Research Reveals How Operators Manage Labor, Inventory and Loss Prevention

Every restaurant owner, whether independent or part of a large chain, understands that labor and inventory costs represent a significant variable expense to the business. Keeping control of those costs is as critical as the culinary magic that occurs in the kitchen. After all, how can a restaurant expect to make a profit when they are regularly overstaffing or running out of ingredients? The same goes for loss prevention — if a restaurant owner is losing money through shrinkage or waste but has no way of tracking it, how can the business succeed?
Oracle Hospitality partnered with Technomic to survey more than 200 independent operators and chains. We wanted to understand how those operators are managing the task of controlling the costs of labor, inventory, and loss prevention. Where do their priorities lie? What are their biggest issues? How can the task of managing costs become more efficient?
By sharing the findings of the research with food and beverage operators globally, Oracle Hospitality aims to show that managing labor, inventory, and loss prevention is a global challenge that can be met by putting cost-control technology at the very heart of your operation.
The research findings are designed to help quantify the significance of back-office functions and, more importantly, shed light on the ramifications they have on so many other facets of the operation.
How much of a restaurant’s revenue is spent on food and labor costs? Where are restaurants losing money? What are the key priorities when it comes to managing staff and inventory? These are just some of the questions that Oracle asked 200 restaurant operators, to establish the importance of cost control in a food and beverage operation, and how it can be improved. Among the key findings:
1. Labor and inventory, on average, combine to account for more than 50% of revenues. The magnitude of their impact on budget clarifies priorities: Food and beverage operators must make cost control a key part of their operation. To offset labor costs, two-thirds of independent operators reported raising menu prices — directly impacting the guest experience.
2. Valuable time is often diverted and wasted on labor scheduling. Food & beverage operators resoundingly rank recruitment, training and retention as top priorities for labor management, yet often find themselves mired in the mundane: 63% of restaurants change schedules prior to posting and 49% do so after posting. What’s worse, even after all these adjustments, 44% reported that understaffing is an issue, which can impact the dining experience.
3. Inventory management also takes up valuable time. A third of operators said that they spend more than 3 hours per week managing stock, when the top priorities for inventory actually lie in meal quality and kitchen staff empowerment.
4. Over-portioning and food waste are among the primary loss culprits. But 50% of independent operators said they do not track prepared waste. Furthermore, 60% reported they do not use a forecasting system to improve ordering, which likely contributes to the waste problem.
There is no doubt that cost control needs to be a significant priority for any food and beverage operation. By using technology to manage labor, inventory, and loss, operators can increase efficiencies while reducing the manual effort needed to achieve maximum control — releasing that time for other priorities.