Restaurant inventory management cannot be ignored when trying to keep costs down to maximize profits. It’s a delicate balance of ordering food, especially perishables, in a timely manner, so that everything that is ordered is used and does not spoil or take up unnecessary space. And, all of this needs to be accomplished at the lowest price possible.
But in recent times, with supply chain upsets and customer unpredictability, restaurant inventory management has become a daunting task. When a restaurant tries to order items, such as proteins, produce, or seafood, for example twice a week, the prices fluctuate so much that the restaurant inventory managers tend to just give up trying to procure supplies at the lowest price.
So what are the four things a restaurant should do in these times but aren’t?
Making inventory management a priority in the face of supply chain issues
There are several good reasons why a restaurant should make inventory management a priority. Food costs are generally 28% to 35% of the total costs for a restaurant. But, when food spoils or is lost, the food costs are higher than that.
Customer satisfaction is another good reason to make inventory management a priority. Keeping prices reasonable for the customer without compromising quality will guarantee satisfied customers.
And, of course, keeping food costs down increases profits as is every restaurant’s goal. However, when there is a shortage of time and staff, how can inventory be managed efficiently?
- Organize inventory
- Keep just enough stock that serves the customers but does not spoil or take up unnecessary space
- Keep track of how much of a specific item is sold in a certain period
- Track every item in inventory
- Automate reordering
- Forecast demand based on prior trends or seasonality
- Analyze the exact recipe cost by calculating the price and exact amount of each ingredient
Another way of managing inventory efficiently is to analyze the menu for how popular each dish is. Once the popularity and specific costs of each dish are determined, decisions may have to be made whether to increase the sales of certain dishes, change the price point, find less expensive ingredients, or discard the less popular dishes from the menu.
Keeping track of costs
Keeping track of costs is complex, and just shopping for the best price isn’t necessarily going to be the right move for your restaurant business. Why? Because the best or lowest price does not necessarily provide the best quality goods. Yes, there are savings on costs, but will the customers be happy with their dining experience?
Establishing relationships can be helpful when trying to establish the best price for the best quality of supplies. Seeking information from other restaurants, which sell the same type of product, on what they are paying and where they are getting their goods can provide steady cost-savings.
Take a hard look at the dishes on the menu and the way they utilize ingredients.
Because prices of produce, protein, and seafood can fluctuate at a moment’s notice, doing a flash cost-quick analysis, periodically, of what dishes are costing can help with restaurant inventory management. If prices go up, this needs to be accommodated with price increases of the dishes to make up for the cost differences.
Different brands or different package sizes can have a determination on cost as well.
For example, maybe there is a particular brand of an item that has always been used in a recipe. However, after some calculation, a conclusion is made that a different brand is less costly. A decision may have to be made to transition to the other brand to save on costs.
The same can be said for package sizes as well. If the regular purchasing habit is to buy half of a case of a non-perishable product for an established price, but later it is determined that buying a whole case will save on costs, the decision to purchase a whole case of the product will contribute to good restaurant inventory management.
Paying attention to the costs of specialty items included in the menus or dishes also is a big factor in inventory management. Because these are specialty items, not readily available, the costs will tend to be higher, and it’s important to pay attention to who has them and at what cost.
Teaming up with other restaurants into a group purchasing organization
A lone restaurant that does business with a supplier pays a price that may make food costs higher. That restaurant can then look to other suppliers for a lesser price for the same product but may sacrifice quality in the process. This not only applies to food products but also, janitorial supplies, linens, and uniforms as well.
Inserting your restaurant into a group purchasing organization with other restaurants gives you leverage for not just pricing, but also the quality of the products and priority ordering for hard-to-find ingredients. The volume of products with an existing supply chain will bring the lowest price by teaming up with other restaurants.
There are other benefits to joining a group purchasing organization with other restaurants.
- Using in-network suppliers will bring lower prices
- Able to compare pricing across the platform
- A purchasing agent will help with the purchasing process and sourcing
- Automated supply purchasing
- The platform will continuously keep track of which suppliers have the lowest costs
- Recipes and menu items can be constantly cost-analyzed
Managing restaurant inventory is not a responsibility that can be put on the back burner if there is limited staff or a shortage of time. This must be a top priority at all times, especially in times such as these.
Keeping track of costs, paying attention to how the menu utilizes ingredients, and teaming up with other restaurants are also top priorities to lower food costs, maximize profits, and keep customers satisfied.
Contact us at ChefMod to see how we can assist with your restaurant inventory management while reducing your restaurant costs without sacrificing quality.
Find out how ChefMod can help you streamline your restaurant’s purchasing process, lower your food and supplies costs through our online marketplace, and increase your bottom line for good!
Power to the Chef!