Proper Inventory Management Can Increase Your Bottom Line Profits

Sept. 4, 2009 - PRLog -- One important key to running a profitable restaurant is managing the controllable costs, such as food, labor and supplies. Of those, it seems the toughest cost to control is food.

Simultaneously monitor portion sizes, prevent theft, watch waste and order efficiently should be done in order to manage food costs effectively.

Inventory software will help you identify accurately where your food costs are out of line. Using inventory control software will typically save you 1 to 2 percent of sales, and could save you much more. And it’s savings that drops straight to your bottom line as profit.

A POS-based inventory control system operators can spot and solve food cost difficulties that might not become visible by simply focusing on portion control. When your staff knows that the system is keeping track, it discourages both waste and theft.

When experiencing food cost problems, a restaurateur will mostly learn this lesson after a week of using inventory control software.

In his restaurant, he can be portion controlling, yield testing and performing physical inventory, but it wasn’t until he uses an inventory software where he learns that his inventory was out by exactly 20 pounds of lamb each week; coincidentally, it's the same weight as a box. Knowing that, it was relatively easy to determine the source of the problem: one of the prep cooks was helping himself to a box of goodies every Friday night.

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 can track ideal usage based on those recipes and the restaurant’s actual sales.

This software can aslo 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 software can also be set up to track as many items as the operator wants.

Generally 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.

With just one item, over-portioning by 1 ounce per order could cost a restaurant hundreds of dollars a month. If an item is running $1.67 per pound, eliminating over-portioning on 100 orders per day for 30 days could add up to more than $300.00 in savings or $3600.00 per year!

Better tracking and controls also helps an operator reduce the amount of stock they keep on hand, reducing waste and freeing up cash for other things. By carrying too much inventory could cause a loss of between 2 percent and 5 percent on an average operator’s profit-and-loss statement.

According to one of our clients it was a lot of effort to set up because they have a fairly extensive menu, but once we helped them program properly, 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 contemplating a purchase make sure you know how to and understand the additional profits that you can acquire by learning and properly using the inventory module of the system.

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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..

Visit http://www.pos-for-restaurants.com for more information on how our national network of restaurant point of sale professionals can help your business achieve greater success in these difficult economic times.

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