Austin’s innovative fast casual meal delivery service Snap Kitchen has put tighter controls on its inventory to reduce food costs and lower overall food waste. Likewise, Charlotte, N.C.-based casual dining brand Hickory Tavern managed to reduce its inventory by 20 to 60% across the majority of its 34 restaurants.
In an environment where many brands struggle with high food costs and potential food waste, it’s important to confront these two challenges. For both Hickory Tavern and Snap Kitchen, getting a handle on inventory was an important part of their strategy for reducing costs and developing a greener approach to food management.
At Hickory Tavern, inventory was taking too long and its restaurants were carrying too much of it. To solve its over-ordering problem, the brand decided to automate its ordering process using their back-office operations platform. This automated “suggestive” approach enabled managers to compare what inventory was needed vs. on-hand so they only ordered what was required. As a result, Hickory Tavern was able to lower food waste across multiple metrics -- including spoilage and theft -- lower food costs and achieve higher profits.
Another example of food waste reduction through innovation is Snap Kitchen with their 33 locations and two commissary kitchens. Inventory automation tools provide them with tighter control on what they buy, so they keep just the right amount of product on hand to meet customer demand. With such streamlined inventory levels, Snap Kitchen can quickly remedy any variance in food cost and minimize food waste.
With inventory automation tools in place, both Hickory Tavern and Snap Kitchen were able to track their actual vs theoretical food cost variance to compare what they actually paid for their food to what those costs should have been without any waste. Once they had identified their food cost variance for each inventory item, they were able to implement better food cost controls and stop wasting money.
Restaurants everywhere can benefit from lower food waste via lower food costs. But what are the best practices in achieving this? Here are some of the things that forward-looking brands are doing with advanced food & beverage operations and inventory management technologies:
- Perpetual Inventory Management: Restaurants can reduce costs by maintaining optimal inventory levels while simultaneously reducing excess inventory waste. With real-time tracking from ordering to depletion, they also manage to avoid out-of-stock incidents.
- Demand-based Production: With a food production forecast based on sales forecasts and historical consumption patterns, brands can customize their production schedules by hour, shift, day, week, or by prep station, and adjust plans daily and intra-day, based on traffic and consumption.
- Suggested Ordering -- Less inventory is required when ordering relies on recommendations based on par levels, historical consumption patterns, sales forecasts and on-hand inventory levels.
- Centralized Order Guides -- By centrally managing all prices, bids, and contracts electronically with “apples-to-apples” comparisons from vendors, the restaurant is always paying the right price for the right products.
- Menu Engineering -- Careful analysis of customer demand, item percentage sales contributions, and costs and profit margins will help the restaurant understand the true place cost of each item, making it easier to price each item.
- Sales and Cash Reconciliation -- True visibility into a restaurant’s food cost variance is achieved through tracking critical data. This should include: over/short, guest counts, comps and discounts, credit card transactions, bank deposits, catering activity, day-part analysis, voids, and much more.
With a data-driven approach to your restaurant’s food cost control and inventory management, brands like Hickory Tavern and Snap Kitchen are achieving new levels of eliminating food waste.
About the Author
Paul Molinari is head of marketing at CrunchTime! Information Systems, Inc., a back-of-house restaurant operations platform provider.