When most people hear the term “inventory managementthey are likely to think of warehouses that ship products to consumers or manufacturing facilities that need to track the various parts and equipment used in their work. But inventory management is just as applicable in the hospitality industry.
This is especially true of hotels, restaurants, bars, casinos and other establishments that offer food and drink to their customer. Managing inventory can already be a challenge when it comes to uniforms and other supplies; it can become a real headache when it comes to perishable goods.
By partnering with a quality inventory management partner, you can have greater confidence in your ability to manage these necessary items in a way that reduces waste and delights your customers.
1) Lack of price visibility
Food has been one of the main areas affected by inflation, with recent reports revealing a 8.8 percent price increase year-over-year from 2021 to 2022. Supply chain issues, increased labor expenses, crop disruptions and other factors are driving up the costs of a variety of staple foods and beverages used for home cooking and in hospitality businesses.
Inventory management practices that focus only on the quantity of items needed may not adequately account for price increases for meat, milk, fresh fruits and vegetables, and other commodities. Without knowing how your suppliers are raising prices, you could easily start seeing a significant reduction in profits.
Price visibility requires identifying if suppliers are changing the price they charge for various items and evaluating your options. Do you find another supplier or increase the price you charge your own customers? By evaluating price trends in your inventory management system, you can proactively account for this increase in ongoing expenses.
2) Inventory waste
Wasted inventory is one of the biggest headaches any hospitality business has to deal with. For example, it is estimated that between four and 10 percent restaurant food purchases are wasted before they reach a customer – and that doesn’t even take into account food that a customer doesn’t eat after it’s been served.
One of the most common reasons these foods go to waste is that they are not used before their expiration date. Poor inventory planning could prevent perishables from being used for days or even weeks – and by the time they are needed, they can no longer be served.
While some waste is unavoidable due to unpredictable customers or food processor errors, a quality inventory management partner can help reduce waste by optimizing inventory replenishment. By considering the shelf life of items and only making requests when needed, waste can be significantly reduced.
3) Unused inventory
Food spoilage isn’t the only way inventory can go to waste. Too often hotel companies spend money on items they don’t actually use. Menus change over time, and as a result, the ingredients your establishment needs to prepare dishes also change.
Without regular requisition order reviews, a restaurant could easily continue to order items that are no longer in use because the dishes they were originally needed for have been discontinued. These unnecessary items don’t just add to the total cost of each request. They also take up valuable space in your stash.
A quality inventory management system will allow you to track inventory levels over time with historical counts. Ingredients that are frequently carried over should be further evaluated to determine why they are still being ordered and if they are even still being used. Items that are no longer used for revenue should be eliminated from purchase orders entirely. Reducing order amounts and closely monitoring the use of rarely used items can further reduce waste.
Automated requisitions can also ensure that you don’t keep ordering inventory that isn’t used often. Where items are only replenished when they reach a set level, new orders will only be submitted when stock is used up.
4) Lack of information on customer habits
When you understand your guests buying behavior, you can distribute the inventory accordingly. For example, during the NCAA March Madness tournament, some restaurants may notice an increase in demand for dishes such as wings or nachos. Demand for other items may vary depending on season or regional events.
Seasonal changes can even impact the number of guests that frequent your establishment each day – another crucial consideration when trying to plan inventory. You don’t want to run out of a popular item because you didn’t order enough stock, nor do you want excess stock to be wasted because you miscalculated demand.
Without a strong inventory management system, these variations are often left unannounced. On the other hand, the right system will allow you to collect detailed data so that you can identify specific trends among your customer base.
The demand for certain items may even vary depending on the day of the week. Analyzing these patterns will allow you to forecast demand so you can allocate inventory accordingly. This way, you’ll always have the right amount of each item your facility needs.
5) Waste of time for manual inventory
Inventory management is key to understanding your facility’s supply levels. Unfortunately, many in the hospitality industry continue to rely on time-consuming inventory sheets that must be completed by hand. Not only does this require a considerable time commitment, but it can also be alarmingly inaccurate.
After all, the average employee won’t want to spend an extra hour or two counting inventory after closing and cleaning. Association for Psychological Sciences Research revealed that people make less precise decisions later in the day. A desire to simply be done with mundane tasks could cause an employee to simply use last week’s requisition numbers rather than go through a time-consuming inventory process.
Tools such as barcode scanning, mobile apps, and automated inventory tracking can dramatically reduce the workload on your employees. This ensures more accurate inventory levels by reducing the risk of human error – and it makes life easier for you and your staff.
6) Not following portioning guidelines
In the restaurant industry, portioning guidelines are key to keeping inventory management on track. Even minor recipe changes (like an extra slice of cheese) or overfilling drink glasses can mess with your cost calculations and stock levels. What seems like a minor mistake on the part of a young chef can eventually become an ongoing cost issue if left uncorrected.
To mitigate this, hospitality companies must establish standard recipes that clearly outline the procedure for preparing a dish, as well as the exact amount of each ingredient that may be needed. Everyone involved in food preparation should be trained to understand the importance of following these guidelines exactly.
Restaurant managers must also ensure that proper portions are served to customers. If a particular dish is often left unfinished, with leftovers thrown away or taken away, adjusting the portion size will reduce the restaurant’s food waste and reduce inventory expenses.
Although some kitchen losses are unavoidable (such as when a junior chef drops a slice of meat on the floor), a carefully regulated system will make it easier to maintain inventory at expected levels.
7) Issue tracking transfers between locations
Managing inventory is hard enough when you have a single facility, but with multiple stores and customer-facing locations, it can get even harder. Multi-unit businesses often facilitate internal orders to transfer inventory from one location to another as needed. While this can help save money by reducing the need for new requisition requests, it can also introduce new inefficiencies and tracking issues.
Not only should your team track their centralized ordering needs, but you should also monitor how each location uses their inventory. A good inventory management system allows your team to quickly and accurately record internal transfers and orders so you have real-time insight into how much stock is available at each location.
Internal order tracking can also provide crucial data that allows you to make location-specific changes to item reorder values. By ensuring that managers log each transfer into the system as it occurs, you won’t have to worry about miscommunications resulting in incorrect stock levels for the locations involved in the transfer.
Improve your inventory management processes with BirchStreet
While inventory management in the hospitality industry is fraught with potential pitfalls and inefficiencies, that doesn’t have to be the case when you have a strong inventory management partner on your side. At Birch Street Inventory management with AccuBar offers a wide range of features to help you manage inventory costs, counts and expenses.
By connecting to your point-of-sale (POS) systems, you can access valuable inventory reports and even automatically restock items or receive alerts for items with low inventory levels. Portable scanning, always-on inventory tracking across unlimited locations, and multiple costing methods ensure this solution can scale with your business needs.
By giving inventory management the attention it deserves, you can stop waste and ensure higher profits for your hospitality business.
About BirchStreet Systems
BirchStreet Systems powers hospitality businesses with a complete procure-to-pay business solution. As the world’s leading provider of expense management solutions to the hospitality industry, 15,500 companies in over 130 countries subscribe to BirchStreet to connect to a network of over 450,000 suppliers.
Founded in 2002, BirchStreet is privately held and headquartered in Las Vegas, NV with offices in California, China, Singapore, India and the United Kingdom. For more information, please visit www.birchstreetsystems.com.