Restaurants and food and beverage businesses thrive on delivering exceptional culinary experiences. That singular focus – quality, consistency, and value – is what cultivates customer loyalty. In the fiercely competitive QSR (Quick Service Restaurant) landscape, however, maintaining attractive pricing can sometimes tempt management to compromise on quality or quantity, potentially damaging hard-earned brand reputation.
Over the past decade, an increasing number of QSR organizations have recognized the advantages of concentrating on their core strengths—food and beverage innovation and customer service—while entrusting back-office functions to specialist providers. This shift has not only enhanced profitability but also significantly improved operational efficiencies and regulatory compliance. Established QSRs might possess long-standing internal back offices, but leaders must critically assess whether these legacy systems are keeping pace with the rapidly evolving technological environment and the considerable costs associated with modernizing them to meet current industry demands.
While outsourcing makes strategic and operational sense for larger chains, smaller chains can leverage shared services to access cutting-edge technology and specialized expertise at a fraction of the cost. Whether large or small, embracing shared services offers compelling economic advantages. Shared services positively impact both operational and capital expenditures, ultimately contributing to a healthier bottom line.
Finance & Accounting outsourcing can enable QSR managements to achieve cost savings exceeding 30% compared to maintaining an in-house department. Similarly, Human Resource Management outsourcing yields savings of over 30% relative to the costs of an internal HR team.
F&B chains operating across multiple locations face the daunting challenge of managing accounts and adhering to strict posting and documentation timelines. Delays in vendor payments can lead to supply chain disruptions across locations, forcing procurement of substandard materials at inflated prices from local suppliers, ultimately negatively impacting the customer experience and brand image. Effectively managing rental and utility payments is equally crucial for restaurants, as payment delays not only incur late payment surcharges but can also result in premises shutdowns, affecting both profitability and customer satisfaction.
Consider the case of a prominent multi-brand restaurant group with a presence in over 200 locations across India. The absence of standardized processes and delays in backend accounting operations created cash flow and working capital challenges, compounded by an elevated risk of revenue and inventory losses. Lack of transparency and visibility into the invoice processing lifecycle strained vendor relationships and negatively impacted the company’s creditworthiness. Delays in vendor payments forced individual outlets to procure materials from unauthorized vendors at higher prices and lower quality, using sales receipts to cover expenses.
The management team carefully evaluated their options: either upgrading their in-house department or adopting a shared services model. Ultimately, they chose the latter and sought expert guidance to streamline their processes. A thorough due diligence assessment of their existing processes was conducted.
The assessment revealed multiple challenges, including non-standardized processes at the store level, excessive reliance on store staff for creating GRNs (Goods Received Notes) in the system without clear accountability, and the absence of a structured MIS (Management Information System) for tracking invoice and GRN movement. Financial irregularities included the use of revenue for petty expenses and material procurement, further exacerbated by delays in submitting petty cash expense vouchers to the head office, creating a disconnect between the point of sale (POS) and the accounting system. A significant finding was the lack of a structured revenue reconciliation process, particularly with food aggregators, which accounted for 10% of total revenue. In essence, a lack of financial discipline and delays in vendor payments were undermining the company’s operations.
Following the due diligence, a comprehensive plan was presented, including a proposed governance model for overseeing the transition and change management. The plan highlighted three key initiatives covering Process, Technology, and Governance.
The process-centric solution addressed every activity within invoice processing and revenue reconciliation, encompassing the GRN process, invoice submission, a standard checklist for processing, and the implementation of a maker-checker concept. This solution also incorporated a structured MIS for all deliverables, enabling monitoring of the invoice lifecycle, revenue reconciliation, cash/card discrepancies, and debtors’ status. The MIS facilitated issue identification and operational streamlining across all outlets.
On the technology front, they leveraged workflow management tools for digital invoice approval and lifecycle tracking. They also integrated with the POS system to seamlessly fetch PO and GRN details for invoice approval and matching, facilitating deviation approval or rejection. They used tools to monitor, track, and control petty cash expenses at the store level. These tools feature dynamic workflows that can be tailored to meet specific business requirements.
Streamlined governance was achieved by implementing a three-layered process to monitor project progress. The first two levels focused on project management, while the third level involved senior leadership engagement on strategic matters.
While the organization achieved approximately 30% cost savings through automation and outsourcing, the more significant benefits stemmed from additional cost savings and improved P&L through enhanced price negotiation with vendors, extended credit periods, and reduced late payment charges. This transformation proved to be a mutually beneficial outcome.
Looking ahead to 2025, the trend toward shared services in the F&B industry is set to accelerate. With increasing pressure on profit margins, restaurants are actively seeking innovative ways to optimize their operations. This includes not just finance and HR, but also areas like supply chain management, data analytics, and even customer support. By centralizing and standardizing these functions through shared services, F&B businesses can achieve greater economies of scale, improve efficiency, and gain valuable insights into their operations.
Another key development is the integration of AI and automation in shared services. AI-powered tools can automate repetitive tasks, such as invoice processing and data entry, freeing up human employees to focus on more strategic activities. This not only reduces costs but also improves accuracy and speed. Furthermore, AI can be used to analyze vast amounts of data to identify trends, optimize processes, and make better decisions.
About the Author:
Vivek is the co-founder of Mynd Integrated Solutions. He is a successful entrepreneur with a strong background in Accounts and Finance. An Alumni of Modern School and Delhi University, Vivek has also undertaken prestigious courses on accountancy with Becker and Business 360 management course with Columbia Business School, US.
Having over 22 years of experience in setting up shared service centers, and serving leading companies in the Manufacturing, Services, Retail and Telecom industries – his strong industry focus and client relationships have enabled the Company to build credibility with 300+ clients in a short period of time.
