Software ROI: the sum before the subscription

Software ROI is the sum most restaurants skip. A supplier shows a demo, quotes a monthly fee that sounds reasonable, and the owner signs because the software looks useful. Months later, nobody can say whether it paid for itself. The fee leaves the bank account every month; the benefits, if they exist, are spread across hours saved, mistakes avoided and a few extra covers that nobody counted.

Doing the sum before the subscription changes the decision. It forces the owner to say what the software will actually do for the venue, in numbers: how many hours it will save, how much waste it will avoid, how many covers it will add, and what all of that is worth. It also forces a full view of the cost, which is almost always more than the monthly fee. Sometimes the sum shows a clear win. Sometimes it shows that the venue should wait, or choose differently.

This guide sets out the four sums that make up software ROI for a restaurant: hours saved, waste avoided, covers added, and other gains, set against the total cost of ownership. It covers how to count each one honestly, the payback period, the gains you should not count, and how to check the return after six months. It ends with a worked example.

Return on investment compares what something earns or saves with what it costs. For software, the return is the value of the hours saved, the costs avoided and the extra trade it brings; the investment is everything the venue spends to have it and keep it running.

A positive return means the software pays for itself and more. A negative one means it costs more than it brings. A venue can still choose software with a weak return for other reasons, such as safety or compliance, but it should know that it is doing so.

Before signing, the venue can still choose. It can compare suppliers, negotiate, start smaller, or wait. After signing, especially on a long contract, the choice has been made. The sum done before the subscription is a decision tool; the same sum done afterwards is only a judgement.

The sum also makes the purpose clear. Software bought to save a manager four hours a week will be set up and used differently from software bought because it looked impressive.

Software ROI for a restaurant usually comes from four sums:

Against them sits the total cost of ownership. The sections that follow take each in turn.

The first sum is the time the software will save. List the manual jobs it will replace or shorten: rebuilding weekly numbers from exports, copying bookings into the guest list, writing tickets by hand, reconciling the till with the card terminal, updating the menu in several places, answering phone bookings that could be made online.

For each job, estimate the hours spent each week now and the hours it will take with the software. The difference is the hours saved.

Count only hours that will genuinely be saved and used for something else. If a manager saves two hours a week but those hours simply disappear into a longer break, the saving is real for the manager but not for the business. If the hours move to the floor, where they improve service, or reduce overtime, they are a real gain.

Be conservative. Suppliers often quote large time savings. Estimate your own, based on your own jobs, and then reduce the estimate by a quarter to allow for optimism.

Value each saved hour at the full cost of the person who would have spent it: their pay plus taxes and benefits. A manager's hour is worth more than a server's. If the saved hours reduce overtime or allow one fewer shift, value them at that cost.

Multiply the weekly hours saved by the hourly value and by 52 to get the yearly value.

The second sum is waste the software will help avoid. That might be food prepared for guests who did not arrive, dishes made wrongly because a ticket was unclear, stock that spoiled because it was over-ordered, or money lost through mistakes at the till.

Waste is harder to estimate than hours. Start with what you can measure: the cost of food wasted each week, the number of dishes remade, the value of voids and comps caused by order mistakes. Estimate how much of that the software would reduce, and be conservative.

The third sum is extra covers. Software can add covers in several ways: booking reminders that reduce no-shows, a booking page on the venue's own site that takes bookings at any hour, a waitlist that fills cancellations, or a faster kitchen and bill that allow an extra turn on busy nights.

For each, estimate the extra covers per week, multiply by the average spend per head, and then by the gross margin, not the full sales value. An extra cover is worth what it leaves after its food, drink and serving costs, not what the guest paid.

If the venue currently pays commission or per-cover fees to a booking platform, moving bookings to its own booking page can save some or all of them. Count the fees paid in the last year, estimate the share of bookings that would move to the venue's own page, and include the saving.

Our guide to commission-free bookings covers the arithmetic in detail.

The fourth sum gathers other gains: fewer mistakes, such as allergies missed or orders sent to the wrong station; higher spend, if the software helps the team suggest dishes and drinks; lower fees elsewhere, if the software replaces several other subscriptions; and better decisions, because the numbers arrive sooner.

Some of these are hard to value. Include only what you can estimate with reasonable confidence, and note the rest as possible upside.

On the cost side, start with software subscriptions: the monthly or yearly fee. Read the pricing carefully. Some fees are fixed per venue; others grow with the business, charged per cover, per order, per booking, per device or per user. A fee that grows with trade means the cost rises exactly when the venue is busiest.

Estimate the subscription at the venue's expected level of trade and size, not only at today's.

The full cost is the total cost of ownership: everything the venue spends to have the software and keep it running. Beyond the subscription, that includes payment processing fees, hardware, set-up, training, the hours spent managing it, and the cost of switching from the current system.

Calculate it over three years. A system with a low monthly fee and expensive hardware can cost more over three years than one with a higher fee that runs on ordinary tablets.

Hardware can be a large part of the cost: terminals, tablets, kitchen screens, printers, card readers, routers and stands. Some software needs specialist hardware; some runs on ordinary phones and tablets. Check what the venue already has that could be used.

Include replacements: devices get dropped, wet and worn out. Allow for replacing some of them over three years.

Set-up takes time: building the menu, drawing the floor plan, setting the rules, creating user accounts, and testing. Training takes time too: every member of the team needs to learn the new system, and new starters will need training in future.

Value these hours as you valued the hours saved. A system that takes forty hours to set up and two hours to train each person has a real cost before it saves anything.

Moving from the current system has its own costs: running old and new side by side, moving data, a period of slower service while the team learns, and any notice period or exit fee on the old contract. Include them in the first year's cost.

Our guide to from spreadsheets to software at the right moment covers how to move without losing history.

Once the gains and costs are estimated, work out the payback period: how many months until the gains have covered the costs. Add up the costs in the first year, including set-up and switching, and divide by the monthly gain.

A payback period of a few months is a strong case. One of more than two years is weak, unless there are other reasons to buy, such as safety, compliance or a system that is about to fail.

Gains rarely arrive on the first day. Set-up and training come first, the team takes a few weeks to use the software fully, and some gains, such as fewer no-shows, build as more guests book through the new system. Allow for this in the sum by counting only part of the gains in the first two or three months.

Ask the supplier, and their references, how long it took before the software was fully in use. A system that takes six months to bed in has a slower payback than one that is running properly in a fortnight.

Some gains grow the longer the software is used. A guest database built from bookings and orders becomes more valuable each month, as more guests are recognised and more can be invited back. A reporting history makes year on year comparisons possible after the first twelve months. A team that knows the system well uses more of it.

These gains are hard to value in advance, so leave them out of the main sum. But note them, because they often make the second and third years better than the first.

The sum fits on one page. List the gains, each with a weekly or yearly estimate and a note of how it was worked out:

Then list the costs over three years: subscriptions, payment fees, hardware, set-up, training, management time and switching. Subtract, divide, and write the payback period at the bottom. Keep the page, because it is what you will check against after six months.

Every part of the sum involves estimates, and estimates tend to be optimistic. Reduce the gains by a quarter and increase the costs by a tenth. If the software still pays for itself, the case is strong. If it only pays for itself on the optimistic numbers, be cautious.

Ask the supplier for references from similar venues, and ask those venues what they actually saved.

Some gains should not be counted. Hours saved that will not be used for anything else. Covers added on services that are already full. Extra spend that depends on the team doing something they are not trained to do. Savings from features the venue will not use. Savings promised by the supplier that you cannot verify.

Count only what you can explain and expect to see.

Several risks can reduce the return: the team does not adopt the software, so the old manual work continues; the set-up takes longer than planned; the internet is not reliable enough; a key integration fails; or the venue's trade falls, so the covers added are fewer.

Note each risk, and what would be done to reduce it. A clear plan for training and adoption is often the biggest single factor in whether software delivers its return.

Six months after the software goes live, check the return. Measure the hours actually saved, the waste actually avoided and the covers actually added, using the same methods as the original estimate. Compare with the sum done before the subscription.

If the return is lower than expected, find out why: is the software not being used fully, was the estimate too optimistic, or has something else changed? Fix what can be fixed. The check also improves the next sum, because it shows how accurate the estimates were.

In a small venue, the biggest gain is usually the owner's time. An owner who spends five hours a week on bookings by phone, manual tickets and spreadsheet numbers can use those hours on the floor or at home. Value them honestly: an owner's hour is often worth more than anyone else's, because it is the scarcest.

Small venues should be especially careful about fees that grow with trade, and about long contracts.

In a group, the sum is done for the group as well as each venue. Some gains only appear at group level: consolidated reporting, shared guest records, staff moving between venues, and one set of training. Some costs grow with each venue: subscriptions, hardware and set-up.

A group that standardises on one system often finds the return is higher than the sum of the venues, because the group-level gains add to the venue-level ones.

The ROI sum is most useful when choosing restaurant software between several options. Do the sum for each supplier, using the same estimates of hours, waste and covers where the software does the same job, and their own costs. The one with the best return is not always the cheapest, and not always the one with the most features.

Our guide to choosing restaurant software without a demo haze sets out a scoring sheet to use alongside the sum.

Here is an illustrative sum for a 70-seat venue considering one system for bookings, orders, the kitchen, guests and reporting. The figures are examples.

The first year's return is clearly positive, and the payback period is around six months.

servearound keeps the cost side of the sum simple. Pricing is per venue, per month, with no fees per cover, order, screen or user, and bookings carry no commission, so the subscription does not grow with trade. It runs in a browser, on iPhone and iPad and on Android, so the hardware line can often use devices the venue already owns.

On the gains side, booking reminders go out as many hours before as you choose, with a link to change or cancel, and the booking page offers the waitlist when a time is full. Allergies reach the kitchen ticket, and reports are built from the service itself. To estimate the sum for your venue, see pricing, or get in touch.

The value of what software saves and earns, compared with everything it costs to have and run.

Hours saved, waste avoided, covers added and other gains such as fewer mistakes or lower fees elsewhere.

The total cost of ownership: subscriptions, payment fees, hardware, set-up, training, management time and switching costs.

At its margin after food, drink and serving costs, not at the full amount the guest paid.

A few months is strong; more than two years is weak unless there are other reasons to buy.

Use your own estimates, check them with references from similar venues, and be conservative.

About six months after going live, using the same methods as the original estimate.

Yes. Some gains only appear at group level, such as consolidated reporting and shared guest records.

Software ROI is the sum to do before any subscription. Estimate four gains, hours saved, waste avoided, covers added and other gains, each counted conservatively and in your own numbers, with extra covers valued at margin. Set them against the total cost of ownership over three years: software subscriptions, payment fees, hardware, set-up, training, management time and switching.

Work out the payback period, leave out gains you cannot explain, note the risks, and check the real return after six months. Use the sum when choosing restaurant software, when moving from spreadsheets to software, and whenever a new tool is proposed.