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Using the POS to control inventory
The restaurant POS system has emerged as the main weapon in the battle against high food costs.
November 29, 2007
One of the keys to running a profitable pizzeria is managing the controllable costs, such as food, labor and supplies. Of those, probably the most difficult cost to control is food.
To manage food costs effectively, an operator needs to simultaneously monitor portion sizes, prevent theft, watch waste and order efficiently.
"Inventory software can help you identify exactly where your food costs are out of line," said Jennifer Wiebe, marketing manger for Lynden, Wash.-based SpeedLine Solutions Inc."Using inventory control software will typically save you 1 to 2 percent of sales, and could save you much more. And it's savings that drops straight to your bottom line as profit."
Using a POS-based inventory control system, such as SpeedLine Inventory, operators can spot and solve food cost problems that might not become apparent by simply focusing on portion control. When employees know that the system is keeping track, it discourages both waste and theft, Wiebe said.
One SpeedLine client who had been experiencing food cost problems learned that lesson after a week of using inventory control software, she said.
"In his restaurant, he was portion controlling, yield testing and doing a physical inventory, but it wasn't until he began using inventory software that he realized his inventory was out by exactly 4 pounds of prawns every week; coincidentally, the exact weight of a box," she said "Knowing that, it was relatively easy to identify the source of the problem: a prep cook who was helping himself to a box of prawns every Monday morning."
Boosting the bottom line
In the case of SpeedLine's inventory control system, an operator sets up the software by first entering their recipes and product costs. The system then can track ideal usage based on those recipes and the restaurant's actual sales.
The software also can track product usage in situations where pizzas don't conform to a standard recipe, such as build-your-own and half-and-half pies.The operator then can do a physical inventory and generate reports comparing that inventory with the calculated ideal usage in order to spot variances. The software can be set up to track as many items as the operator chooses.
"For most pizzerias, their top 10 items such as cheese and pepperoni constitute 80 percent of their food cost problem," Wiebe said. "And you can schedule nightly counts of key items and weekly or even monthly counts of some other items."
Just on cheese alone, over-portioning by 1 ounce per pie could cost an operator hundreds of dollars a month, Wiebe said. If cheese is running $1.67 per pound, eliminating over-portioning on 100 pies per day for 30 days could add up to more than $300 in savings.
Better tracking and controls also can help an operator reduce the amount of stock they keep on hand, reducing waste and freeing up cash for other things. According to restaurant consultant Jim Laube, losses due to carrying too much excess inventory can add up to a loss of between 2 percent and 5 percent on an average operator's profit-and-loss statement.
Pierre Coutu, who with his wife Diana operates Diana's Gourmet Pizza in Winnipeg, Manitoba, has been using inventory control software since June 2004.
"It was a lot of work to set up because we have a fairly extensive menu," Coutu said. "But once we had it programmed properly, we were able to drop our food cost by 2 to 4 percent."
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