How Happy + Hale Can Track Profit and Loss in Mere Seconds

Work hard. Be kind to people. Sprinkle in a little luck.

-Tyler Helikson, Co-Founder Happy + Hale

Founded in 2013 by business partners Matt Whitley and Tyler Helikson, Happy + Hale is a fast-growing restaurant chain providing what it calls “healthy fuel” to the Raleigh-Durham community. With three-bustling locations, Happy + Hale has made quite a splash for it’s creative menu, environmental consciousness, and commitment to well-being.

Problem

Business has been good for them, even during the COVID-19 pandemic, but like all fast growing businesses, they were facing growing pains.

In their case, they needed to track profit and loss on a daily basis so they could rapidly make inventory and staffing decisions.

“We’re getting killed on beef! Should we find a new meat supplier?”

“Why was our electricity bill so high last month?!?!”

“Our online orders are through the roof! Can we afford to hire two more employees?”

“How do we offset the 30%+ fees that these food delivery services (UberEats, GrubHub, etc.) charge us?”

‘Should we kill the Ahi Tuna bowl? Are we even making money from it?”

“Is offering ‘all day breakfast’ worth it for us? What are our most profitable items?”

These are the types of questions that raced through their minds on a nearly daily basis. Sadly, they had no accurate way to make those decisions — decisions that impacted the profitability of their business.

They wanted to track profitability at the restaurant level, and needed to evaluate how day to day adjustments to staffing, inventory, menu items, and even portion sizes affected profit and loss — but had no efficient way to do that.

Up to this point, they had been tracking inventory in a spreadsheet that their operations managers updated when they had the chance — not easy when they were running three bustling restaurants.

On top of that, they could only do their financials two weeks after the end of the month because of the time it took to comb through receipts, time clocks, payroll, rent, and other expenses.

It was all historical data from the prior month so it was hard to make decisions for the coming month — kind of like driving forward while looking in the rear view mirror.

Exasperated, they tried different tools and software, hoping to get a better handle on their profit and loss, but nothing worked. It was either clunky, antiquated, or a pain in the neck to use — so they eventually abandoned each one.

At the same time, they knew they couldn’t do the process manually because it was impossible to make accurate decisions quickly. They were shooting in the dark and knew their business would never reach its potential until they solved this problem.

After struggling for months, they came to the obvious conclusion — they’d need to build software from scratch. They had never built custom software and had no idea how to go about it, but they knew there was no other way.

So they reached out to our company, R&Y Labs for help. After speaking to them, we knew we could help so we reassured them that they could have exactly what they wanted. It would take some effort, but if they followed the process, they’d get exactly what they were looking for.

Lucky for them they had a secret weapon.

Process

In our last article, we discussed our concept of “Maximum Valued Product” and how we want our clients to get traction and user feedback by releasing a bare bones version of their app — as quickly as possible.

That’s done via a prototype, or what we call an “app flow”, which gives users a sense of the look and feel of the end product. Based on that feedback, we rapidly build in core features that make the product as usable as possible, without weighing it down with bells and whistles that no one would ever use.

Earlier, we mentioned that Happy + Hale had a secret weapon that made this process 10 times easier than it could have been. In their case, they had a spreadsheet that they updated two weeks after the end of the previous month.

They used this spreadsheet to track the cost of everything that went out the door. Every leaf of lettuce, every broken dish, every hour of labor. They used it to make adjustments to the business for the next month.

Everything on the shelf is cash; every piece of cheese, every burger bun, every hunk of tuna… it’s all cash. Worse yet, it all has a shelf life and has to be used before it expires.

Tracking and managing these costs was critical to the very survival of their business.

For example, they knew they needed to spend $20k month on food costs to stay profitable. If they saw that they were trending up from that number, they’d have to have to make informed decisions to get back on track.

If they noticed that they were spending more on ingredients than they wanted, they’d either have a conversation with their cooks about recipes and portion sizes — or a conversation with their suppliers about pricing. If they saw that labor was up, they’d have to have conversations around staffing.

It worked well enough, but it was painfully slow to gather all of the data — let alone analyze it. They knew they needed to automate it somehow but hadn’t found a tool that could track every single cost, in real-time.

So they approached us to build it for them.

Once we understood the problem, our goal was to create an MVP product that would run profit and loss of the restaurants, based on percentages.

Luckily, they knew their business well enough (thanks to that spreadsheet) to know what percentage of revenue their expenses (cost of goods sold, labor, rent, utilities, etc.) needed to be to remain profitable. From that, they could calculate EBITDA and net income.

The problem is that they were doing it manually and were relying on month-old data.

So we decided to use their spreadsheet as the foundation of the app, with the goal of tracking expenses on a daily basis, rather than a monthly basis.

We did that by hooking our app into their Point of Sale system so we could feed it with data at the time of each sale.

Luckily, we were able to build off of their spreadsheet. That was their big advantage, but it required a ton of manual entry. It showed us exactly what they wanted so we knew how the end product should behave.

Tyler had never worked with developers this closely before, so we wanted to make it as easy for him as possible. One of our team members, Don, and Calvin worked with Tyler during the discovery phase so that we understood exactly what he wanted.

Together, they painted the 30,000 foot picture of the end product so that Don and our developers could bring an MVP to life.

Outcome

A few short weeks later we had a living, breathing app that he could use.

Now his general manager can manage 30 people per day across his three locations — without a single bit of manual entry.

The secret was to integrate the app into their POS system. Now, it pulls revenues and calculates hourly labor as people clock in. The cost of goods sold comes from their invoices. All they have to do is snap a picture of the invoice, list the vendor, and it integrates into their accounting system automatically.

Now they can keep an eye on food costs, labor costs, and other overages — in real time.

If they see chicken is $2 more they can call their suppliers. If they see that they aren’t profitable, they can rapidly ask the chefs to monitor portion sizes. If they see an influx of customers, they know they can offer overtime to employees.

The app is saving them a ton of money — and quantifying it for them.

Now they have consistent financials month over month and can now approach investors so that they can fuel their growth. In fact, the MVP of this app is good enough that he can offer it to friends that own restaurants..

He feels great about using it and wants us to add in 20 more features to make it even better.

This kind of story makes our day because we see the exact opposite happen so often. We see companies spend tens of thousands of dollars, and waste months, only to release a product that doesn’t deliver.

We’d rather have a client spend a small amount on a project and iterate new features once they validate product-market fit than take a large sum upfront and build something utterly useless.

We know Happy + Hale will continue to do well and we’re happy to have played a small part in that success.