Why inventory matters
Answering the WHY.
Let’s run through some facts:
- Running a restaurant costs more than it used to.
- Food costs are rising day-in day-out
- If you run a restaurant or any other food-service business, chances are that you are spending a third of your profit on food costs.
- Inventory is a tedious task … but only because you do not have our tips and tricks on how to do it right.
Some facts we forget:
- Inventory taking is a very crucial process in the running of your business.
So now let’s look at some reasons why every food-service business should keep good inventory records.
1. Measure Restaurant’s health
Good inventory is a reliable way to measure how healthy your restaurant business is.
You can calculate figures that are essential to understanding the financial health of your business such as Cost Of Goods Sold (COGS) which provides you with the best insight into your profit margins. A simple formula we use is {COGS + Labor costs}/ Total sales = Prime cost.
2. Predict future inventory usage
You may have noticed that you generally use the same quantity of items in your pantry week to week. However, quite often you will have special occasions where you will use more than usual. By regular/weekly inventory, you will be able to (a) identify increases/decreases in food usage immediately (b) Increase ordering to avoid shortage or © decrease ordering to avoid surplus. And you can do all this before the customer walks in the door.
3. Reduce Wastage
About 16% of your food ends up in the trash.
Food wastage impacts your bottom line and success of your restaurant.
Billions of pounds of food are wasted every year in Africa and the world in general.
The truth is, no matter how conscientious you are, there are some boxes of tomatoes that will go past their prime time. However you should do everything you can to reduce these losses.
The first step would be identifying your waste rate (you can’t do this without reliable inventory).
(Average waste rates are 3% for a full-service restaurants)
4. Combat Theft
We know you want to trust your employees… and you should be able to. But you can’t assume that among them there will not be a bad apple that cannot resist the temptation to pocket something from your pantry. Very many businesses have failed due to employee theft; especially catering businesses.
Keeping a consistent inventory and investigating irregularities is the most efficient and reliable way to curb theft.
5. Prevent Over-ordering
Don’t know how many bags of flour to stock for the Luo festival this weekend? With a weekly inventory and a smart inventory management tool, you’ll know exactly how much you went through last time and how much you still have on hand hence how much you should order during festivities.
With inventory on your PC, Tablet, Smartphone and instant reports, you’ll be able to run your business smoothly.
We at Chowbase provide you with a wholesome inventory solution right at the palm of your hand. So that wherever you are, you can run your business smoothly.
Check out our next blog as we show you how all you need to do proper inventory is already available to you. You just don’t know it…yet.
