The management of produce, products and suppliers is not the most popular of tasks, especially in the hospitality industry. Managing the quick turnover of foodstuffs, finding the most cost-effective and efficient supplier, and minimising wastage can be time-consuming.

But however tedious it might seem, inventory management is crucial to control food costs and the profitability of any restaurant. There are many downsides to not having a proper inventory management system in place that can negatively affect ROI.

What are food costs?

When it comes to your food inventory, it’s important to remember to put the value in the bank and not on the shelf. Not everything that you buy will be sold in the restaurant industry, so you can’t arrive at your food costs by dividing your purchases by your sales. You must look at the inventory to calculate the cost. The total available is what you start with on the shelves (from the last day/week/month) plus what you buy. What leaves the shelves will be for your use. In the best-case scenario, we ideally want products to leave the shelves by sales, but they also leave through spoilage, waste, theft and comps. So to arrive at your food cost, you must divide the use by gross sales.

5 ways to optimise inventory management

1. Use the data from a Point of Sale system

The first and most crucial aspect to ensure that an inventory management system functions optimally is to invest in a Point of Sale (PoS) solution that tracks the movement of products throughout the establishment. Using a spreadsheet or manually capturing data is not only an outdated approach to inventory management, it is also open to human error and has no intuitive capabilities.

A PoS system captures valuable customer data in terms of what and how they order. This can help to optimise the ordering of stock to effectively minimise wastage and improve the selection and management of suppliers.

2. Beware of overstocking

Buying extra stock in case there’s a shortage is a big “no-no” and could have serious implications for your cash flow. When most of the supplies that form part of your inventory are fresh produce, you run the risk of wastage if you don’t consume it before its use-by date. Accurately tracking stock through a PoS system can help with the effective forecasting of supply needs so there’s enough produce on hand at any given time while the least amount of fresh products go to waste.

3. Take inventory frequently

Most people view stock counting as a dreaded task. While it might seem counter-intuitive, the more frequently you tackle this, the better control you’ll have over your inventory. And it reduces the chances of a shortage and of produce going off. Frequent inventory checks give you a clearer idea of what products run out faster so you can set up a re-ordering process with suppliers and establish what items must be prioritised.

4. Put one person in charge of inventory control

The saying that “too many cooks spoil the broth” is applicable to inventory management. Just one person should be tasked with taking care of stock levels – someone with the skills to deal with figures and suppliers. In this way, you have one go-to person with overall knowledge of stock levels and someone who can effectively do forecasting. This helps to minimise the risk of conflicting figures.

5. Create an order form for each inventory category

You want to simplify the inventory management process as much as possible. One of the best ways to achieve this is by getting the administration of stock control under control.

Creating categories for similar stock items and monitoring these levels and suppliers minimises the effort needed to manage the ordering. For instance, all vegetables and other perishable items can go into a fresh produce category, utensils and dishware will go into another while cleaning products – which usually have a longer lifespan – can be grouped together.

Automation can help to simplify the inventory management process. Pilot’s Point of Sale software assists with monitoring stock levels and our intuitive PilotLive business analytics allows you to effectively forecast based on the correlation of valuable customer and restaurant data.

To find out how our PoS system can assist in the management of other restaurant processes, download our The Point of Sale Infographic .

Author : Rudi Badenhorst