If you’re in the hospitality industry, you likely already know how critical inventory management is to your business operations and cost margins. But if your software system is disconnected from the rest of your workflow – or if you’re not using it to its full potential – then it might feel like the system is causing more problems than it solves.
When leveraged properly, restaurant inventory management (RIM) tech can help you reduce waste, improve staff efficiency, and optimize your cash flow.
Here is what you should know about how RIM software works, why it can fail, and how your business could be using it more effectively.
Why do some inventory management tools fail?
For busy restaurants and hospitality businesses, investing in a digital system for tracking inventory is a no-brainer. When it comes to reducing margins and managing food, restaurant inventory management is key. However, if the software system isn’t integrating properly with the rest of your business, it can end up increasing costs, wasting time, and disrupting your customer service.
One of the most common problems is having a system that struggles with accuracy. This might be caused by disorganization on the warehouse front, poor visibility into a location’s kitchen requirements or capability, or it might be an issue with staff training on using the system.
When misinformation becomes common in your inventory tool, however, your service and your customers will suffer for it. If your system shows that you have more of a particular ingredient available than you actually do, orders can be delayed or canceled, leaving upset costumes and poor brand perception.
Why do these failures occur?
The most common reason that restaurant inventory management systems present wrong information is that the business isn’t using a unified digital platform. This leads to data silos, operational fragmentation, and inaccuracies.
“There’s this common misconception around restaurant inventory management that it is difficult to use or that it is purely a cost-saving mechanism. But in reality, RIMs, if they are effectively integrated into your system and used to their potential, make life so much easier for restaurants,” says TASK’s US Vice President of Business Development Trevor Dee.
Historically, RIM tools were “software built for software’s sake,” as Trevor puts it. They were developed by engineers, not hospitality professionals, and that made them clunky and inefficient. It was difficult to leverage past inventory usage data or receive meaningful insight into why your surplus stock was increasing.
Now, Trevor says, integrated restaurant inventory management can be part of a single digital solution for businesses – and its offering them a huge competitive advantage when it comes to reducing waste and costs.
What are the key benefits?
When leveraged appropriately, restaurant inventory management unlocks capabilities for restaurants to better understand, predict, and strategically align their stock with their workflow.
Integrated RIM tools help:
- Decrease food waste
- Improve staff efficiency
- Help with menu engineering
- Ensure accurate ordering and capacity in real-time
- Increase margins and reduce sunk costs on stock
“Restaurant inventory management allows businesses to add a new level of optimization,” explains TASK’s President for North America, John Laporte. “When it operates as a connected tool within your digital ecosystem, that’s where you start to see huge strides in your service and your capabilities.”
The benefits of inventory management systems actually go far beyond just inventory tracking and the financial gains from those insights. “RIM can help you manage your workflow, your kitchen capacity, your customer service, and your menu offerings,” says Trevor.
But John adds, “This tool can only add this high level of value if it is leveraged properly and integrated appropriately. That’s why it’s so essential to understand its capabilities and work them into your entire business.”
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11 Best Practices for Inventory Management for Restaurants
Knowing where to start with newer tools or more advanced automation technology can feel somewhat overwhelming – but understanding how to use them to their potential is key to improving your efficiency and reducing costs. Any thriving hospitality business – from a single-location storefront restaurant to an events stadium – will see better earnings and lower waste rates by tapping into their digital tools. Here are the most essential aspects of putting RIM tools to use to maximize their capabilities.
1. Choose a robust, all-encompassing software
Like with any piece of tech, not all inventory management tools are created equal. Trevor recommends, “Ensure that your RIM not only has strong capabilities but that it also is infinitely compatible across your entire digital stack. Without seamless integration, this software won’t present accurate information in real-time.”
Russ Bennett, General Manager for TASK Group, Plexure Division, also emphasizes the importance of scalability when it comes to choosing new software. “Don’t paint yourself in a corner,” he says. “Work with technology partners who can help you expand as you grow.”
2. Conduct regular inventory audits
Having a system in place to continuously monitor your procedures for accuracy and efficiency is critical for restaurants wanting to get the most out of their inventory management system.
“Auditing, experimentation, and continuous improvement should be at the heart of everything you do with your technology,” says TASK Group’s Chief Strategy Officer Kathryn Byrne.
Audits should happen on your software itself to look out for opportunities to improve, as well as with your people on the ground. That might mean screening your stock warehouse for inefficiencies or waste data. If your inventory is kept onsite, audits might include regularly checking on staff routines and seeking feedback about processes.
3. Keep track of expiration dates and shelf life
RIM software will help automate this process for your staff. Tracking expiration dates not only means that you’ll have an accurate, real-time view of what stock is running low, but this process also allows you to make strategic decisions about upcoming specials, marketing efforts, and menu engineering. This will help reduce food waste and sunk costs.
4. Keep track of demand and seasonality
“Restaurant inventory management really starts to show its potential when it comes to predictive ordering and demand,” says Trevor. “The software from TASK is designed to build robust, accurate real-time and historical data not only to give you a snapshot of what you have right now but also what you will likely have and need to prepare for tomorrow.”
To leverage this piece of RIM technology effectively, restaurants should actively use and seek out the insights available. This data will help you make smarter stock ordering decisions, and predict the timing of seasonal triggers for changes in ordering behavior.
5. Keep stock levels low
There’s a growing trend across many industries to take in more stock at any given time, according to a recent McKinsey report. And while this may be a strategic move for some businesses in today’s fluctuating market, it is not advised for food-based operations – even when it comes to ingredients with long shelf life.
Instead, hospitality businesses should aim to have the lowest inventory possible without ever actually running out of key ingredients. Not only does reducing your stock mean that you’ll have less capital tied up in perishable goods, but it also means that you’ll limit your risk of food waste and make your inventory management easier for staff members.
6. Implement FIFO (First In, First Out) method
This method is exactly what it sounds like – food items that have been on the shelf for the longest should be sold first. For example, let’s say you receive an order of fresh tomatoes every day. Rather than using the newest produce for burger orders, restaurants should use any leftover tomatoes from the day before – provided they are still fresh and suitable.
This is also important for shelf foods, such as dry or canned goods. Historically, if you had to manually track the expiration on these items, the FIFO method with these ingredients would be time-consuming and prone to human error. Automated RIM technology will automatically track every can, tomato, and food item in your entire stock to ensure that you have nothing out-of-date sitting on your shelf.
7. Nurture consistent communication with suppliers
It’s no secret that supply chain disruptions and delays have become more common than they once were. One way to mitigate any future shortages (without overordering) is to ensure healthy, strong relationships with your suppliers.
In some cases, hospitality businesses may even find themselves with opportunities to trade and associate with other players in the market to handle surplus ingredients and stock. Restaurants should keep these options in mind and continuously pay attention to fluctuations in the supply chain to be prepared.
8. Train staff on inventory management procedures
Your digital systems can only be effective if your staff is properly trained on how to use and interact with them. This is especially relevant when it comes to accurate order-taking and inventory. From inputting order alterations to recording kitchen mistakes to leveraging historical order data to prepare appropriately for the coming dinner rush – it’s essential to understand that technology is there to optimize staff time, not to replace them entirely.
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9. Constantly monitor sales
One of the key benefits of using RIM software is having the ability to compare sales data to inventory data. To leverage both insights, it’s important to monitor sales by answering these questions:
- What are the items with a good sell-through rate?
- Are there any menu items that aren’t being sold, or becoming less popular?
- Can you identify any seasonal trends in ordering behavior?
- What are the items that accrue the highest food wastage?
“The insights possible with RIM software help you understand your business and your workflow better as a whole,” explains Trevor.
But Kathryn notes, “Those meaningful insights start with ongoing assessment throughout your entire operation. RIM technology should be part of that process and contribute to your overall business development.”
10. Narrow down on par levels and reorder points
When it comes to inventory, your par level is the minimum amount of inventory for each food item that your business should have in stock at any given time. By setting a par level in your inventory management system, the software will automatically send an alert when it’s time to place a new order – and can even prepare the right size order depending on the predicted immediate demand.
To determine your par levels, you’ll need to consider external factors such as typical delivery times, accessibility, and potential disruptions to your supply.
11. Set goals for avoiding food wastage and track progress
With so much data and insight available at your fingertips with a restaurant inventory management system, it’s important to set clear goals and intentions for reducing food waste. To decide where to start, it might help to separate ingredients into menu categories and uncover which areas tend to produce the most waste.
Once you have identified key opportunities for improvements, start with a data benchmark and then actively monitor changes.
“RIM software allows businesses to tap into more accurate insights around where wastage is happening, while also operating as a tool to help you make actionable changes to reduce that waste,” says Trevor.
What should you look for in your next RIM system?
It can seem like there are endless options when it comes to restaurant tech and inventory management – and choosing the right one can be the difference between a smooth operation and a difficult one.
“The best RIM tools are unified, comprehensive platforms that integrate seamlessly with your total digital stack,” says Trevor. The capabilities should include all the essential aspects of a great RIM software, including:
- Good inventory order management
- Waste prevention tracking
- Menu management
- Cost reporting
- Inventory updation across offline and online channels
With all of these insights at your fingertips – and integrated into your other tools – will set your business up for better optimization, higher cost margins, and more efficient ongoing operations as a whole. “For sustainable and ongoing value, look for a technology partner who can support your full digital transformation – inventory management included,” says Trevor.