Few restaurant owners have a detailed analysis of their inventory that lets them pinpoint where they’re losing margin. Yet the sum total of all supply errors and the failure to control material costs can quickly add up to thousands of euros per month.
In this article, we review the six errors that impact your restaurant's supply chain :
Not anticipating raw material needs
Knowing what to order and when to order it to avoid stock-outs and/or waste is the challenge restaurant owners face every day.
Mistake #1: Over-ordering
If we order too many products with a short use-by date, the loss rate increases, we lose margin, and this is all the more problematic with expensive raw materials such as fish or meat. For products with a long use-by date, there is also an issue with overstocking. It is a question of unnecessary financial assets that burden your working capital needs and that generate problems of limited storage space.
Mistake #2: Under-ordering
On the other hand, if you don't order enough, you risk running out of stock in the middle of a service. The result: loss of sales, a drop in your rating on delivery platforms and disappointment among loyal customers.
Placing supplier orders is the responsibility of the restaurant manager or the chef, and is sometimes even kept in the hands of the founder of the restaurant chain, as the slightest error has a direct impact on the profitability of the establishment.
Omissions, quantity errors, fear of running out… We all know that it takes years of experience for a manager to be able to accurately forecast stock levels, and that he needs to have gone through several seasons to know what impacts restaurant traffic, the success of certain dishes, and the volume of sales from deliveries, etc. With the current recruitment problems in the restaurant sector, staff turnover tends to accelerate. Relying on someone’s experience represents an additional risk.
The key is to anticipate and accurately place orders so you can supply just what you need, just in time, and maximise your profitability.
At Inpulse, we’ve developed an artificial intelligence capable of predicting future raw material needs by anticipating sales. Sales forecasts are provided by day, by finished product, and based on all factors that influence them :• Weather conditions • Calendar events (Valentine's Day, school holidays, religious holidays, etc.) • Sports events (Champions League, Six Nations Tournament, etc.) • Local promotions in your restaurant.
Using its sales forecasts, our inventory management software can make order recommendations based on stock status, shelf life, and the conditions of each supplier. Regardless of the manager's experience, Inpulse ensures a just-in-time supply chain to help you control your margins.
Markdown is the difference between actual and theoretical stock, i.e., products that should remain in stock after deducting those that have been sold. Markdown can be measured through regular inventory counts It shines a light on this sort of ‘black box' of raw materials that go missing for a variety of reasons such as :
Breakage: products damaged accidentally,
Fraud: the more stock there is, the greater the risk of fraud,
Products consumed by staff (excluding contractually agreed meals) or offered to customers without having been declared at the till,
Overconsumption of products: Non-compliance with recipe cards,
Unreported losses: The FIFO (first in, first out) inventory method isn’t implemented in the kitchen, which contributes to food waste.
Knowing your markdown or consumption variance is the starting point for identifying and correcting inventory management anomalies. At Inpulse, we recommend that our customers carry out a weekly inventory of their top 10 products: those are sold the most and have the most expensive ingredients. In this way, you can concentrate your inventory count on the most sensitive products and space out the inventories of other non-food products with lower turnover.
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Mistake #4: Not following recipe cards
Once the discrepancy between the actual stock and the theoretical stock is known, the investigation stage begins, which consists of verifying whether it could be due to overconsumption in the kitchen. To dissociate leakage from product overconsumption, everyone needs easy access to the recipe cards. These detail the composition of each dish or intermediate product recipe down to the gram, and are the basis of a restaurant's profitability. It's essential to ensure that actual consumption matches the recipe cards, to identify any overdosage and to provide the necessary training, equipment and checks (weight tools) so cooks can standardise the dishes in all your restaurants.
In her testimonial, Kamal Zaoui, founder of the Lüks Kebab restaurant chain says : "We have a food cost to meet, and to achieve it, we rationalise all our dishes so we have the same proportions in the restaurant in the13th and the one in the 10th arrondissements of Paris. Inpulse lets us keep an eye on material costs. I look mainly at meat, which accounts for around 30% of food costs. When there's a discrepancy I can intervene and ask the cooks to trim back, because just 30 grams more on each sandwich, for example, over a week can be catastrophic for us."
Decentralised data slows responsiveness
Mistake #5: Not reconciling supplier invoices, purchase orders and credit note requests
With the proliferation of substitute products and the incessant price changes since the Ukrainian crisis, it's no longer possible to skip the incoming inspection stage. With more and more errors being made, we recommend checking goods delivered and keeping a record of any problems: substitute product, defective product, quantity, price difference…
When it comes to invoicing, your accountant will need your help to ensure that the supplier invoices match the quantities received and to avoid overpayments.
By centralising your orders and credit requests in a SaaS solution like Inpulse, you gain accuracy and save valuable time.
Mistake #6: Not centralising purchasing data
Access to the history of all sales and stock data allows you to compare changes in losses over time and suggest ways of improving. Are there any anomalies in stock returns due to unusual breakage, theft or poor SLED management ?
Management control, finance and purchasing managers need to analyse discrepancies and the reality of supplier relations in detail (order volume, breakage, price fluctuations, credit note requests, etc., both overall and by establishment) in order to adjust and negotiate annual contracts.
By automating your business forecasts, supplier orders and material cost calculations with Inpulse, you avoid costly errors. No need to wait for your accountant to compile data at the end of the month. Inpulse provides real-time access to your restaurant chain's key performance indicators: sales, gross margin, material cost, consumption variance... You can analyse by outlet, pilot your business from headquarters, and react at the same pace as the price fluctuations you face.