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Inventory in restaurant chains

24 July, 2019 |   | 

How restaurant chains can bring inventory under control.

Are your restaurants or bars across your chain throwing away your company’s margin? Would you like to find out where revenue is escaping? With the right tools, it’s possible to bring your inventory under control.

Where did our profits go?

Leaving aside drinks waste for a moment, food waste alone represents a cost to the UK restaurant sector alone of £682 million each year, according to the not-for-profit organisation WRAP*, which equates this to £0.97 per meal.

As well as the value of the food, this overall cost also includes procurement, labour, utilities and waste management. According to WRAP, food preparation accounts for £45% of waste, and spoilage is the reason for 21%. Customer plates cause 34% of waste (which we’re thinking might have something to do with portion size).

But that’s just the problem with having too much. Sometimes there’s a knee-jerk reaction and staff start trimming ordering — but in the wrong places. Suddenly, there are shortages that result in disappointed customers, reduced loyalty and lost revenue. In the minds of customers, it’s shoddy when “big companies” can’t get the basics right.

So what’s going wrong?

It’s understandable when restaurants and bars struggle with all the aspects of end-to-end food and drink inventory management. It’s not really anyone’s core role, staff usually hate keeping on top of it, and if the restaurant is busy then there’s a strong temptation to put off the job for another day.

However, when inventory problems extend across multiple restaurants or bars, then the entire chain is in trouble. And this makes the business case for tackling the issue even more compelling.

For any chain of restaurants or bars, successful inventory management needs to be about three things:

1. Visibility

Inventory data must be easily available for everyone involved to make business-critical decisions about ordering, monitoring and usage. When this doesn’t happen, wastage starts to rocket, transportation costs increase and revenue is lost.

2. Real-time availability

Restaurants and bars need real-time updates and tracking of inventory at all stages of the cycle. If not, then wasteful ‘gut feeling’ purchasing can become the norm. Spreadsheets that have gone well beyond their ‘eat by’ date are worse than useless.

3. A single version of the truth

Full transparency and a single version of the truth is needed for local staff and for managers at HQ. Without this, there’s room for errors, fraud, confusion, and a lack of trust and motivation.Syrve_Speak with an Expert Banner

Catching sight of bigfoot

For executives at HQ, inventory problems can be infuriating. But this is because inventory is traditionally such a complex and elusive issue to grapple with — like trying to herd cats or catch sight of bigfoot. The truth exists in dark corners of store rooms, at the back of large fridges, and in boxes under piles of other boxes at scores of locations all around the UK. How can anyone get a handle on that?

So there’s maybe even a temptation to just surrender and accept that inventory management is mired with intractable issues — and we all just have to live with it in a kind of fuzzy world.

But that’s not the case. With the right tools, it’s possible to shine a light on your inventory, get crystal-clear definition and then recoup lost revenue.

The whole truth and nothing but …

The first thing to say is that — to be worth its salt — inventory management needs to be end-to-end and cover everything, not just the easier bits.

The right technology will be always thinking one step ahead, predicting events and prompting the user for specific actions and making it all deliciously simple.

But here are three examples of what’s possible in some of the hard-to-sort areas.

  • Real-time goods acceptance: Inventory management tools can lift a huge burden and frustration off your staff. The system notifies your team about what’s arriving. They can accept items in a few clicks in their tablet or mobile.
  • Mobile inventory: Staff can do stock takes in moments on a tablet or mobile. The system knows what should be there. Staff are asked to record what’s actually there. Discrepancies show up. Managers can see instantly what’s in stock at every restaurant or bar and across the chain.
  • Sales forecasting: The system can intelligently view previous inventory patterns and forecast likely sales — and stock needs — with accuracy levels that can be as high as 99%. So there’s no need for expensive guesswork. You can make your own easy adjustments on top for seasonal weather or local/national events.

But that’s not all. The right inventory management tools can also help with assisted purchasing ordering, order approvals, real-time financial reports and much more, including all those dozens of tiny (but critical) details that so often slip between the cracks. As a result, you can save on labour costs, food and drinks costs, and avoid running out of stock

Ultimately, you can identify waste easily, minimise its likelihood and claw back the revenue that’s draining away — anywhere across your chain of restaurants. There’s no need to go looking for needles in dozens of haystacks. You can see everything, up-to-date on your mobile. Then it’s easy to take action.

Inventory checking, predictive inventory tracking and sales forecasting are a powerful combination that give you real-time control and a finger on the pulse of the business.

Simon Dadswell

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