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How QSR Restaurants Can Boost Profit Through Good Inventory Management

Melissa McMillen

July 21, 2022

Are your profit margins shrinking? Chances are that if you don’t have a handle on your food and inventory processes, the answer is yes. Food purchases alone account for up to 35% percent of most restaurant budgets. And while inventory management is a challenge for restaurants—QSRs in particular—it’s a key to your profitability. Knowing how to properly forecast for the future, avoiding under- and over-ordering, and identifying potential theft or yield issues doesn’t happen by guesswork. It takes having a solid inventory management package and following these best practices to get control of your inventory, save time on your back-end processes, and grow your profits.   Organize your stock   Sounds simple, doesn’t it? Keeping your stockroom of ingredients organized is more than optics—it’s crucial for running your business properly. After all, your business is food, so you need to always know what you have on your shelves. Organized stock also prevents food waste and helps you avoid expensive discrepancies between what’s on the books and what’s actually in your storeroom and freezers.   Keep the process simple and less time consuming for all involved by organizing stock in a logical way (category, etc.). Use labels consistently, placing them either above or below stock, and label each item with the date received and/or use by date. Orient food containers so that all labels and barcodes are facing forward, making it easy to see at a glance. Use open shelving and don’t crowd stock—make it easy to scan. Implement a “first in, first out” (FIFO) rule of restocking items for your staff, so the freshest items are at the back, and the oldest at the front. And last but not least, create a map of your storeroom as a handy reference (and new employee training tool), making finding what you need easier than ever.  Take inventory regularly    Between rush hours and special promotions, your inventory can deplete quicker than you think. Add to that your perishable items that need to be used or cycled out regularly, and there are many reasons to take stock of your inventory on a weekly, and sometimes bi-weekly or daily, basis. For example, high-cost or high-loss items should be counted more frequently, and shelf-steady and lower-cost items less frequently. To stay consistent, create an inventory schedule and use a few staff members each week to check your stock, so they can act as a check and balance system for you. Take inventory the same day of the week and around the same time of day to keep a more accurate count and better plan for the future. Train staff to count and record inventory in a consistent process, to ensure reliability.   If you use a manual inventory counting process (paper checklist, Excel spreadsheet, etc.), consider switching to inventory management software. This will give you real-time, accurate inventory data from any desktop or mobile application, helping you forecast for future orders, identifying yield or theft issues, and drastically decreasing your food waste and overhead. This will also allow you to count high-cost items multiple times a day to identify shrinkage or yield issues.  Avoid over- and under-ordering    The delicate balance of food inventory is the bane of every restaurateur. Order too little and you’re turning away sales and you risk losing customers. Order too much and you’re throwing away money and food on a regular basis. Even savvy restaurateurs struggle with this balance, and they’re not alone: inventory shrinkage alone costs restaurants an average of $20 billion every year. What to do?   First, consider conducting an audit on your inventory—if you’re wasting a lot of food, find out where it’s coming from. Is it over-ordering, cooking errors, or not tracking inventory regularly or accurately? Or perhaps you’re running out of ingredients at a faster rate than expected. Are you taking into account promotional and seasonal items as part of your inventory list? Is your staff mislabeling or misplacing stock in your storeroom? Are you standardizing portions so your cook staff doesn’t over or under use ingredients? Do you have a process to track expired product or prepared food? They say the devil is in the details, which is where you may find your inventory issues too.  Keep ingredients lists up to date and adaptable    Add a menu item? Switch up the recipe? Every time you make a change, your inventory should reflect that. In addition to logging the ingredients themselves, keep track of the amount of each ingredient that goes into each menu item—the recipe. With an accurate recipe, you can see the profit margin of each item you sell. Regularly re-examine the recipe cost for new and existing menu items; this will help you measure which items are a success and very profitable and those which you may need to nix or re-think.   Speaking of having ingredients to hand, make a list of non-perishables you can buy in bulk, and which ones you can get frozen instead of fresh. This will increase the shelf life of your ingredients and enable you to buy larger quantities (saving you money on re-orders, small quantities, and shipping). What about those ingredients that are about to pass their use-by date, or are taking up valuable stockroom space? Could you incorporate them into suggestive selling, or run a limited-time promotion, to turn a profit on them before it’s too late?   Invest in an inventory management system    An inventory management system digitizes and automates inventory tracking and forecasting so you’re wasting less and selling more. The QSRSoft Cash & Inventory system helps you track and manage your inventory in real time for better accuracy and reliability. With this immediate insight into your data, you can: 
  • More accurately measure food costs, identify profit opportunities 
  • Calculate gains and losses from improper serving size or theft 
  • Better forecast for future orders 
  • Inventory at any time of the day and get an accurate gain/loss and food cost calculation 
The order process itself is also made easier with a built-in vendor management system that allows you to re-order with just a few clicks. Checking inventory is easy—do it from your smartphone or desktop.   Request a demo today  No need to imagine your new and improved inventory management system. Find out how to: 
  • Lower your inventory costs and food waste 
  • Streamline your back-of-house processes 
  • Free up staff to help customers 
  • Gain valuable insight into your business costs 
Request a free demo.  

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