Proper Inventory Management Can Increase Your Bottom Line Profits
One major key to running a profitable restaurant is managing the controllable costs, such as food, labor and equipment. Although, controlling food would probably be the most difficult cost.
Simultaneously monitor portion sizes, prevent theft, watch waste and order efficiently should be done in order to manage food costs effectively.
An inventory software will help you identify exactly when your food costs are out of line. Using inventory control software will typically save you 1 to 2 percent of sales, and may possibly save you much more. And it is savings that adds up to your bottom line as profit.
A POS-based inventory control system, operators would be able to easily spot and solve food cost difficulties clear by just simply focusing on portion control. When your staff knows that the system is keeping track, it discourages both waste and theft.
One restaurateur who had been experiencing food cost problems learned that lesson after a week of using inventory control software.
Inside his restaurant, he was portion controlling, yield testing and doing a physical inventory, but it wasn’t until he uses an inventory software where he discovers his inventory was out by exactly 20 pounds of pork each week; coincidentally, it’s precisely the same weight as a box. Knowing that, it was relatively easy to specify the source of the problem: one of the prep cooks was stashing a box of goodies every Friday night.
Boosting the bottom line
In a typical restaurant point of sale inventory control program, an operator sets up the software by first entering their recipes and product costs. The system then can track ideal usage based on those recipes and the restaurant’s actual sales.
The software also can track product usage in situations where some orders don’t conform to a standard recipe. The operator then can do a physical inventory and generate reports comparing that inventory with the calculated ideal usage in order to see variances. The software can also be set up to track as many items as the operator desires.
Generally in restaurants, their top 10 items 80 percent of their food cost problem. And you can schedule nightly counts of key items and weekly or even monthly counts of some other items.
With a single item alone, over-portioning by 1 ounce per order can cost a restaurant hundreds of dollars a month. If you eliminate over-portioning on 100 orders per day for 30 days on a .67 per pound of one item, may well add up to more than 0.00 in savings or 00.00 per year!
Keeping a better track and control also can help an operator reduce the amount of stock they keep on hand, reducing waste and freeing up cash for other things. Losses due to carrying too much large quantities of inventory can add up to a loss of between 2% and 5 % on an average operator’s profit-and-loss statement.
We’ve assisted a client before who’s menu is fairly extensive and had lots of work for setting up, but after helping them program their system as it should be, we were able to drop their food cost by 2 to 4 percent – a good addition to their bottom line profits.
So if you’re presently using a restaurant POS system or are thinking of a purchase make sure you know how to and understand the additional profits that you can acquire by learning and using the inventory module of the system properly.
The author of this article is the VP of Customer Relations at POS-Fof-Restaurants.com with over 20 years experience in restaurant point of sale (POS) helping restaurants nationwide increase their efficiency and bottom-line profits.
To learn on how our national POS network of restaurant point of sale experts can help your business achieve greater success in these difficult economic times, visit POS-For-Restaurants.com.