It’s the middle of your crazy busy Saturday brunch rush, and you’re about to run out of bacon.
You know you placed an order the other day, but for some reason, your stock is getting low.
So, it’s off to the grocery store to grab as many packs as you can. Have you ever seen a customer who doesn’t get the crispy delicacy they ordered? It ain’t pretty.
If this happens once or twice every now and then, not to worry. You may have just had a busier week than normal.
If it’s happening every week… Well, you’ve got a problem.
And you probably don’t have an inventory par level set.
An inventory par level is the normal amount of an ingredient you expect to have on your shelf at any given time.
It’s simple: If you set your par for 5 jars of mayonnaise, and you only have 2 on the shelf, you know you need to order 3 more.
If you don’t set pars – or if you’re ignoring the ones you maybe set way back when – you’re missing out on cold hard cash that could be in your bank account.
How? Well, we have the 3 Ways Ignoring Your Inventory Par Levels is Costing You Thousands. Because simply paying attention can make a world of difference in your finances.
1 – You’re Over- or Under- Ordering
An inventory par level is set so you know exactly how much of an ingredient should be on your shelf at any given time.
You set it based on your average usage, as well as the time in between your typical orders.
Say you’re known for your grilled chicken tacos. On an average week, you’re using 20 50-ct bags of corn tortillas. You know you order once a week, so you don’t want to set your par for exactly 20.
What if you have a busy week, and you sell more tacos than normal? You’d be switching to chicken taco bowls for a couple days, and probably pissing off a few customers in the process.
So, maybe you set your inventory par level for 25 bags. Then, each week as you’re preparing your order, you can go into the stockroom, count the number of bags you have left, and order from there.
But what if you don’t have a par set?
That means each week, you’re probably just ordering 20 bags of tortillas. Which means you’re not taking into account what could be happening with your business. Maybe you had a slow week, and still, have a lot of bags that need to get used up before they go bad.
But you still ordered 20 bags, and now you’ve got over 30 bags of tortillas sitting in your stockroom, a lot of which will likely go bad.
And wasted food is just like burning a pile of cash: It’s useless.
Or, you could have had a busy week and your stock could be gone. You’ve got what should be another busy week coming up, yet you don’t properly prepare.
And you’ll have upset, hungry customers once again.
2 – You’re overstocked on the wrong goods
We’re in the midst of the dog days of summer.
People are coming to your restaurant for the fresh salads and lemonade, not the full, hearty soups.
So why are you still ordering gallons of chicken stock every week? If you’re blindly ordering, you’re not probably not making the smartest business decisions.
You’ll keep bringing in all this chicken stock that will go bad before you even have the chance to use it.
But when you’re ordering against an inventory par level, you can adjust your numbers for the seasons. Based on your summer sales, you can drop your chicken stock par down, and save some money while the soup sales are slow.
Then, as the temperature cools, you adjust your inventory par levels again to ensure you’ve got plenty of soup, while maybe lowering the pars on some of those ice cream sundae ingredients.
But, be sure to keep an eye on your sales and stockroom before making any big ordering changes.
Who knows – maybe your soup is a hit year-round.
3 – Laziness is Contagious
When you’re not paying attention to your inventory par levels, you’re likely not paying much attention to your ordering in general.
Which means you’re probably getting gouged on prices by your suppliers.
They’re not necessarily taking advantage of you on purpose. But if you’re not keeping them in check, do you really expect them to stop you?
By simply showing that you’re aware of and adjusting your orders each week, your suppliers will know they have to stay in line.
They can see you’re adjusting your orders each week, so you’re only ordering what you need. They know you’re watching invoices come in, which means you’ll be ready to have the proper conversations when they try to overcharge you for broccoli.
When you show you care about your profitability, it’s way less likely your suppliers will try to sneak one by you.
And when your orders get cheaper, your Cost of Goods Sold goes down, too. Which means your cash flow goes up.
CONCLUSION: SET THE BAR WHEN YOU SET AN INVENTORY PAR LEVEL
Setting up inventory par levels on your ingredients can have a lasting effect on your restaurant’s profitability.
But, it can seem like a lot of work to track and maintain.
That’s why Orderly helps you ensure you’re always making the smartest purchasing decisions – and doing it in a fraction of the time.
Once you set your pars in Orderly, we’ll always ensure you’re ordering against them. As you snap photos of your invoices and upload your sales, we’ll adjust your numbers accordingly.
And when you go to make purchases, our Restaurant Food Index is there to show you what prices you should be paying on ingredients. Easy-to-read graphs show you both the national and local averages.
If you don’t have time to look them up yourself, Orderly’s Customer Success Managers send you recommendations on places you can save.
With Orderly, it’s easy to turn your restaurant from a slow-burning train wreck into a well-oiled, profitability machine.
All it takes is paying attention, setting inventory par levels, and sticking to them.