Inventory Optimization Software: A Key Ingredient for Restaurant Success

Published on:
January 5, 2024
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According to recent reports, about half of the food produced in the world is wasted. Food waste has always been an issue, particularly in the food business.

However, with proper inventory management, business owners can save money in ways they never thought.

Everything that comes from your kitchen has a cost. However, are you aware of where you're losing money? You can see what's on the shelf and where money is being lost with the help of comprehensive usage, loss, and sales performance data.

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According to a Toast survey, the number one difficulty for both successful (39%) and no-growth (47%), restaurant businesses is excessive food costs.

Approximately 10% of food in a typical restaurant is wasted before it ever reaches a dish, which makes this obstacle much more difficult to overcome.

This is an unrecoverable expenditure created by huge servings, long menus, and the inefficiency of the kitchen staff. All of these issues can be discovered and controlled by using sound inventorying procedures.

Technology, which enhances both customer service and kitchen display systems, has played a driving role in the restaurant industry's change in recent years, with 95% of operators admitting that technology increases overall efficiency.

What is Inventory Optimization?

Inventory optimization is a collection of best practices for businesses that aim to spend less money while still having a saleable inventory.

This is an important aspect of inventory management that takes into account the volatility of supply and demand. It is a technique for reconciling investment restrictions with business goals and fulfillment targets over a wide range of inventory stock-keeping units.

Inventory optimization keeps warehouses and supply networks running and helps businesses preserve liquidity. It assists firms in determining the appropriate quantity to purchase for stock-keeping units, allowing them to have it readily accessible for rapid order fulfillment, and reducing surplus inventory that becomes outdated over time.

Understanding Inventory Optimization Software

Restaurant inventory optimization software tracks inventory down to the ingredient level and easily connects data to recipe preparation, food pricing, buying, receiving, and counting processes. 

These sophisticated technologies assist busy pubs and restaurants in ensuring that ingredients are available to meet daily demand.

They also aid in the reduction of losses caused by over-ordering, waste, and theft. 

Most include built-in POS capabilities or links with leading POS systems to expedite operations and provide managers and owners with real-time visibility into all aspects of the organization. 

Consider inventory optimization software to be your digital sous chef, meticulously monitoring your restaurant's inventory, decreasing waste, optimizing purchases, and offering actionable insights - all on a clean, user-friendly platform.

Here are its  main components:

Inventory Tracking

Inventory tracking is one of this software's most important functions.

It gives real-time stock-level updates, so you always know precisely what you have on hand. This enables you to place orders on time and prevent running out of critical components or, worse, overstocking perishables.

Because it eliminates all inventory-related concerns, automated inventory management software has entirely altered the restaurant sector.

It has been shown that 70% of food products are wasted before they reach the customer's plate. Thus, with inventory tracking, restaurants can now reduce food loss and other expenditures.

Batch and Expiry Tracking

This is one of the most significant inventory management approaches for food-related firms. Fresh food, for example, is particularly vulnerable to deterioration owing to inappropriate storage conditions.

In the case of contamination or spoiling, you must be prepared to do a product recall to retain your goodwill and keep customers.

Batch and expiration monitoring will allow you to track the incoming and exiting goods on a batch-by-batch basis, allowing you to utilize or sell older products first - the FIFO (First In, First Out) approach. This will assist you in avoiding spoiling.

Accurate Demand Forecasting

Demand forecasting is another important feature.

The program can forecast what materials you'll need and in what amounts based on prior sales data, trends, and even seasonality. This function lowers occurrences of excess or deficit by eliminating guessing.

Secondly, demand forecasting assists with day-to-day operations. Looking into the demand for various meals and other items might help a restaurant make better ordering selections.

It also assists in making personnel choices, such as how many workers to recruit and how many shifts to schedule. Demand forecasting incorporates data gathered throughout the restaurant's operation as well as data from other sources such as industry rivals or general economic trends.

Waste Tracking and Reduction

In the restaurant sector, waste is a major problem. Inventory optimization software detects waste trends, enabling you to alter your ordering and consumption methods appropriately. Less waste equals greater savings and a cleaner business.

Food prices typically range from 28% to 35% of a restaurant's overall costs. When food is lost or spoils, the number rises. When restaurants buy food, around 4-10% of it is wasted before it reaches the customer.

This occurs when they buy too much food at once, and it spoils before it's utilized. Proper food and inventory management might help to reduce this loss.

Efficient Supplier Management

Most restaurants get their goods from certain providers. Inventory management allows you to keep track of meals and purchases, payments, and more.

Restaurants can use inventory management to monitor their food and purchases more carefully, enabling them to better manage purchases and vendor payments.

Maintaining good relationships with suppliers is easier with inventory optimization software. It provides transparency about delivery schedules, quantities, and even pricing, helping you keep up with your suppliers more effectively.

Benefits of Inventory Optimization Software for Restaurant Managers

Inventory optimization software's influence on restaurant management goes beyond its core purpose, just as a culinary masterpiece is more than the sum of its parts. It's not only about keeping track of materials; it's also about encouraging efficiency and, eventually, enhancing your bottom line. 

Here are some of the primary advantages it provides:

Efficiency and Accuracy in Inventory Management

One of the most significant advantages of this program is increased efficiency and accuracy in inventory monitoring and forecasting.

You can get an exact, real-time overview of your inventory levels, making ingredient management a breeze and leaving no space for errors.

Inventory management in integrated working capital management software delivers more accurate inventory data since it is updated in real-time as soon as a transaction happens, eliminating the need for manual input and decreasing mistakes.

Minimizing Food Waste and Spoilage

Inventory management in logistics can boost the efficiency of your organization by regularly monitoring stock levels and being informed of what items are in stock and where they are situated.

The software reduces food waste and spoiling by optimizing inventory levels based on precise predictions. It's like having a crystal ball that tells you what you need and when you need it.

Cost Savings

Inventory management can save you money on storage costs and reduce waste.

You can continue to keep an eye on inventory levels and order just what you need.

In the restaurant industry, the two biggest detractors of profitability are overstocking and stockouts. You can achieve a perfect balance using inventory optimization software, resulting in significant cost savings by avoiding these challenges.

Improved Profitability and Cash Flow Management

Profit margins in the food sector are often very slim, with just a tiny profit on each menu item at the end of the day.

As a consequence, even a little inventory mismanagement or underestimation could have a significant influence on how much profit your business generates. Proper restaurant inventory management can guarantee that your company profits from each menu item.

The total cost of products sold is a significant factor in determining net profitability. Inventory management reduces waste, which reduces the cost of items supplied and, as a result, enhances profitability.

The software's direct and indirect advantages, such as reduced waste and appropriate stock levels, all lead to increased profitability. Furthermore, it helps with cash flow management by allowing you to invest in goods wisely.

Data-Driven Decision-Making

Managers can make better judgments about production planning and procurement processes when inventory levels are precise and up to date.

Using real-time data and analytics, you can empower your decision-making process. This program provides you with the information you need to make educated, strategic buying, menu planning, and other choices.

Choosing the Right Inventory Optimization Software for Your Restaurant

Scalability and Customization

Scalability and customization options are important factors to consider when selecting the software for your business. The software should be able to scale with your company and adapt to new requirements. It should be able to manage a growing number of orders, tables, and clients while maintaining performance.

Furthermore, it should have customization choices that enable you to adjust the software to your individual needs and processes.

Features and Functionality

Another key factor to examine is the software's features and functioning. Table management, reservation systems, menu management, inventory control, personnel scheduling, reporting and analytics, online ordering integration, and customer relationship management (CRM) technologies are all essential components for successful restaurant operations. 

The software should also be user-friendly, with an easy-to-navigate interface for both staff and consumers.

Integration and Compatibility

The software should work in sync with other systems in your business, such as POS systems, accounting software, online ordering platforms, loyalty programs, and third-party delivery services. 

This connection guarantees that data flows smoothly across systems, avoids human data input mistakes, and boosts overall operational efficiency.

Cloud-Based vs. On-Premises

Whether you want your restaurant management software hosted in the cloud or on your own servers is another factor to think about. Cloud-based solutions have various benefits, including remote access from any device with an internet connection, automated updates, data backup and recovery, and scalability without the need for new hardware expenditures.

On the other hand, on-premises solutions allow more control over data protection and may be favoured by businesses with unique compliance needs.

Training and Support

The success of any restaurant software system depends on proper training and continuous support. Find a provider that will put your employees through extensive training so they can utilize the software to its full potential. 

Think about the vendor's technical assistance as a whole, including their availability, response speed, and communication channels.

Use Xenia for Inventory Optimization Software Today!

The strategic choice to embrace technology and remain ahead of the game is made when restaurant managers consider the rising relevance of inventory optimization software and the multiple advantages it offers. 

Inventory optimization software, such as Xenia, provides many benefits that are specific to the restaurant business, including more efficiency, lower costs, better decision-making, and more profits. 

It helps you save time and effort while simultaneously providing you with data you can use to make better long-term choices.

Because of its intuitive design, Xenia will be a breeze for your team to implement. Its robust features make it the perfect tool for restaurant managers to keep tabs on inventory, predict demand, cut down on waste, and manage vendors. In addition, it provides a one-stop solution for all of your restaurant's POS system integration needs.

Don't allow problems with stock control to hinder the growth of your restaurant. 

Learn how inventory optimization software may revolutionize your restaurant's administration. Try Xenia risk-free with a trial and see for yourself how it may improve your eatery!


Which inventory system would be the most optimal for you to utilize as a restauranteur?

You should utilize the FEFO inventory technique for restaurants since they deal with perishable commodities. This necessitates prioritizing the usage of the oldest food and resources. Make sure the oldest goods in your storage facilities are front and center, where they are easily accessible. Keep track of what you have on hand to help you decide what to purchase next.

How do restaurants keep track of their inventory?

The kitchen staff of a restaurant keeps tabs on the supply by taking frequent measurements of each item. You can achieve this by yourself or with the help of digital technologies. To keep track of what's available and what's required, the procedure often includes counting things, monitoring consumption, and updating records after each delivery.

What is the difference between inventory optimization and inventory management?

Inventory optimization and inventory management are distinct yet interconnected aspects of supply chain operations. Inventory management involves overseeing the entire lifecycle of a company's goods, including procurement, storage, and distribution, to ensure that the right quantity of products is available when needed. It focuses on maintaining adequate stock levels, reducing holding costs, and preventing stockouts. 

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