Developing an effective restaurant inventory strategy is a crucial part of your entire management system. It is equally important to have an optimal level of inventory so that your services and operations will go smoothly.
Food waste is a massive problem in the Food and Restaurant Industry. It doesn’t matter what type of operation you’re running, as long as there’s a considerable amount of waste, you’re still losing money.
In a typical restaurant kitchen, four out of ten percent of food is wasted before it reaches the dining area? This is a big chunk of resources, and if you put this amount in monetary terms, you’ll see how much money your business is losing.
Trying out different tactics such as menu engineering and working out your portion sizes may help. But if you’re not going to address the root cause of the problem, you’ll just end up encountering the same issues over and over again.
Being on top of your food waste management gives you the potential to be more in control of your business finances. It allows you to maximize your purchasing authority and gives you more freedom in your management and operations side.
Getting to know different inventory management facts and tips can help you build a stronger business foundation and improve operations.
Inventory Management in Restaurants
Better handling your revenue and expenses all starts with proper management of inventory. It may not be the most exciting part of the job, but it pays its worth with you and your entire operations.
Having a good understanding of your inventory will produce sustainable and profitable management. Utilizing the perfect tools can make things easier for your and your team to be on top of your inventory game.
The management of inventory in a restaurant involves tracking, recording, and reporting which commodities enter and leave your establishment. It is a key factor in loss prevention. It provides a clear picture of your margins.
You may be losing money without knowing it if you don’t consistently track your inventory.
Restaurants, fast-food chains, and retail establishments where inventory spoils are especially vulnerable to inventory losses.
One of the most difficult elements of operating a food business is adequate inventory management. This process can be cumbersome, time-consuming, and labor-intensive depending on the resources available.
There is also the challenge of accurately predicting consumer preferences, and deciding how much inventory to keep is always subject to change; however, if your business is consistently losing money on food, you are very likely to be out of business by the end of the year.
Data tracking, monitoring, and analysis can help you identify waste and inefficiency patterns. A food business’s success depends on its ability to manage its inventory effectively. However, most operators fail to utilize this valuable resource to its full effect.
Terms To Remember
As mentioned above, this task is not the most interesting task under restaurant management. There are plenty of procedures and terms to remember to master the art of restaurant inventory management.
The variance of product price is the difference between the product cost and the usage amount cost. As an example, suppose you had a slight decline in inventory to $100 worth of haddock at the end of the day, while your POS says only $75 worth was sold.
This means you are not accounting for $25 worth of haddock, and your food cost variance is now -$25.
It is the amount of merchandise, or dollars worth of merchandise, used in a given period. A POS can often calculate depletion based on the sales reporting data. Depletion can be calculated daily, weekly, or monthly.
Present product inventory in your restaurant. Your sitting inventory should be either the physical amount of products or their dollar value, depending on your business. Regardless of the unit, stay consistent and only use one measurement.
Calculated by dividing the sitting inventory based on the average period of depletion.
Here’s how the formula works:
Sitting Inventory / Average Depletion (within a defined timeframe) = Usage
For example, if you have sixteen gallons of tomato sauce and you plan to use four gallons per week, it would take four weeks to use up the oil.
How To Manage Your Restaurant Inventory Effectively
Working on your inventory requires great focus and attention to detail. Even if it’s already automated, system errors can still hold your entire process back. Accurate and smooth management can be achieved with these basic steps.
Make improvements to your stockroom
Having a strategy won’t work if you can’t implement it right away. Ensure that every stock shelf in your stockroom is clean and organized. This will make it easier for you to monitor, track, and manage your inventory.
A disorganized stockroom leads to common inventory mistakes such as over-stocking, under-stocking, and double counting. Encountering these leads to frustration on your team, resulting in lower morale in work.
Start cleaning and organizing your items accordingly. You may consider keeping the ingredients by category. This prevents cross-contamination on your end and makes it easier for your kitchen team to locate the ingredients that they need.
Install more storage cabinets if your stockroom is getting too crowded and you don’t have enough room for another one. Shelf additions prevent ingredients from being left on the floor because there is not enough space to store them.
Keep your cupboards and shelves labeled to make sure that your ingredients are in their proper places. Having it on hand also eases the workload of your staff during busy shifts.
Anything that is organized increases efficiency. And should you need to do your inventory, the process will now be simpler.
Integrate your POS System
In a labor-intensive working environment, you need to deploy everything that will make your life more convenient. Point-of-sale systems were considered the heart of any restaurant management. It makes every process more manageable and easy to understand.
This goes with your inventory as well. Make sure that you upload every menu on your POS system for it to track and monitor every ingredient needed. It may be tedious at first, but it’ll be worth it once you’re done inputting every key ingredient that a specific menu item needs.
Once you’re done with it, you also need to indicate the minimum required ingredients it needs. Remember to associate and link it with your suppliers as well. Your system will automatically update and connect every data you’ve entered.
Most of the modern POS systems have basic restaurant inventory management software in them. But if you want access to more detailed and informed reports, you can always integrate them one your POS system.
Through this, you’ll never run low on ingredients and you’ll keep your inventory on track accurately. It will send alerts if replenishment of certain ingredients and materials is already needed.
Create a reliable team
Although every staff member must have basic knowledge regarding inventory management, you must assemble a team who are highly trained for this type of task.
When it comes to conducting stock counts, two people work best, as this reduces the possibility of human error and ensures accurate results. The key to good inventory management lies inconsistency; whoever manages the stock today should also do so tomorrow and the next day.
Your inventory manager needs to know that good inventory management is meant to improve your restaurant’s financial standing and cash flow as well as making their jobs more secure.
Conduct multiple trial inventories
With your POS system, you’ll be able to do stock takes without grabbing pen and paper. Make a list of all the items you can count. All items that need to be weighed should be weighed. Save all the changes after updating all the quantities.
Next, it is essential to have someone else repeat the process. When your numbers are all in agreement, you have completed your task. Even though automating your process reduces the need for manual labor, it is still helpful to have additional data on hand.
A POS system provides you with easy access to inventory reports. Afterward, you can compare every piece of data with what you have previously worked with.
In a world where purchasing orders and customer sales are automatically updating inventory, a manual count of inventory might not seem cost-effective, but purchase orders and sales don’t reveal the full story about inventory.
Establish a schedule and follow it
Particularly with high-priced items, it is important to verify assumptions and check ingredients to have an accurate picture of where you’re at.
Additionally, your inventory data remains valuable even after your inventory has been consumed. By staying on schedule, your information will accumulate for weeks, months, or years to analyze and use as a decision-making tool.
The more reliable data you supply to your system, the better insight you’ll receive into your restaurant business, and the more you can automate your purchasing.
Keep your inventory schedule consistent by scheduling it at a consistent time each day. This will allow you to calculate your cost of goods sold (CoGS) and manage your budget using a cleaner set of data.
Keep tracking and monitoring for accurate reports
Whenever food goes out of your inventory, you should know and record the reason behind why. Sales reports are often the source of that information. However, what if the food didn’t sell and was still removed from the shelves? That’s something you must understand as well.
You shouldn’t simply discard expired ingredients when performing an inventory by hand. Notate the reasons for any wastes encountered in the system. This applies to spilled items, returned items, and customer exchanges.
With your system, you can identify where your waste is occurring and take action to prevent it from occurring again.
A good inventory management strategy goes beyond simply keeping track of assets. It’s easier to understand the impact of your losses when you have the figures to back them up. Taking measures to prevent further wasting can be accomplished if you know why you wasted in the first place.
Update your inventory according to your deliveries
Always make sure that you start from a fresh, verified count when making deliveries. When stock is updated, the system ensures the information is accurate and helps eliminate confusion when new inventory is added to existing stock.
Accurate deliveries are expected if your inventory is up to date. No more over and under-stocking because you already have the proper data as your basis.
Monitor and analyze your data
Your purchasing will be adjusted based on how your actual usage compares to your predictions. Using this, you can quickly identify what’s coming in, what’s going out, how much is being wasted, and so forth.
Keeping an eye on real-time data will help you become better at understanding your restaurant’s processes, what it costs, and ways you can save money.
A comprehensive inventory exercise gives you a better understanding of your business. As inventory flows from the delivery door to the stomachs of your customers, you’ll have the data to ensure that this continues.
The benefits of good software are obvious, but you must do the work necessary to maintain it. You already paid for your supplies, so that means it is also revenue waiting to happen.
By following these steps, you’ll be in complete control of your business’ inventory. As a result, you cannot only make informed choices but also complete the rest of the tasks on your endless to-do list.
Restaurant Inventory Procedures
Regardless of the restaurant business model that you operate with, here are some of the basic procedures involved in your inventory management process.
Specifying ingredients and menu items
Defining the specific ingredients for each of your dishes is the best place to begin. It is important to document each specification to ensure consistency and at a minimum, to include the product attributes, the name of the ingredients, and any important dates.
The process will make sure the supplier has not altered specifications or materials.
Creating a Supplier List
For purchasing and quality control, it is important to have a list of approved suppliers for each ingredient. In addition to the ingredient name and inventory code, the label should also list the name and contact information for the supplier, as well as the trademark for the ingredient.
For each food item, there should be a written recipe or formula that explains how it was used. You can use this function to establish consistency between batches, dishes, or even production days.
Establishing Standards for Your Products
Documents describing a product standard are among the most important tools for quality assurance in a restaurant. Standard properties of a finished product include physical, microbiological, and chemical traits.
Shape, volume, size, dimensions, weight, and any other specific characteristics of products are important to note.
Standard microbiological tests vary by food item, and imports and pathogens must be taken into account. Decide upon the criteria for rejection of each food item and determine how to determine them. The local health department regulations should dictate your minimum rejection standards.
Identifying procedures for manufacturing
In identifying important processing operations, many factors should be taken into consideration, such as temperature, equipment needed, timing, and ingredients ordered. Share with your kitchen staff the method you use to prepare each menu item.
Embedding and packaging
Your quality control program should cover packaging and labeling. As your customers come into contact with them first when they order takeout or line up at your quick service restaurant, they are vital to your success.
Primary and secondary packages are two basic forms of packaging for food items. A primary package, such as a carton, box, jar, or bottle, contains the food and comes in direct contact with it.
In addition to the primary package, multiple packaged food items can also be protected with the secondary package. For example, a paper or plastic bag can be used as a secondary package.
Regardless of the type of packaging, the label must contain the product name, manufacturer or distributor name, an ingredient statement. In addition to print size and accuracy representation, government regulations demand correct labeling on packages.
Practicing production efficiency and sanitation
In the USA, there is a set of federal regulations called Good Manufacturing Procedures (GMPs) that stipulates precise procedures for minimizing food contamination in production, storage, and processing facilities.
It is the owner or manager’s responsibility to make sure that GMPs are followed by staff members. GMPs are an important aspect of quality control. It is important to implement a consistent sanitization and cleaning plan along with GMPs ensuring contamination does not occur.
Work with your local health officer and know what are the sanitation legalities you need to know in food handling and food preparation. It is beneficial for your restaurant to establish and maintain a clean brand.
Remember that if your customers report anything scandalous about your restaurant or make them question sanitation, it will negatively affect your brand. The repercussions will be hard to recover from, especially if your business is preparing and serving food to the public.