Optimize Your Restaurant Inventory Management for Greater Profitability

By Emma LiburdiMay 22nd, 2024

Running a profitable restaurant isn’t just about selling more food or serving more diners; it’s also about efficient inventory management. Our partners at MarketMan specialize in reducing Cost of Goods Sold (COGS) and have tips to cut expenses by as much as 10% to free up more profits. Here’s what the experts shared with us.

Know what you spend 

Successful restaurants know that tracking food costs is crucial. Prices of ingredients, supplies, and packaging fluctuate all the time, while impacting the bottom line. There are also fixed costs, like rent, utilities, and salaries, that usually remain stable.

COGS isn’t just the price of what goes into a dish; it’s also all the expenses for making and delivering it. Successful restaurants usually aim for food costs to be around 20 to 30 percent of total profits, and for COGS to be around 28 to 35 percent.

If you know all these numbers and track them over time, it’s a benchmark for understanding where to invest and where to cut back. For instance, locking in COGS or reducing it gives you more room to confidently experiment with premium ingredients or different menu pricing strategies–without compromising quality elsewhere.

COGS and the profit formula

While calculating restaurant costs can be intricate, using smart technology can help cut down on food waste, manage suppliers better, and make work easier for staff. For example, in most restaurants, it’s the more experienced and higher-paid restaurant managers who are tasked with taking inventory. If tech can help out managers with swift and accurate reporting, it frees up time and refocuses a manager’s expertise in more important areas.

Six COGS-cutting habits

  1. Watch the scale: Using kitchen scales ensures that portion sizes and food costs stay consistent.
  2. Look for leftovers: See what tends to come back on plates, and adjust portions accordingly.
  3. Buy just enough: Over-ordering leads to food spoilage, but under-ordering means selling out too soon. Nailing the right order size keeps profits flowing steadily.
  4. Strike a bargain: Negotiating bulk deals or long-term contracts can give your margins more wiggle room.
  5. Optimize menus: Tweak prices, recipes, or swap out items that don’t make as much money.
  6. Embrace tech: Many POS systems and online ordering platforms have built-in features to streamline work, improve accuracy, and cut down on labor costs.

Tech ties it all together

While incorporating these tips will certainly help cut costs, the best way to ensure results is through reliable data. With MarketMan’s inventory tool, you get real-time info that makes managing inventory a breeze—saving money, boosting profits, and delighting your staff, too. By focusing on efficient restaurant inventory management, you can significantly improve your bottom line, ensuring a healthier, more profitable operation.

MarketMan is an inventory management platform that helps restaurants keep costs under control and efficiently manage inventory by automating back-of-house operations. ChowNow partners who sign up for MarketMan are eligible for waived setup fees ($500 value).

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