure to match consumer needs and outperform the competition.
- Generates Actionable Insights - Restaurants can use real-time and historical data to monitor employee performance, identify weak areas, and track customer input on social media. This helps to achieve operational effectiveness and increase brand loyalty.
Advantages and Disadvantages of Business Analytics
Successful business analytics depends on how much expertise there is on the subject. Companies may prioritize big data collection, but fail to focus on quality or finding the right data sources. Analytics is a type of data science that requires an understanding of machine learning, data mining, and data aggregation. It isn't just about collecting and storing a lot of data in a warehouse. The average restaurant owner doesn't know about these subjects and needs a good analyst to help. Otherwise, he/she will make unreliable and inaccurate decisions based on faulty information. Keeping this in mind, it helps to know the other ways BA can serve as an advantage or disadvantage.
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1. Business Analytics Helps Monitor Progress of Mission
Restaurants can use data to know what to expect from their team members. For example, an owner may use data analysis to monitor patterns within absenteeism. He/she can then take these findings straight to the appropriate employees and mitigate any performance issues. This helps the restaurant stay on track with its mission and ensure customers receive top-quality service. However, owners shouldn't keep the insights to themselves. They need to continuously ensure employees are informed of any findings so they can increase their productivity.
2. Business Analytics Improves Efficiency
Marketing analytics and internal analytics enables restaurants to achieve organizational objectives. Because owners have evidence in the form of data, there's no way for employees to lie or skirt around an issue. This holds everyone accountable, which encourages a culture of efficiency. Employees can also share their insights so they can feel a part of the team and the decision-making process.
3. Business Analytics Ensures Everyone Stays Updated
Armed with real-time data and valuable insights, everyone knows exactly what is going on. With the proper set of tools, employees can easily navigate a business intelligence platform and share information. For example, employee scheduling software allows workers and managers to communicate easily about scheduling problems. Managers can see on their end who has been absent, who needs time-off, and what issues to expect in the future. When everyone is better informed, it's easier to meet the needs of both team members and customers.
4. Business Analytics Lacks Alignment and Availability
One disadvantage of business analytics is that top executives tend to be the only ones who see insights. It's sometimes hard for owners or supervisors to communicate findings with their team. Customers also don't see the results of BA, which means they don't always know why stakeholders make certain business decisions. Owners must ensure that they understandably communicate important findings, perhaps with the use of data visualization. This will establish trust between higher-ups and employees/customers.
5. Business Analytics and Data Quality
If restaurants don't practice good data collection processes, they will not have accurate insights. A data scientist can enable proper mining, cleaning, transforming, and uploading of data. Otherwise, owners will use unreliable or duplicate data to make decisions. Not just anyone can perform good business analytics. There are several online programs and degree programs to learn this type of master science. Owners must hire the right business analyst before embarking on a BA journey.
The Relationship Between Business Analytics and Business Intelligence
Business intelligence and business analytics are buzzwords that get interchanged but have entirely different meanings. Business intelligence is the process of data collection, storage, and analysis. It typically involves the use of an interactive dashboard that employees can view in real-time. Business intelligence helps streamline day-to-day operations and ensures everyone in the supply chain is informed.
On the other hand, business analytics is about drilling down into data to derive valuable insights. It's more concerned with future events, rather than current and existing processes. The average employee is not going to perform business analytics. It requires a professional data scientist who is well-versed in data mining, aggregation, and modeling techniques.
Business analytics is used to solve big real-world problems and answer frequently asked questions. Business analytics is how restaurants increase customers, improve menu options, and enhance marketing campaigns. Business intelligence is how a worker knows that a project is complete or the history of customer transactions.
While business analytics uses the data derived from BI to create insights, BI does not require BA. Restaurants are better off using a combination of information systems (BI) and BA to achieve business success.
How to Manage Business Analytics for Growth
On the best day, restaurant operations are challenging. If everything was black and white, then the entire workforce would be top-performers. Managers would rake in the money, and the competition would be wiped clean. Unfortunately, that's not reality. However, the use of business analytics tools can enable a future that is a little bit closer to that reality. Business analytics clears up the messiness to create more reliable, accurate, data-driven decisions. But first, restaurants need to ensure their business analytics program is top-notch. Read ahead for some suggestions to streamline BA.
1. Business Analytics Tip Optimize Project Management
Owners should leverage analytics software to identify inefficiencies in processes and workflows. Drilling down into project management data points enables owners to improve everything from product development to employee efficiency. Metrics to monitor should include tasks, due dates, project timelines, and the competition's processes. Restaurants should use a dashboard to maintain this data and share it with various stakeholders across the supply chain.
2. Business Analytics Tip Optimize the Sale Cycle
To achieve true growth potential, restaurants should drill down into POS and sales data. Again, a business intelligence platform such as a dashboard is a useful tool to do this. Potential areas to look into including the performance of top servers, top sales opportunities, campaign conversion rates, and the number of new patrons. Managers need to know what tactics are utilized to achieve good results and bad results. This can help optimize everything from onboarding, marketing strategies, upselling strategies, and time management.
3. Business Analytics Tip Drill Down into Financial Data
Every business owner knows that to be profitable, the organization must bring in more than it spends. But when restaurants don't properly track their financial data, it's easy to let spending slide.
Top metrics to track include business expenses, POS data, overall restaurant revenue, and historical/present budgets. This will help identify areas of waste, improve future budgets, and even bring in more revenue.
Key Takeaways of Business Analytics
In conclusion, here is what to know about business analytics -
- Business analytics is used to analyze different data sources, pinpoint patterns within data sets, monitor KPIs, and support business decisions. The methods of analytics include descriptive analytics, diagnostic analytics, predictive analytics, and prescriptive analytics.
- The 5 benefits of business analytics are that it improves performance, enables faster and more accurate decisions, minimizes risks, encourages change and innovation, and generates valuable insights.
- The top advantages of BA include that it helps monitor the progress of the restaurant's mission, increases efficiency, and ensures everyone stays updated. Disadvantages include a potential lack of alignment/trust and potential low quality of collected data.
- To manage BA for growth, restaurants should drill down into project management data, sales data, and financial data.
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