Tips for controlling costs with inventory software

December 9, 2011 – With a staggering seven per cent average rise in food cost in 2011, restaurant operators are being more cautious than ever about managing inventory. Inventory software helps restaurant operators pinpoint problems such as over-portioning, waste, and theft. The resulting impact on food cost—and bottom-line profitability—can be significant.

At Nancy’s Pizza in Chicago, for instance, implementing portion controls and inventory tracking last year reduced food costs by five per cent chain-wide.

But getting started with inventory software requires an upfront commitment to do the work required to set up the system, and a long-term commitment to keep inventory counts and product receipts up to date.

Operators succeed with inventory implementations by following these important guidelines:

Be ready to invest some time. Inventory software can track your food cost to the penny, but without complete and consistent recipes, your numbers will never be on target. Defining accurate recipes can take time, but the effort is worth it in the long run. The more accurate your recipes, the easier it will be to identify problems and control waste and spoilage.

With the right inventory software, defining a unique recipe for every possible combination of pizza shouldn’t be necessary. In SpeedLine POS, for instance, you can specify how much of a topping to use based on pizza size and the number of toppings on the pizza. SpeedLine then uses this information to track ideal topping usage for all pizzas, including create-your-own and half-and-half pies.
   
Everything should be measurable. To be as accurate as possible, “you can’t have a pinch of this and a handful of that,” says Michael Watson, a project specialist at SpeedLine. He adds, “All the quantities in the recipes must be measurable.” When setting up your inventory, choose units of measurement that match the way you purchase and handle food in the kitchen. Do you account for pepperoni by the slice, or by the ounce? Decide what works best, and what makes sense to you. This is often determined by your supplier: if your pepperoni is labeled 200 slices per case, it seems logical to create your recipes by the slice. If you receive by the pound, define your recipes by the ounce.

Portion control. Defining your recipes is step one, but unless you follow through, your inventory will always be out. Enforce portion control at the make line with digital scales and portion cups as appropriate. With consistent portioning of high-cost items such as cheese and meat, restaurant operators have reported savings of hundreds to thousands of dollars each month. Do regular audits, and always account for an average spoilage with your inventory counts.

Physical inventory is critical too. Stock on hand is cash out of pocket. By training your staff to receive, transfer, and count inventory accurately, you’re protecting your physical assets. Skipped or sloppy physical inventory counts will result in significant variances that will skew your averages. Stock handling is just as important. Avoid spoilage by keeping items in view and organized. Also do regular physical counts, as these are essential in determining your actual usage—and enter your counts into the POS when you’re done. Comparing your ideal usage with actual usage in your inventory reports is the key to identifying costly problems with waste, theft, or portion control.

Careful inventory management controls food costs for increased profit. Better tracking and controls can help you operate with less stock on hand, moderate spoilage and waste, and free up money for more important things. In an industry where margins only seem to get tighter every year, isn’t that worth the effort?

Carmen Vogel-McCombie is a marketing and trade show
coordinator at SpeedLine Solutions, Inc., and a contributing editor to On Point: The
Restaurant Technology Blog.