Oracle Hospitality: The Changing Role of the CFO in Food and Beverage

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1 Oracle H The Changing Role of the CFO in Food and Beverage

2 By embedding team members in LOBs, finance executives are learning the The Changing Role of the CFO in Food and Beverage nuances of the market and bolstering their chances of unleashing their own industrydisrupting initiatives. In today s world of food and beverage, the finance function bears little resemblance to its original iteration. Modern CFOs and finance executives no longer can afford just to contain costs and keep score. They are expected to leverage their operational knowledge and analytical expertise to provide management with the data-driven insight needed to identify growth opportunities. CFOs are filling this critical role by becoming technology evangelists. They are gaining greater oversight of IT strategy and related investments, and embracing a broader understanding of how digital technologies dashboards and analytics, mobile apps, social collaboration and the cloud can be used to create new value. They are emerging as co-pilots for the enterprise, partnering with the CEO to invest in digital technologies that give instant, real-time access to data from every facet of the business. With advanced technologies providing insight, ranging from the macro perspective to the granular detail of a single POS terminal s performance, finance teams are contributing to food and beverage operations in unprecedented fashion. Indeed, they are being called upon to capitalize on big data and maximize productivity. Digital technologies and their higher degree of automation also are liberating finance staff to work more closely with individual lines of business.

3 Digital Disruption The Change Catalyst When companies such as Uber and Airbnb emerge seemingly overnight to upend mature industries, food and beverage CFOs must be prepared for similar disruption in their sector and, more importantly, be ready to thrive in its midst. Even if your business hasn t faced such transformative forces, it is imperative to recognize the success of native digital companies and the impact they are having in altering the valuation of all companies. Every CFO must play a strategic role in guiding this digital transformation. Today, tangible assets such as property and equipment are given much less weight. Instead, shareholders are increasingly placing their investment bets on business models that are enabled or extended by digital technologies. Greater valuations also are attributable to intangible assets such as brand value and intellectual capital. Every CFO must play a strategic role in guiding this digital transformation.

4 Capitalizing on Big Data Business information always has been considered a key corporate asset, but big data is bound to redefine that classification because of the breadth and depth of management competencies and skills needed to exploit its potential. The finance function becomes the natural port of call for big data initiatives that are strategically aligned and have a demonstrable return on Investment. Furthermore, big data requires analysis and modeling of business opportunities, defining leading-edge applications, and interpreting results all tasks that fit well with the capabilities of many modern finance functions. From an organizational perspective, the demands of big data also align with the CFO s growing IT oversight role. That s not to say that big data won t cause challenges, especially at a time when organizations already complain of information overload and overbearing business complexity. Big data will take most organizations well out of their comfort zone. But make no mistake: finance executives who successfully wield new data and analytics tools to expand their boundaries will broaden the horizon for their business, too.

5 Maximizing Productivity and Efficiency Tech-savvy CFOs also are embarking on increasing operational efficiency, improving productivity and reducing costs. A recent study by Oracle Hospitality underscores the impact they can have on two major cost factors: labor and inventory. For enterprise and independent operators alike, labor accounts for roughly a quarter of total revenues. And a sizeable percentage of limited-service restaurants (17%) and full-service establishments (13%) reported spending a staggering 30% or more of revenues on staffing. To offset high labor costs, restaurateurs almost inevitably boost menu prices. Indeed, two-thirds of independent operators reported taking such action, and 38% of operators who had not raised prices said they planned to do so in the next six months. The cost of labor is one of the most significant factors in a restaurant business, and consequently, its variation can have a rippling affect across all operations. This explains why controlling it is of paramount importance. Food cost, along with labor expense, rank first and second, respectively, when it comes to consuming restaurant revenues. In fact, more than 71% of independent operators said food cost accounts for 25% or more of revenues, including 10% who reported that food cost exceeded 35%. By comparison, only 6% said they managed to keep food cost under 20%. Considering its super-sized impact, inventory cost is a lynchpin for financial success and getting it under control is an absolute priority.

6 Big Data: What s All the Fuss About? Every two days, we create as much information as we did from the dawn of Building the Finance Organization of the Future civilization up until Eric Schmidt, Executive Chairman, Google Led by a new breed of CFO, the finance function within the food and beverage organization of the future will be a radically different entity. It will be a full-fledged, strategic business partner that finds new ways to collaborate with the rest of the organization. Modern finance teams will set the growth agenda through sharper insights gained from data. This all means there is a casting call for a pivotal new role; Become the technology evangelist your enterprise needs you to be.

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