Next Level Inventory Management

Managing inventory in the restaurant space has always been a top priority as it’s easy to lose money on waste. Technology continues to make strides in helping operators control over- or under-ordering, and to find areas where waste is occurring, but today’s systems can also help with food safety and traceability as well as allergen information.

“We track allergy information through our Clover (www.clover.com) point-of-sale (POS) system to let the kitchen know there is an allergy, and it (the potential allergen) can also be tracked through our inventory management system in the future too,” says David Raday, director of corporate development at Illegal Burger (www.illegalburger.com) based in Arvada, Colo., and operating five locations. 

The company uses Marketman (www.marketman.com) for its inventory management and is also tracking temperature storage to ensure food safety. There is an area within Marketman that general managers enter temperature logs from the walk-in coolers on a daily basis. This is also done to manage waste, Raday states.

Additionally, GS1 standards offer a common language for restaurant chains, suppliers and distributors to identify, share and capture supply chain data, which makes food traceability easier than ever. It not only offers efficiency, but can also provide huge cost savings.

“The Foodservice GS1 US Standards Initiative is the main vehicle to get full supply chain food traceability.  There’s no individual software or technology tool that can achieve that,” notes Lucelena Angarita, director of supply chain traceability at Independent Purchasing Cooperative Inc., (www.ipcoop.com) based in Miami, Fla., which is the purchasing cooperative for more than 30,000 Subway (www.subway.com) restaurants.

The company uses FoodLogiQ (www.foodlogiq.com) as its data aggregator. She says the biggest benefit is knowing exactly where their product is by lot and date;  if there is a recall or product that needs to be withdrawn, they can find it quickly and easily — which saves not only time but also money.

“Without enhanced traceability, we would have to go to every single restaurant and impacted distributor services to find the targeted product,” she explains. “We had an issue where only nine cases of product needed to be found and removed within 733+ restaurants, but because of the system we put in place, we found four out of nine immediately, and all nine in only two hours.  It saved $61,000 on product retrieval services and us having to visit 733 stores.”

In the past, they have spent close to half a million dollars on one single recall, and with this system it would have only been $83,000 – if we would have known which restaurants were impacted, she continues. Laying the foundation for the system they have in place started in 2014 when they communicated IPC’s Foodservice GS1 US Standards adoption requirements to their supply chain partners.  This enabled all partners to speak one language, gain efficiencies, and reach the full supply chain traceability goal. This included adopting GTINs, or global trade item numbers to identify products, GLNs, which are global location numbers, and utilizing traceable barcodes as well as scanning them as products are delivered to Subway restaurants.

“We have 98% of our products by volume with a traceable barcode and about 28 percent of the entire Subway distribution system scanning, which is about 8,400 restaurants so far,” Angarita says. 

Back-of-House Improvements

Inventory management technology can be a game changer for restaurants, allowing operators to gain more insight into their operations and drive down food costs. Before switching to Marketman two years ago, Illegal Burger did everything on paper and through Excel spreadsheets. Now they can see exactly how much inventory was used, what is left, and can place orders directly through Marketman, sending an email or text to distributors for processing, Raday says.

“It has helped us with our over- and under-purchasing, and with the consistency we need to grow the brand,” he notes, explaining the system breaks down menu items so recipes can be sent out to the kitchen, sharing ideal temperatures to cook a burger and more.

Inventory management systems also enable operators to eliminate waste and ensure portion sizes are not too large or small at each location. Mascott Corp., (www.mascott.co) based in Hillside, N.J., and operating three Cinnabon (www.cinnabon.com) bakeries and three Ground Connection (www.groundconnectioncoffee.com) coffee shops, uses Restaurant 365 for inventory management, which integrates with the POS.

“In the bakery we have a lot of items baked from scratch every hour, and we can easily create waste because the products are only good for a half hour or hour. The system helps us make sure we are not wasting and can even monitor compliance of over-portioning or using less of an item than we should,” Scott Gillman, CEO of Mascott, explains.

On the inventory side, there is one main report Mascott focuses on which offers a view of actual usage, theoretical usage, operating supplies and other key items. Store managers can click into items to drill down for more information. It’s easy to spot an issue because the system becomes a “closed loop” with numbers being within .5 percent each week, Gillman explains.

“In the past a restaurant might know food costs should be running 30 percent, but from store to store they might sell a different product mix of more profitable and less profitable items. Without a system drilling down, a manager wouldn’t know this,” he shared, explaining there could be one store running at 29%, but with the food mix it should really be 27%, and another could be at 31%, and be only one-quarter point higher than it should.

“You would think the lower food cost store is running better, but they could actually have more waste. That is where the right system comes into place,” Gillman says.

At Illegal Burger, Raday says he drills into sales summary reports to ensure tracking is accurate and the POS codes are tracking correctly. 

“We run a variance sheet to see what the opening and closing inventory was, check what the POS said we sold and compare our ideal with actual to see if we find items improperly tracked,” he explains.

In the future, both Raday and Gillman would like to see the task of taking inventory removed and replaced by a system that knows when an item is taken off the shelf by weight. For those serving liquor, there is Partender (https://app.partender.com), which allows people to use a phone or tablet, pull up pictures and enter liquor levels of each bottle to place an order. 

“I think one of the most arduous tasks is taking inventory, and in the future, I think there will be novel ways of taking pictures, weighing items and artificial intelligence to allow you to take inventory in 15 minutes versus four hours,” Gillman says.