Restaurant Procurement : Top Tips To Run It Efficiently
- October 4, 2023
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Nouhad Es-Said
Nouhad Es-Said
Anyone working in the world of restaurant management knows the crucial role of restaurant purchasing and procurement operations. Restaurant procurement ensures that all the ingredients that make up your menu and dishes are procured efficiently, meaning in the right quantities. Order too much, and you’re dealing with a potential risk of food waste. Order too little, and you risk missing out on sales as you won’t be able to sell a menu item. But the challenge of efficient restaurant procurement doesn’t stop here : picking the right suppliers and high quality ingredients is also a vital part restaurant operators and procurement managers need to nail. Running an efficient purchasing operation can lead to significant profits.
This article jumps into what is restaurant procurement, and elaborates on how the wonders of modern procurement can sprinkle some magic into a cost-effective purchasing cycle.
- What Is Restaurant Procurement & Why Does It Matter
- Understanding the Typical Purchasing Cycle In A Restaurant
- How To Pick The Right Restaurant Supplier
- Diverse Restaurant Procurement Modalities In Restaurant Management
- The Role Of Trade Deals And Discounts In Shaping Food Cost Dynamics
- Reassessing Prices In Light of Current Tenders
- Analyzing Your Purchasing Trends
- Conclusion
- About Supy
1. What Is Restaurant Procurement & Why Does It Matter
At the heart of a successful culinary operation lies the process of restaurant procurement. So, what exactly is restaurant procurement? Simply put, it is the strategic method of sourcing, ordering, and managing the essential ingredients and supplies required for a restaurant to function seamlessly.
Typically, this responsibility falls upon the shoulders of procurement managers or purchasing officers in larger establishments, while in smaller eateries, it might be overseen by the head chef or the owner themselves. The procurement process goes beyond just buying goods; it’s about forging relationships with reliable suppliers, ensuring consistent quality of ingredients, and balancing budgets. However, the road of procurement isn’t devoid of challenges.
From negotiating favorable terms with suppliers and maintaining the consistency of ingredients to navigating the fluctuations in market prices and ensuring timely deliveries, procurement managers constantly juggle various facets to keep the restaurant’s operations smooth. The effectiveness of a restaurant’s procurement strategy can significantly influence its profitability, customer satisfaction, and overall reputation.
2. Understanding The Restaurant Procurement Cycle
The restaurant world thrives on detail. Every element of the restaurant purchasing cycle, from setting par levels to updating inventory, plays a vital role in ensuring the establishment runs smoothly, profitably, and consistently delivers quality to its customers.
a. Analyzing Par Levels and Min Levels: Central to any restaurant purchasing system is the concept of Par Levels and Min Levels. Your restaurant inventory management software should constantly track your stock, ensuring there’s no wastage, while also preventing shortages.
Consider potatoes. If your restaurant’s daily usage is 20kg and you receive shipments twice a week, a par level (ideal stock level) might be set at 50kg. This provides a buffer.
The min level, on the other hand, is a trigger point for reordering, say at 10kg. By understanding and setting these levels, restaurants can better manage their restaurant supply chain and avoid unnecessary purchasing costs.
b. Forecasting Demand: Beyond historical data, understanding local events, seasonality, or even weather patterns can aid in anticipating demand. For instance, if there’s an upcoming local festival where potato dishes are a hit, forecasting allows for increased orders. This proactive approach ensures you’re not caught off-guard by sudden spikes in demand.
c. Creating a Purchase Order: A detailed purchase order is a blueprint of your restaurant purchasing expectations. It’s not just about listing items but being precise. For example, a vague order might get you overripe tomatoes, unsuitable for a salad but okay for a sauce. Hence, specifying ’50 kgs of ripe, medium-sized tomatoes’ provides clarity and sets expectations for both parties in the restaurant supply chain.
d. Supplier Confirmation: A seemingly small step, but confirming orders can be the difference between a smooth service and a kitchen in chaos. Imagine prepping for a signature salmon dish, only to find out there’s no salmon! Confirmation avoids such mishaps, ensuring you don’t compromise dish quality or resort to pricier last-minute alternatives.
e. Goods Receiving Process: In the hustle and bustle of a busy kitchen, it’s easy to overlook discrepancies. Establish a system where every delivery is meticulously compared with the PO. If deviations are found, they should be addressed immediately. For instance, receiving 18kg of cheese instead of the ordered 20 can impact several dishes, especially in a large establishment.
f. Efficient Storage: Purchasing food is only part of the equation. Proper storage dictates its longevity and quality. Implement FIFO (First-In-First-Out) practices to ensure older stock is used first. Store items like dairy products in colder parts of the fridge to maximize freshness. Remember, efficient storage directly impacts food waste and food costs.
g. Invoice Management: In this digital age, clinging to paper invoices can lead to errors and misplaced documents. Digitalizing them makes for easier tracking, instant retrieval, and better financial oversight. Additionally, it paves the way for seamless integration with accounting software, optimizing the entire financial aspect of the restaurant supply chain.
h. Updating Inventory: With advanced inventory management software, gone are the days of manual stock-taking. Regular, consistent updates prevent scenarios like discovering a key ingredient is out of stock during peak service. This not only streamlines operations but also aids in providing consistent customer experiences.
Keep in mind that the usage of a restaurant purchasing software remains a considerable time-saving initiative for you and your team. Keeping your par and minimum levels optimal, ordering with speed and accuracy, and receiving your goods accurately are some of the ways that a restaurant purchasing software will help you save time and money.
3. How To Pick The Right Restaurant Supplier
Selecting suppliers is not just a transactional process. It’s a strategic endeavor that directly impacts the quality of food, operational efficiency, and ultimately, customer satisfaction. Ensuring a careful balance between quality, price, and reliability in the restaurant supply chain is crucial for long-term success.
Here are some of the things to keep in mind :
a. Quality vs. Price: While cost-efficiency is vital in restaurant purchasing, it should never come at the expense of quality. Opting for a cheaper supplier might seem like an immediate saving, but if their seafood arrives less fresh or their produce is inconsistent, the real costs can be far-reaching. A dish compromised due to inferior ingredients can lead to dissatisfied customers and negative reviews. In today’s age of online feedback and reviews, compromising on quality for a slight price reduction can significantly tarnish a restaurant’s reputation, leading to long-term revenue losses.
b. Delivery & Cut-off Times: Timeliness is essential in the F&B industry. The rhythm of a restaurant’s operations is often meticulously choreographed around delivery schedules. If a restaurant starts its preparation process by 10am, ingredients should ideally be on-site well before this time. A supplier delivering at noon disrupts this flow, potentially delaying service. Thus, understanding and aligning with a supplier’s delivery and cut-off times is crucial to maintaining the smooth operation of the restaurant supply chain.
c. Supplier Diversification: Relying too heavily on a single supplier exposes a restaurant to significant risk. An unexpected issue, from a crop failure to a transportation strike, could disrupt supplies. By diversifying suppliers, a restaurant can mitigate these risks. For example, having two or more suppliers for essential ingredients, like poultry or grains, can ensure continuous availability, even if one supplier faces challenges.
d. Vendor Credit: Cash flow is a primary concern for many restaurants, especially in seasonal businesses. By negotiating favorable credit terms with suppliers, restaurants can manage their finances more effectively. For instance, securing a 30-day payment term instead of a standard 15-day term can offer greater financial flexibility, allowing a restaurant to better navigate lean periods or unexpected expenses.
e. Purchasing Methods: Different outlets, even within the same franchise, might have varied preferences based on locality, customer demographics, or logistical reasons. One outlet might favor Supplier A for beef due to its proximity, ensuring fresher deliveries. In contrast, another might opt for Supplier B, offering a specific cut popular in that region. However, for franchises aiming for a consistent brand experience, centralized purchasing ensures standardization. This means that every outlet offers the same taste, quality, and dish presentation, reinforcing the brand’s identity and promise to its customers.
4. Diverse Restaurant Procurement Modalities in Restaurant Management
Navigating the complexities of restaurant purchasing and understanding the nuances of different restaurant procurement strategies is pivotal for a streamlined restaurant supply chain. Utilizing Restaurant Purchasing Software can provide valuable insights and tools to assist in this endeavor. The chosen restaurant procurement method often mirrors the establishment’s size, objectives, and the intricacies of purchasing food.
a. Centralized vs. Decentralized Procurement:
Centralized Procurement: Here, a centralized purchasing department or hub dictates the entire organization’s restaurant purchasing decisions. For chains, it can mean a singular entity ensuring ingredient uniformity across outlets.
Example: For global pizza chains, centralizing the procurement of tomato sauce from a specific supplier guarantees every outlet worldwide delivers that signature taste.
Decentralized Restaurant Procurement: Each outlet or department exercises autonomy in their restaurant purchasing decisions. This allows adaptability to local tastes but may introduce inconsistency across branches.
Example: A burger franchise with decentralized procurement might see its Asian outlets sourcing local spices for a region-specific burger, while European outlets opt for traditional flavors.
b. Procurement By Supplier vs. Procurement By Category: Purchase Order by Supplier: Orders are structured around individual suppliers, emphasizing the relationship with each vendor. This method simplifies restaurant purchasing for specific items.
Example: When purchasing food like seafood, an order might be directed specifically to a fish supplier, detailing the types and quantities.
Purchase Order by Ingredient/Category: Orders are structured around food categories or ingredients, potentially spanning multiple suppliers. This approach is invaluable when diversifying sourcing for a single ingredient.
Example: When purchasing food for a steakhouse, you might source sirloin from Supplier A and ribeye from Supplier B.
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c. Procurement to Central Kitchen vs. Multiple Outlets: Purchase Order to Central Kitchen: Chains with a central kitchen model procure ingredients for a main hub, from which they are processed or semi-prepared before distribution to various outlets.
Example: A sandwich chain might centralize its bread procurement to one kitchen, where it’s baked and then distributed fresh to outlets every day.
Purchase Order Consolidated for Multiple Outlets: Some chains might consolidate their food purchasing, receiving bulk orders at a central location before redistributing based on each outlet’s needs.
Example: Centralizing the procurement of coffee beans for a franchise could see a large shipment delivered to the main warehouse. Beans are then allocated and dispatched to branches based on sales data and forecasts.
d. Restaurant Procurement With or Without Approval Workflow: Embedding an approval workflow into the restaurant purchasing process brings an added layer of oversight, especially crucial for larger entities keen on tight budgeting and cost controls. An outlet might place an order, but it is executed only after higher-authority approval, establishing checks and balances.
Restaurant procurement is more than just buying; it’s strategizing. In the vibrant realm of F&B, mastering the dance of restaurant purchasing is pivotal. The blend of strategies, be it centralized or by ingredient, all play a role in the restaurant’s operational success, profit margins, and ultimately, the customer experience.
5. The Role of Trade Deals and Discounts in Shaping Food Cost Dynamics
Within the multifaceted domain of restaurant purchasing, trade deals and discounts play a pivotal role. Not only do they provide establishments with the opportunity to optimize costs, but they also directly influence the very fabric of procurement decisions and strategies.
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Actual Food Cost vs. Theoretical Food Cost – The Influence of Free-of-Charge Items (FOC) and Discounts:
In the realm of restaurant purchasing, distinguishing between actual and theoretical food costs is pivotal. Theoretical food cost outlines the direct expenses of ingredients required for dishes, devoid of recipe deviations or promotional discounts. In contrast, actual food costs encompass the on-ground realities faced in the kitchen, such as food waste, unplanned spillages, and the impact of promotions, including discounts, on procurement. Recognizing these distinctions ensures more precise financial planning and an optimized restaurant procurement strategy in the F&B sector.
For instance, let’s consider an example:
A restaurant’s theoretical food cost for a pasta dish, based on standardized recipes and ingredient costs, might be $5. However, a trade deal with a pasta supplier might offer a discount or a “buy one, get one free” deal (FOC). When incorporated into restaurant procurement, the actual food cost might drop to $4.50.
Such scenarios highlight the importance of actively seeking and negotiating trade deals during the purchasing food process. It’s not just about cutting costs, but about making informed procurement decisions that reflect both the economic and qualitative interests of the establishment.
The complexities of restaurant purchasing and procurement extend beyond simply buying ingredients. With the aid of Restaurant Purchasing Software, it becomes easier to understand the market, leverage trade deals and discounts, and continuously recalibrate strategies to maximize both quality and profitability. Recognizing the nuances between actual and theoretical costs, especially in the context of trade deals, offers restaurants the insight needed to thrive in a competitive landscape.
6. Reassessing Prices in Light of Current Tenders
a. Inflation: Every restaurant purchasing decision is intrinsically tied to broader economic trends. When inflation surges, it invariably affects procurement budgets. Rising prices can escalate the costs of purchasing food and other essentials. If the inflation rate jumps by 5% (yikes!), restaurants might witness their monthly ingredient expenditure rise correspondingly. This change directly impacts the dynamics of restaurant supply chain management, urging establishments to reevaluate their menu prices to maintain margins.
b. Fluctuations in Ingredient Prices: On the flip side of inflation, there are instances where the costs of specific ingredients drop. Such scenarios can arise from factors like bumper harvests, global trade deals, or other supply chain dynamics. When olive oil prices dip due to an abundant harvest season, it’s crucial for restaurants to leverage this change in the course of purchasing food to renegotiate rates and potentially enhance dish quality or portion sizes. Seeing price fluctuations, however, requires your procurement to be fully digitized. This is where Restaurant Purchasing Software can help.
c. Re-tendering in restaurant procurement: Consistently revisiting contracts and opening them up for re-tendering can be a game-changer in restaurant purchasing. This proactive approach ensures competitive pricing and might introduce restaurants to new suppliers offering superior products or more favorable terms. In the vast landscape of restaurant supply chain options, re-tendering can lead to discovering a supplier that offers a premium coffee blend at a cost-effective rate, enhancing both customer experience and profit margins.
d. Assessing the Impact on Actual Food Cost and Average Item Cost: Every nuance in restaurant purchasing, from inflationary trends to re-tendering, leaves its mark on the restaurant’s financial health. For instance, if procurement expenses for ingredients surge by 10% without a corresponding increase in menu prices, profit margins inevitably compress. Conversely, capitalizing on reduced ingredient prices by offering promotional rates can lead to a surge in sales volumes, bolstering revenue.
In the dynamic realm of F&B, understanding the intricacies of restaurant purchasing and the restaurant supply chain is paramount. Regularly re-evaluating pricing strategies, being attuned to market changes, and optimizing procurement processes ensure restaurants remain profitable, competitive, and prepared for future challenges.
7. Analyzing your Purchasing Trends
In the bustling domain of restaurant purchasing, to merely react is not enough. Proactive strategies, powered by cutting-edge dashboards and in-depth analytics, are the need of the hour. They grant insights, allowing operators to both predict and navigate the ever-fluctuating waves of the restaurant supply chain.
Dashboards and Analytics:
Dashboards serve as the control panels for today’s restaurant managers. In one glance, they highlight the vital metrics, trends, and discrepancies within restaurant purchasing operations. But to truly comprehend the depth and breadth of restaurant procurement practices, analytics comes into play. It dives deep, scrutinizing each aspect of purchasing food, highlighting patterns, suggesting optimizations, and unveiling potential cost-saving avenues.
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Impact on Food Cost, The Domino Effect of Ingredient Costs:
In essence, the science of restaurant purchasing is a blend of art and analytics. It’s about orchestrating a seamless ballet of supply and demand, costs and quality, and vendors and dishes. With the support of Restaurant Purchasing Software, tools like dashboards and analytics act as the choreographers, ensuring that every step, every leap in the restaurant supply chain is well-timed, precise, and gracefully executed.
8. Conclusion:
Restaurant procurement, often likened to a dance, indeed requires a harmonious balance of finesse, strategy, and adaptability. In the intricate ballet of the restaurant supply chain, every ingredient chosen, every supplier partnered with, and every dish crafted weaves a unique narrative. This story reflects not just the flavors on a plate but the underlying decisions, strategies, and partnerships that culminate in that dining experience.
As we venture deeper into the realms of restaurant purchasing and the nuances of purchasing food, it becomes evident that the essence lies not in mere cost-cutting, but in deriving optimal value from every transaction. Restaurant Purchasing Software plays a vital role in this journey, allowing establishments to cultivate relationships with suppliers, understand market dynamics, and use data-driven insights to optimize every aspect of the procurement process.
It’s a continuous journey of learning, adapting, and innovating. The ultimate goal? To serve dishes that not only delight the palate but also ensure the sustainability and profitability of the establishment. In the bustling world of F&B, mastering restaurant procurement with the aid of Restaurant Purchasing Software is the key to unlocking consistent, high-quality, and memorable dining experiences, all while ensuring every dollar is spent wisely.
9. About Supy:
Effective restaurant procurement, efficient restaurant purchasing, and comprehensive restaurant inventory management are pivotal in the modern F&B landscape. Supy offers Restaurant Purchasing Software, integrated with restaurant inventory management software, tailored to address the intricacies of the restaurant supply chain. Its functionalities aim to simplify the process of purchasing food and managing inventory, enabling establishments to maintain consistency in ingredient quality and manage costs effectively.
A notable feature of Supy’s Restaurant Purchasing Software is its analytical dashboards, enhanced with inventory management insights. These provide a detailed view into supplier performance and inventory metrics, facilitating a better understanding of various metrics such as delivery timelines, product consistency, inventory levels, and invoicing. Such insights can be instrumental for restaurants in assessing and, if necessary, refining their procurement and inventory strategies based on tangible data.
By emphasizing clarity and accuracy in restaurant purchasing and inventory management, Supy’s Restaurant Purchasing Software aids establishments in minimizing inefficiencies. In the ever-evolving dynamics of the restaurant supply chain, having tools that offer comprehensive insights into restaurant procurement and inventory can be of significant value.
