Restaurant Inventory Management: 7 pro tips to keep it profitable
Inventory. Inventory. Inventory! It all starts and ends with it, doesn't it? Apparently, restaurant inventory is connected to the bottom line, which is why it's important to do it right from the very beginning.
Ask any restaurant owner and they won't shy away from confessing that managing inventory is one of the most painstaking jobs of running a restaurant business and yet, sometimes, we tend to ignore it and shift our focus on other matters of the business. Result? Our bottom line takes a big hit!
When it comes to restaurant inventory management, there are numerous aspects to take into consideration. It’s a challenging job for sure, but not an impossible one if you follow some tried and tested methods.
Here are 10 simple ideas to help you out.
Organize your inventory
It goes without saying that the first and foremost thing to do when controlling food costs and increasing profitability is to organize the inventory and conduct inventory regularly.
Managing inventory basically includes keeping a tab on your restaurant supplies. You must know where the food is stored, where it is going, when it was utilized and if there’s a need to restock.
When you have all the numbers on your fingertips, it would be easy to control the wastage and spoilage, hence making a significant reduction in the operation cost. You can also use this information to decide menu item costs and get clarity on your bottom line.
Take technology’s aid
Restaurant tech is evolving at a rapid pace. New tools and apps are being launched to help restaurateurs manage different aspects of restaurant operations effectively. But if you are still using pad and a paper or even spreadsheets to take inventory, you can kiss them goodbye and switch to efficient software. These are more evolved than spreadsheets and designed to provide accurate and detailed data. Stay on top of the latest technology trends by following our blog on Restaurant Technologies.
Automating your manual processes can save time and money as well as eliminate losses due to errors. An efficient POS system also provides advantages like data forecasting, order planning reports, and automated inventory tracking based on customer orders to help you keep better track of your inventory and manage your food cost percentage.
Do not buy in bulk
While it is a common practice to buy stock in large quantities, our experts recommend against it!
While a large purchase could look attractive at first because of the savings, but if the stock is not utilized well in time, it can quickly turn into wastage. Over purchasing is one of the most expensive things you can do in this business. It can hurt your bottom line in a big way!
The Boston Consulting Group has predicted that by 2030 annual food waste will hit 2.1 billion tonnes globally, accounting for approximately $1.5 trillion in lost revenue.
There are a number of factors that you must take into account when deciding inventory, such as, seasonal changes, current demand through both online and offline orders, availability of cheaper alternatives and so on. For instance, there’s no reason to stock up on the mix of frozen drinks in winters. The best way to combat wastage and spoilage is to carry out weekly audits and maintain a daily waste chart.
Recycle everything that can be recycled
Do you know how much money you throw away in your trash every day? How many old bread loads you throw away every day just because it’s old! Why not make croutons!
Restaurant waste that occurs during food preparation like raw foods such as roots from leafy vegetables, leftover fluids, old loaves of bread, bones, etc. can be reused to create innovative small plates.
Encourage your chefs to reuse discarded ingredients as much as possible. Such practice helps you reduce food wastage and hence save on expenses. The younger generation is more drawn towards ethical brands and repurposing ingredients could also turn out to be an important selling point. Let them know that you are doing your best to reduce your carbon footprint.
Focus more on small plates/portions
Your customers are already embarking on the small plate movement, Why not take advantage of this shift and reduce portions of food? Read our blog on the benefits of introducing small plates to the menu.
The recommendation is a 10-inch plate.
Appropriate portions can sustain consistency in quality and help influence customers' expectations. Moreover, proper portioning also helps keep inventory costs in check.
Monitor how much food prepared and served is being thrown away on a daily basis. If your customers are not able to finish a dish consistently, the portion is too big. Observe the pattern for a period of 30 days and recognize the dishes that need portion control. This practice will help you serve the proper amount of food to your customers.
Remember that portion does not simply mean the amount of food you serve on a plate but it is also measured by the number of ingredients needed in a dish.
Make them order more with reasonable pricing
Accurate pricing of menu items is an art in itself and is never easy as it seems. Pricing your items properly will ensure that your customers order from you over and over again so you are able to sell more and use the ingredients before the expiration date.
According to experts, an ideal food cost per dish should be between 15-30%. If you are spending anything more than 30%, maybe it’s time to reassess your menu prices or find a new vendor to source less-expensive ingredients.
There are several details to consider before arriving at the perfect pricing of a dish. Some of these are:
Overhead costs: such as decor, electricity bill, salaries, website maintenance, marketing, etc.
Direct costs include what you pay to procure and prepare food itself. It involves the purchasing of raw material, portion sizes, wastage, and spoiling.
Indirect costs involve the perceived value of the food. This allows you to add your margins to the final price
Volatile food costs involve fluctuation in the price of raw material due to natural calamities, economic conditions, and seasonal changes.
It is also important that you research the pricing strategy of your competitors
Reward your staff for inventory savings
Train your employees to care by keeping them involved in the process. Make them understand that if they are able to bring down the wastage and bad orders, they’ll be able to see the numbers reflected in their own paychecks.
Designate not more than three people to take your inventory. Even if they are experienced, show them how you’d prefer to handle things for your business. Creating SOPs will help you identify inconsistencies and ensure accuracy.
Are you ready to master inventory management?
Efficient inventory management means that you must always be on top of your numbers. Be more organized and keep a track of these numbers on a weekly basis. This will help you gather observations that you can utilize to create strategies that lower food costs and increase profitability.