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Unlocking Profit Potential: Three Steps to Boost Restaurant Earnings

03 October, 2023 |   | 

You've successfully established a thriving restaurant business with a steady stream of orders and healthy revenue, yet you sense that there's untapped potential for higher profits. It's time to identify and address the areas where profit leakage is occurring. Let's explore three key problem areas in your supply chain that often lead to losses, and look at their solutions:

Streamline Supply Chain Operations to Free Up Capital

Problem: Your warehouse inventory should ideally match the demand for your products, but accurately calculating expenses and planning purchases can be challenging. Reports are cumbersome to generate, and balance data is often outdated due to weekly accounting updates. Additionally, missed orders to suppliers and delayed deliveries result in either overordering or stockouts, ultimately impacting revenue and increasing the cost of goods sold (COGS).

Solution: Implement an automated resource control loop. This system relies on sales statistics to generate sales forecasts, which then drive automated procurement plans and supplier orders. For precise ordering, real-time inventory balances are crucial, so conduct daily inventories for this product group. Align inventory schedules with delivery schedules and set up reminders for employees to update the counts and inventory plan through a mobile application. This approach eliminates human error from the ordering process, significantly reducing wastage and lowering your restaurant's COGS.

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Minimise Losses Due to Write-Offs

Problem: Perishable goods often need to be written off because they are purchased in advance. Additionally, over-preparation by cooks to manage demand leads to spoilage and write-offs.

Solution: Develop a detailed plan for when, how much, and what type of preparations are needed, creating an hourly schedule for their preparation. Ensure that every cook follows this plan upon starting their shift. Implement automatic write-offs for finished goods at the end of each day to eliminate manual error and save time.

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Cut Restaurant Procurement Costs

Problem: Price discrepancies between supplier agreements and invoices are common, making it challenging to track and verify costs. Irregular deliveries and overdue payments further complicate supplier relations.

Solution: Create supplier price lists and establish price limits to ensure adherence to agreed-upon prices. Set up alerts within your system to notify you when purchases exceed specified price limits. Identify high-usage items and negotiate minimum prices with specific suppliers.

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Example Case: Reducing Write-Offs for Spoilage 

A coffee shop chain implemented the strategies outlined above in March. Prior to these changes, they experienced an average damage write-off rate of 3.5-4%. After implementing these measures, the rate dropped to 2-2.5%. The table below illustrates the reduction in wastage and potential savings:







Revenue, pounds 

257 111 

300 060 

442 345 

481 125 

442 010 

Wastage, P 

9 754 

11 003 

13 356 

10 501 

10 924 

Wastage, % 






By reducing write-offs, the coffee shop chain estimated savings of approximately £7,752 in April and £5,846 in May, contributing to increased profitability.

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