Why Restaurant Inventory Should Integrate With Sales Data

We’ve talked a lot in these blogs about the importance of restaurant data and the fact that each system a restaurant uses houses a plethora of information. We’ve mentioned in the past that each solution can provide reports, but these systems do not communicate with each other effectively. Operators are forced to manually piece details together to get a more detailed and accurate glimpse into how their restaurant companies are performing. However, manually piecing bits of data together on a spreadsheet can be tedious and problematic. We often refer to this process as "Excel hell".

The goals for most restaurant businesses are the same, drive sales, improve and streamline operations, and keep customers satisfied and coming back. Let’s take a closer look, specifically into the importance of merging Inventory and Point of Sale (POS) data to achieve these objectives.

Improve Purchasing and Reduce Inventory On Hand

Once information is merged, operators can have a better understanding of the popularity and profitability of menu items, thereby allowing them to make smarter decisions with inventory purchasing. They can better control food cost and maintain proper amounts of inventory while maintaining the quality of their products and preventing waste.

Visibility above the restaurants can assist maintaining proper inventory levels in each restaurant and reducing costs across all of them. If one restaurant has too much of an ingredient with a short shelf life, quickly identifying the overstock and moving the excess to another location that needs more of that ingredient will achieve both goals. Exception reporting can help identify and match these types of issues and it's a fully automated process.

Analyze Contribution Margin trends

Inventory systems always calculate Actual Food Cost for each ingredient. The better systems also calculate the material cost ("Plate Cost" or "Menu Item Cost") for each menu item. If your system calculates Plate Cost, you can use that to examine your margins all the way down to the check level. All you have to do is subtract the Plate Cost from your Net Sales to calculate the Contribution Margin. You can actually calculate the profitability of each hour, or each of your revenue centers, or for each check. Using Plate Cost let's you see more clearly whether that promotion is making you money, or costing you money. This type of visibility is beyond what your inventory management system can do alone.

To Summarize

The restaurant industry has evolved significantly and reliance on technology has influenced business practices a great deal. To have the upper hand in today's competitive market, a successful restaurant business should utilize the right tools to maximize profitability and streamline operations. You are probably using a proficient POS system and Back Office solution for inventory maintenance. However, separately, these systems are not able to show you what's really going on in your business. When you combine the data from both systems, you'll eliminate manual data entry (and human error), save valuable time, gain greater insight and your restaurants will become that much more productive.