Managing an eatery can be tough, especially when your cash flow is thin. After paying employees, vendors, rent, insurance, and other bills, profit margins at restaurants are relatively narrow — narrow enough that a shelf full of expired steaks could put you in the red. The average establishment has about a third of its budget tied up in food at any time, which means a pretty big chunk of your capital is going directly into your walk-in.
Owners have been dealing with those realities since the earliest days of restaurants, and that hasn’t stopped savvy managers from building a successful business model. These entrepreneurs knew that low food costs are the secret to restaurant success — even if that meant inventorying by hand with nothing but a pad and pen.
Lucky for us, the modern era offers plenty of robust, useful technology for restaurant owners looking to make the job of inventorying easier and more efficient. These applications go way beyond your basic spreadsheet, integrating with your Point of Sale (POS) system for more accurate sales forecasting and ordering.
These features are so powerful that they may just be what you need to turn a corner on your finances. Effectively ordering and stocking your kitchen not only saves money — it can also improve customer satisfaction and help you build more reliable spending projections. Need more convincing? Here are a few reasons why an inventory management system may be the boon your restaurant needs.
Boost Cost Savings by Reducing Waste
Inventorying your product prevents costly over-ordering that can sink your profit margins. Unfortunately, taking inventory manually without a weekly ordering schedule can lead to errors that throw your projections off.
Inventory managers tend to over-order by nature: the “better to have too much than too little” mentality. That approach often results in wasted product that could have been out there making you money. Another issue may arise with human error. Counting cans of tomato sauce can get tedious, so employees frequently rush through the task to get it done. That dispatch makes for waste when employees make a counting mistake.
Restaurant inventory management systems, on the other hand, have no such tendencies. The information entered during inventory can be used to populate order lists based on your established budget. The automated system will also flag you if a count looks off, thus preventing certain counting errors. It’s nice to feel like your tech’s got your back.
Make Inventory Easier
Why execute something the hard way when you don’t have to? Technology for restaurants has come a long way in the last decade, making the job of inventorying less time consuming and labor intensive. The added convenience means you can take inventory more frequently — ideally, once a week at a minimum — or even take stock of specific items, like proteins, every day.
Most systems are mobile compatible, meaning you can update your inventory anywhere. And many include an offline feature, so you can add items while standing in your walk-in or other areas with poor Wi-Fi reception. Inventory items can be reordered easily to match shelves, allowing your team members to get their counts faster and more efficiently. And you can combine amounts from different locations, such as the bar, walk-in, and prep station, to get the most accurate counts available.
Take the Guesswork Out of Ordering
Investing in inventory management technology can also streamline your vendor ordering process. Inventory systems typically have an ordering module so that you can organize and send vendor orders directly from your management application.
By using your budget and inventory counts, your system can intelligently calculate the amount of product you’ll need to get you through to your next order — whether that’s a week or a month from now. Once you add vendor details to your system, most applications will compile and email vendors directly from the ordering module. No more copy and paste!
Never 86 an Item Again
Okay, maybe “never” is a bit of an exaggeration, but a restaurant inventory management system can save you the frustration and embarrassment of running out of an item.
Naturally, that can boost employee morale since no one likes having to turn a customer down. And happier employees make for better customer experience. In fact, Gallup’s “State of the Workplace” survey showed that engaged employees sell more — as much as 20% more on average. That can have a significant impact on your bottom line.
Get More Predictable Spending and Forecasting
There’s a lot more to inventory systems than counting. An integrated restaurant management tool typically contains a budgeting module, allowing you to set spending for every week of the year. It may also track historical spending so you can see exactly what your food costs were at this time last year. Some even take into account the weather forecast to help you set the most accurate budget possible.
Overall, that adds up to more reliable, predictable budgeting. You’ll be better able to plan around your projected food costs. And without those unexpected last-minute orders, you won’t have to borrow from your cash flow — instead of putting it to better use growing your business. That kind of stability may be precisely what you need to save your business.