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How restaurant inventory software can help owners perform better

Restaurant Inventory Software

Boosting top-line sales and revenue might sound like a recipe for success in the restaurant industry, but with increased sales comes the challenge of managing a more complex operation and dealing with additional costs, particularly food costs. 

Not to mention, with current instability in procurement leading to a lack of ingredient availability and fluctuation in supplier prices, restaurant owners have a lot on their plate.

So to keep your restaurant on the path to increased profitability and to navigate these challenges, it’s essential to have strict oversight on food costs and increase operational efficiency. 

Doing that means tracking food costs, minimizing wastage, constantly assessing menu prices and having real-time data and analytics on your inventory available at all times. That is exactly where implementing an advanced restaurant inventory management software can help. 

This article delves into the importance of inventory management software, how it can directly contribute to controlling restaurant food costs, as well as offering actionable insights and tips to maximize profitability. 

1. What Is Inventory Management?
2. Understanding Restaurant Inventory Management Software And The Importance Of Integrated Data
3. Streamlining Inventory Process And Optimizing Workflows
4. Performing Weekly Stock Counts
5. Food Cost Variance: Ensuring Your Costs Do Not Exceed What You Planned For Initially (Theoretical Vs Actual)
6. Over Portioning And Recipe Accuracy
7. Tracking And Analysing Daily Waste
8. Controls On Procurement
9. Menu Engineering
10. Actionable Insights And Business Intelligence
11. Conclusion 
12. About Supy

1. What Is Inventory Management?

Inventory management is the systematic tracking, organizing, and control of all items and supplies within a restaurant’s inventory. While it helps restaurant owners ensure their operation is running as planned (i.e. actual food costs do not exceed planned food costs) it also helps restaurant chefs and procurement managers determine how much stock to order, balancing the need to meet customer demands with the limitations of storage space. 

Compared to bars, restaurants face the additional challenge of managing perishable food items, requiring swift turnover to prevent spoilage. As food comes in from suppliers, inventory management tracks its usage, losses, and leftovers.

While inventory management can be done manually using spreadsheets and manual counting, that process is cumbersome and prone to errors. 

Inventory management software streamlines this process, providing more accurate tracking and counting of products. Not to mention, it offers better insights into financial and performance data, enabling informed decision-making, and can automatically reorder stock when inventory levels reach certain thresholds. What’s not to love about that?

2. Understanding Restaurant Inventory Management Software And The Importance Of Integrated Data

One of the challenges the F&B industry has is integrating data between systems. One of the benefits of Inventory Management Software is that it can serve as the bridge between software systems in restaurants, facilitating communication and data transferability between disconnected systems.

By integrating with POS systems, accounting software, and procurement platforms, Inventory Management Software enables the aggregation and consolidation of data from across the restaurant’s operations. 

Through open APIs and real-time insights, Inventory Management Software fosters compatibility, meaning that data flows freely between different systems. 

This seamless integration streamlines processes, enhances efficiency, and empowers restaurant managers and owners to make informed decisions based on a complete and accurate picture of their operations.
Restaurant Inventory software

3. Streamlining Inventory Process And Optimizing Workflows

Software can optimize the inventory process by reducing inefficiencies, minimizing errors, and saving time.

Efficiency: By implementing streamlined inventory processes, redundant tasks are eliminated, and workflows become more efficient. This means that employees spend less time on manual tasks such as counting and tracking inventory, allowing them to focus on other essential aspects of their roles. 

Accuracy: Streamlining the inventory process often involves using inventory management software or automated systems. These tools provide real-time tracking and data analysis, reducing the likelihood of errors associated with manual data entry or counting. As a result, inventory counts and records are more accurate, leading to better decision-making and inventory control.

Time Savings: With streamlined inventory processes, tasks that used to take hours or even days can now be completed in a fraction of the time. Automated systems can quickly generate purchase orders, reports, and update inventory levels, saving employees valuable time that can be allocated to more productive activities.

Cost Reduction: By optimizing workflows through streamlining inventory processes, businesses can better control costs associated with excess inventory, stockouts, and manual labor. Accurate inventory tracking helps prevent overstocking, which can tie up capital and lead to waste, while also minimizing the risk of stockouts, which can result in lost sales and dissatisfied customers.

Accounting Integration: With all invoices from suppliers now being automatically recorded in your inventory management software, say goodbye to manually entering hundreds of invoices per month in your accounting software, and waiting till the following month to understand your actual purchase value. With cutting-edge inventory management softwares, integrating your invoices into your accounting software has become instant and seamless.

4. Performing Weekly Stock Counts

Modern restaurant inventory management softwares will enable the implementation of weekly stock counts through user friendly tools and streamlined processes. This is important in order to keep food cost variance in check throughout the month. 

  • Ease of Use: Modern inventory management software is designed with intuitive interfaces that make it easy for staff to conduct inventory counts. With user-friendly features and clear instructions, employees can quickly learn how to perform weekly counts without extensive training, or long hours spent doing it.
  • Mobile Accessibility: The more advanced inventory management systems offer mobile apps, allowing staff to conduct counts using smartphones or tablets. This flexibility enables on-the-go inventory management, making it convenient and time efficient  to perform weekly counts.

5. Food Cost Variance: Ensuring Your Costs Do Not Exceed What You Planned For Initially (Theoretical Vs Actual)

No matter how well restaurant managers plan their recipes and engineer their menu, it is essential to ensure that the plan is accurately followed; any deviation can have a significant impact on food cost. 

Restaurant Inventory Management softwares give you strong insights on food cost variance,  which is the difference between a restaurant’s actual food cost percentage and its theoretical one, and it is used as an indicator of how efficient a restaurant is at controlling food costs. The lower, the better.

Food cost variance in restaurants can arise from several factors, including:
  • Recipe inaccuracies
    • Recipe inaccuracies can lead to differences between theoretical and actual ingredient usage, while ingredient substitutions without proper documentation can result in inaccuracies in cost calculations. 
  • Ingredient substitutions
    • Inconsistent portioning and inaccurate ingredient receiving further contribute to deviations between theoretical and actual food costs. 
  • inconsistent portioning
    • Inconsistent portioning leads to a deviation between theoretical and actual food costs. 
  • inaccurate ingredient receiving
    • Receiving the wrong amount of ingredient from suppliers also causes differences between theoretical and actual costs.
  • outdated supplier prices
    • Having outdated supplier prices and the omission of complimentary items or management meals from inventory records can lead to discrepancies in cost calculations. 
  • complimentary items
  • management meals
  • human error
    • Human error, especially when inventory is managed manually, and inaccuracies in stock counts can also cause disparities between theoretical and actual food costs.
  • inaccurate stock counts
  • theft
Human error, especially when inventory is managed manually, and inaccuracies in stock counts can also cause disparities between theoretical and actual food costs. Additionally, theft poses a significant challenge, as it can lead to unaccounted-for inventory losses and discrepancies in cost calculations. Implementing an advanced inventory management system is crucial for minimizing errors, enhancing variance management, and ensuring optimal financial performance.

6. Over Portioning And Recipe Accuracy

In the restaurant business, maintaining strict control over portion sizes and adhering to recipes is crucial for managing food costs and ensuring customer satisfaction through consistent quality. Over portioning, or serving more than the standard recipe calls for, directly impacts a restaurant’s profitability by increasing food costs and potentially leading to inconsistent dining experiences. Similarly, inaccuracies in following recipes can result in variations in taste, appearance, and cost, undermining the establishment’s reputation and customer loyalty.

Over portioning not only affects the cost efficiency of a restaurant but also its operational consistency. When portions vary, it becomes challenging to predict inventory needs accurately, leading to either excess waste or insufficient stock. Recipe accuracy is equally important; it ensures that every dish served meets the expected standards for flavor, presentation, and portion size, contributing to a reliable and high-quality customer experience.

Implementing the best restaurant inventory management software plays a significant role in addressing these challenges. These systems can provide detailed analytics on portion sizes and recipe adherence, offering insights into where deviations are occurring and their impact on costs. By monitoring these metrics, restaurant managers can identify trends, train staff more effectively, and make adjustments to recipes or portion sizes as needed.

Furthermore, restaurant inventory management software can assist in standardizing recipes across the board, ensuring that each ingredient’s quantity is precisely calculated and consistent from one dish to the next. This standardization helps in minimizing food waste and optimizing inventory levels, as precise forecasting becomes more achievable.

To combat over portioning and ensure recipe accuracy, some of the best restaurant inventory management software includes features like digital recipe books that can be accessed by kitchen staff in real-time, ensuring they always have the most up-to-date version. These systems can also integrate with POS systems to track the popularity of dishes and adjust inventory orders based on actual sales data, further aligning food cost management strategies with customer preferences and demand.

By focusing on over portioning and recipe accuracy, restaurants can significantly improve their cost control measures and maintain the high quality of their offerings. Leveraging technology through restaurant inventory management software enhances these efforts, enabling more precise control over food costs, reducing waste, and ensuring that customers receive a consistent, high-quality dining experience every time.

7. Tracking And Analysing Daily Waste

Accidents while cooking are inevitable, and so are expired ingredients, both of which can lead to some food waste occurrences. However, it’s crucial to track, document, and reconcile these incidents to ensure accurate variance figures and cost calculations, preventing financial losses.

As previously highlighted, restaurant inventory management software helps in comprehensively managing inventory depletion. To maintain accuracy in inventory levels and cost of goods sold (COGS) figures, it’s essential to account for all instances of food waste. This can be facilitated by maintaining detailed records of food waste events through a restaurant inventory software’s mobile application, enabling the calculation of losses for subsequent inventory periods.

By recording daily food waste, owners can avoid over wasting by having alerts and notifications when wastage amounts hit a certain threshold. A common high wastage reason is expired goods, which is most likely due to over ordering, in other words, an inefficient procurement process.

8. Controls On Procurement

Creating an efficient restaurant procurement process involves considering various factors to ensure timely and accurate inventory management. Firstly, establishing appropriate par levels for each ingredient is essential. Par levels represent the ideal quantity of inventory to keep on hand to meet anticipated demand without excess or shortage. These levels are determined based on factors such as historical consumption patterns, seasonal variations, and sales forecasts.

Additionally, understanding the lead time by supplier is crucial for effective procurement. Lead time refers to the duration between placing an order with a supplier and receiving the goods. Having this information allows restaurant owners to plan their orders accordingly, ensuring that ingredients arrive when needed to avoid stockouts or overstocking.

Forecasting demand is another critical aspect of restaurant procurement. By analyzing historical sales data, seasonal trends, and upcoming events, restaurant owners can predict future demand for different menu items. This helps in adjusting order quantities to meet anticipated demand levels and prevent excess inventory or stockouts.

Furthermore, maintaining awareness of current stock on hand is essential for efficient inventory management. Restaurant inventory software provides real-time visibility into inventory levels, allowing managers to track stock levels accurately and make informed decisions about when to reorder ingredients.

Considering safety stock is also important to buffer against unexpected fluctuations in demand or supply chain disruptions. Safety stock represents the extra inventory kept on hand as a precautionary measure to mitigate the risk of stockouts during unforeseen circumstances.

Restaurant inventory software with a dedicated procurement module streamlines these processes by capturing and consolidating relevant information. It analyzes data on par levels, lead times, demand forecasts, current stock levels, and safety stock requirements to recommend optimal ordering levels for each ingredient.

Moreover, as an owner or a restaurant manager, as much as one can trust their team and the software, having an approval workflow in order to avoid any human errors before orders go out to suppliers is necessary. This additional layer of oversight helps ensure that orders are accurate, appropriate, and aligned with the restaurant’s inventory management goals.

In summary, controls on restaurant procurement and implementing approval workflows can streamline the procurement process, minimize errors, and optimize inventory management practices for improved efficiency and profitability.

9. Insightful Data-Driven Decisions

Utilizing menu engineering helps owners in determining optimal pricing for menu items, as well as strategically adjusting prices to accommodate additional expenses related to increase in ingredient prices or delivery services fees. Also known as menu management, this strategic process integrates data-driven insights to design a profitable menu. Analysis begins by identifying the most profitable and popular items, as well as the least profitable and least popular ones, categorizing them into four groups: Stars, Plowhorses, Puzzles, and Dogs. Based on these categories, restaurant owners can then decide on the appropriate actions to maximize sales of profitable items and increase visibility of less popular ones, or to reduce cost of non profitable items.

It’s important to recognize that menu engineering is an ongoing process that requires combining collating your cost and revenue numbers, which requires an advanced inventory management software. Through continual monitoring and adjustment of the menu, restaurant owners can fully harness its potential for success in the competitive culinary landscape.

10. Actionable Insights And Business Intelligence

In addition to controlling food costs, the primary objective of utilizing inventory management software is to derive actionable insights into your business through user-friendly dashboards, alerts, and notifications. A robust Business Intelligence tool empowers operators to construct dynamic, visually instructive dashboards that offer context and guidance, facilitating the comparison of multiple variables to uncover hidden correlations and identify profit-draining outliers that might be obscured by larger trends. This capability directly influences profitability.

However, merely gathering data is insufficient. The true advantage lies in interpreting the data and applying it to your operations effectively. Business intelligence plays a pivotal role in evaluating restaurant data and driving critical business decisions, such as inventory management, scheduling organization, loyalty program creation, and store performance enhancement. These focal areas contribute to increasing profits and ensuring the smooth operation of your business.

A comprehensive business intelligence solution that consolidates and simplifies the influx of data into real-time, user-friendly visuals enables leaders at every level to bridge the gap between events and profit-driving decisions, resulting in enhanced operational efficiency and profitability.

11. Conclusion

Irrespective of the chosen approach, successful leaders in the restaurant industry invariably commence from a common starting point: a comprehensive understanding of their business operations. This foundational comprehension is crucial as it forms the bedrock for informed decision-making and strategic planning.

The importance of measuring performance in this context cannot be overstated, as it distinguishes industry leaders from the rest of the pack. Without operational data, restaurant management remains in the dark regarding the specifics of their business’s performance, lacking essential control. Operational data serves as a beacon, illuminating strengths and areas ripe for improvement.

Armed with operational data, management can steer their efforts in the right direction, confidently tackling challenges as they arise. The disparity between entrepreneurs who rigorously monitor metrics and restaurant KPIs and those who rely solely on intuition will only grow wider with time.

12. About Supy

Your back-of-house spending, controlled.

Supy is the data-driven, all-in-one in inventory management platform designed to help restaurants look within, cut costs, and maximize profits. Our suite of interconnected modules, which includes Procurement, Invoices & Settlements, Inventory Management, Menu & Recipes, Central Kitchen, and Reports & Analytics, enables data-driven decision-making across a food business’s operations.

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