Digital tools for small food businesses: what first

The first thing to move to digital is whatever is costing you money without you noticing: your recipe costs and your purchase records. Sales by product and payments come next. Ordering, inventory and the rest come once those are working. A tool is worth it if it saves more time or money than it costs, and only if you will actually use it every week.

The kinds of tools out there

You do not need all of them. This list is so you know what each type does and can choose based on what you are missing.

• Costing and recipes. Work out the loaded cost of each product from the recipe and ingredient prices, and flag when a price changes. It can be a spreadsheet or a costing app such as Rindero. The guide to spreadsheet vs app for costing compares them with numbers.
• Purchase records. Anything from a folder of receipt photos to apps that read the receipt and store item, quantity and price. They tell you what you paid for each ingredient and when it went up.
• Sales and till. A record of what you sold, how many and through which channel. A spreadsheet, a notebook typed up at the end of the day, or a point-of-sale system.
• Payments. Card readers, payment links, bank transfers and QR codes. Each has its own cost structure: some charge a fixed monthly fee, others a percentage of every sale.
• Orders and messaging. Online ordering pages, order forms, catalogues in messaging apps and delivery apps. They organise orders, but many charge a fee on each one.
• Inventory and production. Stock lists and production planners. Useful once you have several products sharing ingredients.
• Bookkeeping and invoicing. Software for invoices, expenses and tax records. What you need depends on your local rules; the guide to permits and registration covers what to check, and an accountant can tell you the rest.
• Recipe cards and quality checks. Standard recipes with weights, steps and photos anyone in the kitchen can follow. The guide on making the same product every time covers what to put in them.
• Calendar and reminders. For renewals, bills and use-by dates on what you have in stock.

What to move to digital first

The order depends on where you lose the most money without seeing it. For almost any small food business it is this:

1. Costs and recipes. If you do not know what each product costs, everything else rests on a made-up number.
2. Purchases. Without the real price of each ingredient, your recipe cost goes stale in weeks.
3. Sales by product. Shows which product earns the most, which is not always the one that sells the most.
4. Payments. Reconciling what came in through each method without adding it up by hand.
5. Orders. When the volume of messages stops you cooking.
6. Everything else, once the above runs on its own.

If you digitise step 5 before step 1, you will get more orders for products that may be losing you money.

How to tell whether a tool is worth it

Tools cost you in one of two ways: a fixed monthly fee or a fee per sale. Judge each differently.

Fixed fee: compare what you pay with the time it saves and the mistakes it prevents.

monthly saving = hours saved × value of your hour + losses avoided − fee

For the value of your hour, use what you would pay someone else to do that work, or what you want to earn per hour. The guide to labour cost helps you put a number on it.

Per-sale fee: if the customers using that channel would have bought from you anyway, the fee is pure cost. It only pays for itself through new sales, or through time it saves you.

new sales needed = (monthly fee − value of time saved) ÷ contribution margin (%)

Worked example: a costing app and an online ordering page

You sell brownies, granola and meal prep boxes, six products in all. Each month you recost them by hand, which takes 3 hours. You value your hour at $20.

The costing app. Say it costs $15 a month (an example figure). With it, recosting takes 1 hour.

• Hours saved: 3 − 1 = 2 hours
• Value of the saving: 2 × $20 = $40.00
• Result: 40 − 15 = $25.00 a month in your favour

You only need to save 15 ÷ 20 = 0.75 hours a month to cover it. And if it catches a nut price rise a month earlier, saving you $60 of lost margin, the month leaves you 40 + 60 − 15 = $85.00.

The online ordering page. Say it charges 5% per order (an example rate; check your provider's). Last month you took $1,200.00 in orders through it.

• Fee: 1,200 × 0.05 = $60.00
• Time saved answering messages and writing orders down: 2 hours × $20 = $40.00
• Net cost: 60 − 40 = $20.00

If every one of those customers would have messaged you anyway, the page costs you $20.00 a month. To cover that with new orders at a 50% contribution margin:

• New sales needed: 20 ÷ 0.50 = $40.00 a month
• In brownies at $3.50: 40 ÷ 3.50 = 11.4, so 12 brownies a month you would not have sold otherwise

Twelve extra brownies a month is a low bar: two new regulars who each buy six a month would cover it. If the time saving were zero, you would need 60 ÷ 0.50 = $120.00 of new orders, which is a harder question.

Mistakes that cost money

• Paying for several tools that do not talk to each other. If you copy the same data into three places, you end up keeping none of them up to date.
• Digitising the mess. If you do not record purchases in a notebook today, an app will not do it for you. Habit first, tool second. A weekly business routine is a good place to start.
• Not being able to get your data out. Before you commit, confirm you can export recipes and sales to a file.
• Trying everything at once. One new tool a month, and only once you use the last one without thinking.

The operations guide shows how these tools fit with inventory, food safety and records.

Do it with the calculator

Before you pay for anything, try the food cost calculator with one of your products: enter the recipe, the prices from your last receipt and your selling price, and see whether the loaded cost it gives you matches the one in your head.