How restaurants deal with inventory management challenges?
Inventory in the restaurant inventory management can become challenging unless there is a proper plan to keep all the resources organized and on track.
In the food and beverage industry, inventory control plays a crucial part in the entire operation management. Powerful inventory management helps to smoothen the process, but failure might cause a financial problem. According to FoodFrint, nearly 10% of food in the inventory system is wasted, which means 10% of the restaurant’s cost will not bring revenue.
Overview of restaurant inventory management
Inventory management in the restaurant industry is a process of tracking how the inventory is carrying continuously. In other words, with inventory tracking, restaurant owners can know exactly about:
The number of raw ingredients they’ve purchased with a detailed list
The quantity of used inventory during the day
The amount of ingredients leftover at the end of the day
These specific numbers show where their supplies, or the investment, are coming in and out. The data of inventory is often included in the restaurant software development. Understanding the food and beverage inventory also helps to point out some losses relating to staff meals, employee mistakes, resolve customers’ complaints, spillage, or theft. Based on the information, restaurants can adjust their inventory usage to maximize their profitability.
There are four central terms of restaurant inventory that one should be familiar with
Sitting inventory is the amount of existing inventory or the money worth of the product. Stick consistently to one unit of measure when tracking sitting inventory, physical amount, or dollar value, depending on each specified business
Depletion is the amount of used inventory in a particular period, which is expressed by the physical amount or dollar value. Depletion is calculated daily, weekly, or monthly using the reporting data from the restaurant POS system
Usage is the amount of sitting inventory divided by the average depletion in a specific period (with the same unit of measure). Below is the formula:
Usage = Sitting Inventory Average Depletion.
For example, you have 80 pounds of beef, and the plan is to use 8 pounds a day. So you will have ten days of usage.
Variance is the difference between the cost of the product and the price of the usage. It can be a dollar worth or a percentage to make the comparisons more easily.
You used $100 worth of beef in inventory, but your POS shows that you sold only $90. So the beef cost variance is -$10 or -10%, which means that $10 is lost.
Inventory management challenges in the context of the restaurant industry
Inaccurate stock forecast
In the F&B industry, the challenges facing inventory management are related to how to forecast customer demand more accurately. Seasonal produce, along with rapid changes in customer trends make it even more necessary. The shelf-lives of raw ingredients are usually not so long that restaurants must optimize depending on the demand of customers.
A mismatch of stock purchase also happens due to poor recipe inventory management in the restaurant industry. The recipe standards can tell accurately which and how much an ingredient is required for the dish.
The more exact the prediction is, the better you manage the supplies. Otherwise, you could overstock the inventory and get them wasted, or understock and then run out of product to serve precious customers. As regards, restaurant food inventory software can help managers to estimate the amount of each product they need in the next order, based on the data of usage report and order history. Automatic alerts also remind you what supplies are about to run out.
Shelf-life monitoring
One of the most reasons for failed shelf-life surveillance is that the inventory room is disorganized. Miscounting can lead to over-ordering. Almost all raw ingredients in the food and beverage inventory have limited or short shelf-lives. If they are not used in their prime, it might be a waste of spoilage and discards.
Additionally, the wastage from restaurants’ supplies can create harmful gasses that cause adverse effects on the environment. Always keep track of all supplies’ shelf-lives and follow the method of First In, First Out. Organize the storage areas according to the rule so that you can use the products that are earliest received first.
Quality control
Strict food safety is always required for all restaurants around the world. Any mistake might lead to the risk of spoilage or grave contamination, which can affect the health of customers and the long-term reputation of your restaurant as well.
Transportation is another inventory management challenge in quality control. The whole process requires sensitive conditions related to temperatures, productive routes, and fast unloading to secure the freshness of products.
You should consider tracing all ingredients, especially allergenic products, by food traceability software. Inventory management solutions also help the restaurant to prevent costly losses from spoilage or customers’ complaints. Concerning transportation, schedule the stock shipments wisely as many come at once as possible, which will save your time and cost.
Lack of Automation and IoT integration
Manual inventory tracking on paper, or even with Excel sheets, is no longer efficient as it increases your workloads and takes a lot of time and effort. One drawback of the manual restaurant inventory management method is to create detailed periodic reports automatically. Maintaining a healthy inventory with IoT solutions can be much more difficult without appropriate tracking and reporting.
Restaurant inventory management software will be the best alternative solution. The software solution gives an automated real-time report of the inventory available, consumed, and remained. You can access the data at all times to make the purchase decision rapidly and timely. It also reduces errors in tracking and reporting.
Besides, developers should integrate food inventory software into the restaurant POS system. In this way, the restaurateurs can not only track the actual usage but also compare against the forecasting usage and revenue to understand how effective the inventory is operated.
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