5-Out Helped Little Italy Pizza Set the Stage for Expansion
5-Out helped a family restaurant owner gain the financial security and forward visibility required to expand his business.
Avery Ward was facing challenges that will be familiar to many independent restaurateurs. “I was working 65 to 70 hours a week and not able to step away from day-to-day operations,” he says.
As the third generation owner and operator of a pizza restaurant started by his grandparents in 1979, he says: “I knew there had to be a better way.”
Avery was motivated to follow an online coaching program designed to give independent restaurateurs greater freedom. The program included the use of sales forecasting spreadsheets which Avery deployed at his business.
While the program delivered plenty of good advice that empowered Avery to delegate and step away from front-line operations, the forecasting spreadsheets, based on taking averages from the previous month, were inaccurate by as much as $3,000 a day.
Then one day Avery received an email from 5-Out offering automated sales forecasting driven by artificial intelligence. “It sounded really interesting so I reached out to them,” he remembers.
Onboarding the 5-Out software was smooth, says Avery, and only took a couple of days. “It was all done remotely via email and video calls. They were extremely knowledgeable and helpful,” he says.
The 5-Out software was linked to Avery’s existing point of sale system (Toast) and he was encouraged to switch his home-designed labor scheduling to 7 Shifts.
“We started to see the 5-Out forecasts roll through and we started to schedule our labor and food purchasing based on them. The forecasts were really accurate right from the beginning,” he says.
5-Out automatically ingests data not only from internal sources (POS, labor, reservations, events) but also external sources (weather, traffic, events) to accurately predict upcoming sales down to the hour.
“My managers are able to look at the forecasts in the moment, for example, in the middle of a shift to see if we are ahead or behind on our labor. Do we need to make cuts this afternoon because we spent too much on labor at lunchtime? We can ask: ‘Hey, who wants to go home early?’ It’s definitely made our team’s schedules better because we are giving them more options,” Avery comments.
So, Avery and his managers look at the 5-Out forecasts in real time on a daily basis (for example to compare lunch versus dinner), as well as using them to plan the labor schedules each week and the monthly budgets.
What have been the key outcomes of deploying 5-Out?
5-Out has contributed to a significant reduction in Little Italy’s cost of goods sold (COGS).
“Our managers are now paying much more attention to purchasing to budget,” says Avery. “We’ve seen our COGS drop from 34.5% of sales to 28% over the course of six months. With labor, we were running at about 24% before we installed the 5-Out software. Right now we are at 19.3%.”
In cash terms, Little Italy has saved $18,200 on COGS per month and $13,160 on labor since deploying the 5-Out software. Over one year, that’s a total saving of $376,320.
“It’s been a huge saving that has allowed us to carry out this new project and open a brand-new restaurant on a much bigger site,” says Avery.
Little Italy is due to open in a new location that will be more than twice the size of the original restaurant.