How to increase your bottom line by proper inventory controlling
One major aspect to running a profitable restaurant is managing the controllable costs, such as food, labor and supplies. With these, you’ll probably experience more difficulties controlling food.
To handle food costs effectively, an operator needs to simultaneously monitor portion sizes, prevent theft, watch waste and order efficiently.
An inventory software will be able to help you identify precisely when your food costs are out of line. Using inventory control software will typically save you 1 to 2 percent of sales, and may perhaps save you much more. And it is savings that drops straight to your bottom line as profit.
A POS-based inventory control system operators can spot and solve food cost problems that might not become noticeable by simply focusing on portion control. When your staff knows that the system is keeping track, it discourages both waste and theft.
A single restaurateur will be able to realize this lesson, when it comes to food cost problems, probably a week of using inventory control software.
Inside his restaurant, he’s portion controlling, yield testing and conducting physical inventory, but it wasn’t until he uses an inventory software where he finds out his inventory was out by exactly 20 pounds of pasta each week; coincidentally, the exact weight of a box. Upon knowing, it was relatively that easy to specify the source of the problem: a prep cook who was helping himself to a box of shrimp every Saturday evening.
Boosting your bottom line
In a typical restaurant point of sale inventory control program, the operator sets up the software by first entering their recipes and product costs. The system then tracks the ideal usage based on those recipes and the restaurant’s actual sales.
This software is also able to track product usage in situations where some orders is not in line with the standard recipe. The operator then can do a physical inventory and generate reports comparing that inventory with the calculated ideal usage in order to spot variances. The operator can even set the software to track as many items as he wants.
Mostly 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.
Even an ounce of over-portioning 1 item per order can mean hundreds of dollars in a month for restaurants. If you eliminate over-portioning on 100 orders per day for 30 days on a .67 per pound of an item, may well add up to more than 0.00 in savings or 00.00 in a year!
Better tracking and controls 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 excess inventory can add up to a loss of between 2 percent and 5 percent 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 – all of which went to their bottom-line profits.
So if you have a restaurant POS system or are considering a purchase make sure you know how to and understand the additional profits that you can obtain by learning and using the inventory module of the system correctly.
The author of this article writes for POS-For-Restaurants.com, with over 20 years experience in restaurant point of sale systems, helping restaurant owners nationwide increase their efficiency and bottom-line profits..
To learn on how our national POS network of restaurant point of sale specialists can help your business achieve greater success in these difficult economic times, visit POS-For-Restaurants.com.