(FORTUNE Small Business) – When I was a waiter, I was everything I now hate as an owner," says Danny Abrams, 42, the proprietor of three chic and successful New York City restaurants. He would show up late, mouth off to his bosses, and give away too many drinks and desserts to his favorite tables. Not surprisingly, Abrams's customers loved him. He would offer to flip a coin for his tips, and if he won, his customers would double his gratuity; if he lost, the deal was that he would get nothing. He quickly realized that even when he lost, he won: Most customers would tip him anyway.

But running a restaurant group with $9.4 million in annual sales isn't as sure a bet. Abrams and his business partner, chef Jimmy Bradley, 35, face a constant challenge to provide charming hospitality--which means being willing to lose a little money occasionally to earn loyal customers--while still delivering solid returns to their private investors. "I don't want to be the guy who's rushing people out the door to clear the room for the next group," says Abrams. "That's not why I got into the business."

Abrams has discovered software that helps him be both a good host and a good businessman. About a year ago he signed up with Avero, a New York City firm, to use its web-based service called Slingshot, which lets him track and analyze what's happening in his business for about $300 a month per restaurant. Before that, Abrams managed through instinct, reinforced by frequent trips on his motorcycle between his establishments (each a few miles apart), and by reports from his point-of-sale data that took hours to produce. Having recently added the Mermaid Inn (an East Village seafood restaurant) to the Red Cat (a Chelsea bistro) and the Harrison (Tribeca, modern American), and hoping to open a new place every year or so, Abrams saw that his seat-of-the-jeans methods took too much time.

Slingshot takes Abrams's POS data and posts them on a secure website that he can access from anywhere and from which he can generate reports in seconds. (Slingshot is designed specifically for restaurants, but other retailers can get some of the same benefits from Intuit's QuickBooks Point of Sale or Synchronics's CounterPoint.)

Abrams primarily uses Slingshot to track the performance of his wait staffs to ensure that customers are satisfied. Tips are the best indicator, so Abrams and his operations manager, Alicia Nosenzo, 30, check them every day. They also track average check size, talking to those servers who consistently fall below--or above--that mark, and pay close attention to new servers. "I can see who's doing a better job selling desserts, who's pushing more drinks," says Abrams, who continues to roam his restaurants wearing jeans and a ski cap, looking less like the proprietor than the rebellious employee he once was. "The time and effort it used to take to pull those numbers meant you wouldn't do it." Using Slingshot, Abrams also tracks voided sales and giveaways, and he has Nosenzo find out whether a free $8 dessert might have appeased an angry customer rather than a $75 meal.

Although Slingshot's greatest value is in enabling Abrams to be a better manager, it has helped him make money too. After discovering that the restaurants had 200 more cases of a 1999 Gatto Rosso on hand than they had thought--an expensive bit of inventory to carry at an average of $35 a bottle on the wine list--Nosenzo used Slingshot to hold a contest for her servers, promising a $200 bonus to the one who sold the most bottles each month. Tracking sales, she saw the totals grow from about a dozen cases a month to nearly 70. The contest made room for the new 2001 vintage in only three months. And the wine, which cost some $29,000 wholesale, generated $85,000 in additional revenue.

Almost as eye-opening for Abrams was that waiters were open to using the software to track their performance. "We hire people with a passion for food and wine, not technology," he says, admitting he has been wary of overanalyzing data and driving people mad. Ultimately, Abrams says, the bottom line will lead to acceptance, since higher check averages mean higher tips. "If the restaurant makes more money," he says, "they make more"--even if they don't play the double-or-nothing game.