Restaurant Profitability Blog

How to Calculate Your Restaurant Inventory Par Levels

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Your restaurant’s inventory par levels and food costs go hand in hand.

It’s one of the hardest things to juggle… Having enough inventory to meet demand each week, but also keeping it low, as to avoid stockpiling or food waste.

We mentioned this in our last article, but keeping track of inventory (and your par levels) is essential to the success of your restaurant.

Lower inventory levels help:

Ben BaggettHow to Calculate Your Restaurant Inventory Par Levels
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What is Food Cost Variance and How Do You Control it?

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How often do you check the prices of your ingredients?

Every delivery? Once a week? Once a month? You’re expecting your food cost to be around a very specific number. Your supplier didn’t mention any major changes in price, so why should you have to worry? You’re getting a good deal after all, right?

But prices are seasonal, and will often change. Small increments here and there. Sometimes they may go unnoticed. Sometimes you may catch them.

In an ideal world, your food cost would be exactly what you expect every single time. But unfortunately, that’s not how the supplier industry works.

So what is food cost variance and how can you keep it under control? Below we’ve outlined what food cost variance (as called cost variance) is and a few ways you can keep it under control.

Ben BaggettWhat is Food Cost Variance and How Do You Control it?
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How to Calculate Your Inventory Turnover Rate (And Why it’s Important)

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Do you know if you’re using your inventory efficiently?

Or how many days you’re holding inventory?

Managing your restaurant’s inventory sometimes get pushed to the backburner.

Invoices stack up. Servers call in. Managers show up late. And payroll has to get done.

You have a million things to think about every day and inventory management isn’t always a top priority.

But understanding your inventory is vital to the success of your restaurant.

You should have a thorough understanding of your inventory turnover rate, how many days its held on average, and how that compares to others in your market.

Ben BaggettHow to Calculate Your Inventory Turnover Rate (And Why it’s Important)
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Restaurant Food Waste: The Silent Killer

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You’re busy.

Well, ever since you opened your restaurant, you’re never not busy.

You’re being pulled in a million different directions at all times. You’re covering for a waiter who skipped his shift. A customer is causing a scene. A fight just broke out in the kitchen.

With all that going on, you just haven’t had the time – or energy – to focus on reducing your restaurant’s food waste.

You’re not keeping track of your orders. Instead, you’re just placing the same ones over and over. Who has time to analyze all that stuff?

Well, when you don’t analyze that “stuff”, you’re throwing out hundreds of dollars a week in wasted food.

And you have nothing in place to help with your restaurant food waste management.

But, you can reduce food waste in your restaurant in a ton of ways, including inventory management, smarter ordering decisions, and more.

Stop letting restaurant food waste kill your profits.

Read on and give them an extra breath of life.

You’re Not Alone

You’re not the only one with restaurant food waste issues. Sadly, it’s an industry-wide epidemic.

According to the National Restaurant Association, over 133 billion pounds of food was wasted in 2010. And that number has continued to climb.

That breaks down to the average restaurant tossing about 4-10% of food before it even reaches customers.

food waste statistics for each year

Sure, your restaurant may not be average. It’s tossing away less. It’s special, just like you.

But no matter how special you are, we can bet your restaurant food waste cost is higher than you want it to be.

Even though restaurant food waste is costing the industry billions each year, only 50% of restaurants – at most – are tracking it.

Which means you’re simply allowing yourself to waste money. You might as well just light a pile of cash on fire while you’re at it.

When orders aren’t adjusted, you’re not accounting for the fact that for some reason, your normally popular Bananas Foster didn’t sell as much last week.

And now you’ve got triple the bananas in your stockroom, a ton of which are about to spoil if sales don’t pick back up.

You also aren’t taking the time to research ingredient prices. And though monitoring prices may not help you with reducing restaurant food waste, it can save you a pretty penny on your orders.

So basically, what does this boil down to?

Your ignorance is costing you thousands.

You’ve got no pars to order against. No budget to keep your spending in check. No weekly inventory count to see what you need to order in the first place.

Want restaurant food waste to stop harassing your bank account? Start paying attention.

How Do You Lower Restaurant Food Waste?

Ready to actually make a change?

Here are a few places to start.

1: Set a Budget

solid, weekly budget is a great way to keep your staff aligned when it comes to ordering.

It forces you to stop and take a good, hard look at your finances.

Each week, you’ll want to hold a team meeting with all of your managers. At this meeting, you’ll reflect on the past week. What went well? What didn’t?

Then, you’ll look ahead at the upcoming week, and figure out if there are any specials, events, or more.

You’ll take all that information and build a budget for the week.

Make sure all orders are subtracted from it, so you can keep your spending in check.Or, if you do go over, you can pinpoint exactly why.

2: Order Against a Par

Setting pars on all of your ingredients (or even just on your top-20 most used ones) can make a huge dent in reducing restaurant food waste.

Essentially, your par level is how much of an ingredient you expect to have on your shelf at any given time.

You’ll set this based on how much you intend to sell each week, leaving some room for extra, just in case you sell a bit more than normal.

Then, when you’re going about your ordering, you order based on what you actually need, not just what you think you do.

A quick restaurant food waste management tip: Pars can change. They’re not set in stone. As sales go up and down over time, adapt your pars accordingly.

3: Get Accurate, Weekly Inventory Numbers

This one’s a no-brainer.

It’s easy to reduce food waste in your restaurant with inventory management.

But “inventory management” doesn’t mean stepping into your stockroom, doing a quick scan, and then leaving.

It also doesn’t mean using a pile of spreadsheets covered in tomato sauce.

It means actually hunkering down and getting the accurate numbers you need.

Because inaccurate numbers mean you’re going to make inaccurate spending decisions for your restaurant.

And that’s just a waste of time.

4: Use Technology

All the methods we’ve mentioned – while extremely valuable – can be very time-consuming.

Especially taking a full inventory.

But the right restaurant technology? It can make a huge difference in reducing restaurant food waste.

Plus, it can save you hours of time.

That’s what we’ve built here at Orderly. We’ve made it so you don’t have to count inventory, yet can still get accurate numbers. Well actually, you’ll get more accurate numbers.

(Sound fishy? Schedule a demo and let our product specialists show you how it works.)

Plus, Orderly has functions to help you set and maintain both a budget and par levels.

It’s designed to help you save time and money, and to help control your restaurant food waste.

Conclusion: Lower your Restaurant Food Waste and Save Your Restaurant

You don’t always notice your restaurant food waste.

But that doesn’t mean it’s not harming your business.

You can’t just ignore a rat that runs through your kitchen daily. Eventually, he’s going to cause you some serious problems.

Restaurant food waste is the same way.

Don’t wait until it’s too late. Get started reducing your waste now.

Whether that’s on your own terms or with the help of restaurant technology, it’s a change that needs to be made.

It can save the world. It can save your bank account. And it can save your restaurant.

Danny BarryRestaurant Food Waste: The Silent Killer
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Infographic: 5 Processes to Shred Your Food Costs

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According to the National Restaurant Association, the restaurant industry netted almost $800 billion in sales in 2017.

So.. why are you still struggling to turn a profit?

It’s probably because you’re not taking care of your food costs.

Make a change and save your restaurant.

Here are a few places to start:

Danny BarryInfographic: 5 Processes to Shred Your Food Costs
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Restaurant Inventory Master Class Webinar Recap

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Recently, we hosted the Restaurant Inventory Master Class Webinar.

This first-of-its-kind course covered a variety of topics, including:

  • The importance of getting accurate inventory numbers
  • How to find your Cost of Goods Sold
  • How all these numbers help lower your food costs
  • A way to get better numbers in a fraction of the time (and without counting inventory)
Danny BarryRestaurant Inventory Master Class Webinar Recap
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The Case for Price Transparency: A Note from our CEO

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Orderly is here to help restaurant owners run a smarter business. And we can’t do that if we’re just giving you our perspective.

So each month our CEO, Bill Jones, takes a deep dive into a topic of his choosing. He’s got thoughts, tips, and things to watch out for – all designed to help you out.

And we have them right here, for you.

Danny BarryThe Case for Price Transparency: A Note from our CEO
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