Inventory: 5 “P”s to Improve Speed and Accuracy

15th April 2014
A Flickr Creative Commons Photo by Thomas Rousing https://www.flickr.com/photos/thomasrousing/

Effectively managing inventory is the cornerstone to the success of running any restaurant. It’s a perishable asset that significantly impacts the cash flow of the business; but it’s also fundamental to operations, more so than staff or any other asset. No ingredients, no sales.

As a perishable asset, it’s good business to stay on top of what you have in inventory. A good operator will streamline the process and minimize the amount of cash sitting on shelves. However, to do it effectively, they must have access to accurate and relevant data.

 Taking inventory is an important part of running any restaurant; however, it’s often not given the respect and attention it deserves. To help you manage your inventory process better, we have compiled a few helpful hints that we have learned over the years and seen implemented in some of the most successful restaurants in the world.

5 Easy Steps to Improve Your Inventory

Predictable (Make it someone’s job) – even better, make it two people’s responsibility. This has lots of benefits, not the least of which include accountability, and efficiency. Having two people responsible for inventory means they can check each other’s work, improving accuracy and greatly reducing the likelihood of theft. Adding predictability also reduces the need to “order extra”, which increases spoilage, drives up food costs, and unnecessarily tightens cash flow – if they know they will be ordering again next week, employees are less likely to over order. Also, repetition adds efficiency to the process. The following recommendations will improve efficiency and accuracy even more.

Plan – Counting inventory should be part of every day, every week and every month. We recommend a daily count for the 5 most expensive inventory items each shift. For example: cheese, chicken, and/or beef. For improved accuracy and reduced theft, we suggest a weekly count for the most frequently used items and a monthly count of all inventory items. For consistency, inventory should be done on the same day, at roughly the same time, each week. It should never happen during a delivery.

Prepare – Clean and organize the storage areas. The team responsible for inventory should also be responsible for ensuring the area is clean before accepting a delivery. Train them to throw out expired/spoiled items, stack boxes, with the oldest inventory on the top (to be used first). Have them consolidate broken packages and combine them in easy to access areas. Well-organized and clean storage areas will improve the accuracy of your inventory counts, reduce order costs and improve the efficiency of your kitchen.

Process –Make inventory counting and ordering a regimented procedure at your restaurant. There are many ways to do this:

  • Introduce product count sheets – Prior to starting the counts, ensure all inventory is documented either on a printed sheet or electronically, including the pack and/or portion size. Where applicable, include the price per unit. Electronic files may be provided. An organized list will improve the accuracy of the counts and make it easier to calculate food cost.
  • Consistent sizing  – To improve the accuracy of your food cost, determine how your items will be counted and the cost applied. For example: A box of chicken with 24 breasts is $72. Are you recording per box pricing ($72) or per unit ($3)
  • Record spoilage – As mentioned above, teach staff to check first; but train them to throw-out and properly record inventory that has spoiled. It will help accurately track food costs and by collecting data on spoilage, it will improve the ordering process.

Progress – A number of technologies have been introduced that track inventory and ensure the process is more efficient and accurate.  Some restaurants have started using tablets and Excel to improve the accuracy. However, that is only the beginning of how technology improves the process. More advanced systems, calculate real-time food costs, based on units sold; predict inventory requirements based on sales data; alert operators when food will be spoiling; and allow easy inventory transfer between restaurants.

For example, LiveInventory – which works at transaction-level, with any POS and updates inventory as products are sold. In addition, it integrates with the largest food suppliers (GFS, McLane, Sysco, etc.) to provide the most accurate pricing and pack-size. Restaurant operators can effectively manage the entire inventory process: ordering the proper amount, rotating the inventory to freezer to sale, in real-time.

Inventory may not be glamorous, but it’s the essential to running a successful restaurant. Fortunately, with these easy-to-implement steps and the help of some technology, you can improve the efficiency and accuracy of tracking one of your most valuable assets.

To learn how LiveInventory can help your restaurant lower its food cost and improve order efficiency, click here.

How do you track inventory? Do you have any secrets that have helped you stay on top of your food costs? Let us know.

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Former restaurant operator and technology enthusiast who loves data and seeing what's possible. It's truly amazing how measurement, engagement, and awareness changes a business.

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