With labour shortages, rises in business rates, rises in food and transportation costs and an inflation-driven tightening of belts, many hospitality businesses are anticipating some tough times ahead.
For owners of restaurants, cafes and bars, the ever-increasing cost of food is a particularly difficult problem to swallow. It’s one of the largest operating expenses which so often seems to be an external issue that is beyond anyone’s control.
Or, is it?
While there may not be very much you can do about the cost of the ingredients you use in food preparation, there are many ways to keep those costs under better control. We’re not going to suggest you rise your prices or work with a leaner staff as both approaches would inevitably have a knock-on effect on customer satisfaction.
What we really mean is undertaking some fine-tuning of your basic business operations in ways that will directly affect the profitability of your business. Let’s look at just three key areas: staffing issues; inventory management; and sales forecasting.
The performance and attitude of your staff has a direct impact on your ability to deal with food costs. We’re talking about everything from staff who whip something out of the freezer to those who snack on produce during a shift; staff who offer their employee discount codes to friends and family to those who regularly spoil or waste food during preparation. It all literally eats into your profits, so what can you do?
Well, a few things spring to mind:
- Use the inventory management software installed within a modern smart POS system to help keep track of food from when it is delivered to when it is sold to the customer, including reconciling customer bills and kitchen tallies.
- Set thresholds for discounted employee meals and monitor the use of discount codes (again your POS should be able to help with this). You might also think about offering a few low-cost ‘freebies’ to deter the snackers!
- Invest in training! A well-trained chef will work with your ingredients to create menus that minimise waste; understand how to rotate food using FIFO; and be a master of portion control. A well-trained waiter will be knowledgeable about the menu; competent in answering customer queries and making ‘add-on’ recommendations; and proficient in using your POS to prevent waste or mistakes. Ask yourself how every member of staff is contributing to your food costs, use staff training to instil best practice within your business, then ensure it’s being upheld.
Inventory management and reporting
We recently came across a statistic that claims almost half of small businesses don’t track their inventory or are still using a manual method!
Our guess is that this is either due to the old ‘I don’t have the time’ problem or a fear of change. For hospitality businesses, missing out on a more digitised inventory management system could be having a huge impact on overall food costs.
The solution is simple. Invest in a smart POS system like the Good Till and your business will soon benefit from a range of easy to set up and maintain inventory management practices.
- Create an inventory that micro-manages your stock at product or ingredient level.
- Check weekly food orders against supplier invoices (ensuring your costs are not affected by mistakes or missing items).
- Easily carry out complete audits when you need to, but also use regular partial stock counts to reduce the likelihood of running out of popular items or the overstocking of those which are less popular.
- Reduce the man-time involved in inventory work by using cloud-based software to track your inventory from anywhere and send POs to suppliers directly (avoiding duplication).
- Use inventory variance reports to compare your actual inventory with expected inventory (helping to identify variances caused by theft, wastage, over-portioning etc).
Once you’ve got your inventory management under control, the great thing is you can also use the reporting features of a modern POS system to synchronise the data you have about stock with reports on sales, menu performance, staff performance, supplier costs and more.
With a clearer understanding of what is popular and profitable within your business, this enables you to make insightful decisions about your menu, run more accurate sales forecasts and plan staffing accordingly – all of which means better management of those troublesome food costs!