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    Why Restaurants Need Inventory Automation

  • Sponsored Content February 26, 2018
    thinkstock/gpointstudio

    Sponsored by HotSchedules.

    Counting, ordering, receiving, and invoicing may seem like time-consuming tasks, but those day-to-day decisions around inventory have big implications. When traffic is high and sales are up, operators may not be as quick to tighten the belt around food and waste. Today, that belt is tight and restaurants feel the squeeze on their already slim margins.

    Enter inventory automation and predictive analytics. “Even restaurants with simple menus have complex inventory processes,” says Nathan Pickerill, principal solutions architect at HotSchedules, provider of the first cloud-based intelligent operating platform for restaurants. “That state of the many-to-one relationship between product production and what is actually sold to the consumer makes monitoring product throughout the week difficult. Items sold aren’t just a simple one-in, one-out type of equation in the restaurant world.”

    Let Software Handle the Simple Tasks

    A portion of every manager’s job is to oversee the day-to-day operations and keep shifts running smoothly. But the sheer number of administrative tasks managers have to crush every single day has reached a boiling point. Even the best managers struggle to keep up with the workload.

    “We use smart technology in our everyday personal lives to handle simple tasks—why can’t restaurant managers use the same type of technology to automate theirs?” Pickerill says.

    For example, you tell your smartphone your daily goals for steps or calories burned. As you move through your day it sends you progress updates. If you’re 100 steps from your goal, your smartwatch recommends you walk for another six minutes. It’s doing the thinking for you.

    Now take that concept and apply it to the inventory process. Corporate can configure the inventory software with thresholds and exceptions that control food and waste costs. The system can take that information along with the store-level data and send an alert to managers to spot count a particular item, for example.

    “Intelligent inventory software is going to be able to crunch that data way faster than a busy manager, and that busy manager will know exactly what to focus their attention on,” Pickerill says. “In my experience, just the practice of taking inventory on a weekly instead of biweekly or monthly basis can reduce food cost by a quarter to a half percentage point.”

    Companies using inventory systems often see savings that range from between 1–4 percent of sales in food and liquor cost savings.

    Precision Forecasting Improves Inventory Accuracy

    Big events like local concerts or shifts in weather patterns can change purchasing patterns. Marketing teams are simultaneously rolling out new LTOs, BOGOs, or other traffic-boosting initiatives. For the quick-service segment there may be annual patterns that occur year after year, but even that predictability is subject to change.

    “A good forecast drives the plan for the week or a month,” Pickerill says. “Downstream, that forecast drives the schedule, purchasing, prep, and many other facets of the operation.”

    The challenge is that managers typically make their best guess at a forecast based on their own historical knowledge.

    It’s not that managers are 100 percent wrong all the time, but they’re not 100 percent right either. Quick-service restaurants have to be looking for opportunities to decrease the variance between the theoretical forecast and the actual results. The more managers trust and use the forecast to make decisions, the more stores improve their ability to increase profitability. Stores can save thousands of dollars just by getting alerts that their actuals aren’t in line with the theoreticals.

    Pickerill agrees, “the complacency that the cost of waste is the cost of waste doesn’t have to be the case anymore. Precision forecasting helps managers order exactly what’s needed. A great forecast prevents over ordering and frees cash up. It also prevents under ordering, which could drive down sales and guest satisfaction ratings.”

    But the Inventory Solution Has to Be Simple-to-Use

    Quick-service brands aren’t strangers to robust inventory management software or the business analytics and intelligence tools that above-store leaders use to generate performance reports. But therein lies today’s biggest challenge: fragmentation. IT and operations teams are looking for automation, optimization, and visibility across too many disparate systems that managers may not use.

    “Managers want technology to be simple,” Pickerill says. “They don't want to have to source data from several different systems, and they don't want to have to log into multiple systems to perform their basic job duties. Consolidating their daily action plans, temperature logs, task lists, labor, ordering, and inventory into a singular platform and modern, mobile user interface makes these complex processes approachable.”

    And that’s key. Without high engagement and usage, there’s not enough data in the system to automate those time-consuming tasks and data-heavy decisions.

    “I talk to above-store operators and corporate teams everyday, and there is a real need for an end-to-end back office platform that does a lot of the thinking for the store,” explains Pickerill. “It’s not that managers aren’t capable—it’s acknowledging that the latest, integrated technology can do it for them so that managers can go back to focusing on the most important things that matter.”

    For example, Clarifi Inventory, HotSchedules’ inventory module on its intelligent restaurant operating platform, combines inventory data, advanced forecasting algorithms with an intelligent workflow that offers recommended actions based on best fit scenarios based on business rules and unique store characteristics. The power of the Inventory Module comes from the advanced forecasting algorithms, intelligent workflows, and business rules in the Clarifi Foundation Module.

    “The Clarifi Foundation Module really acts as the brains of the platform,” Pickerill says It’s transforms the way typical inventory solutions work. It’s not enough to send an alert to a manager stating that a particular item is low. Intelligent back office technology uses the data to tell managers the steps they can take to solve the problem right there. And now above-store leaders and corporate have visibility not just into store performance, but in what decisions are driving that performance.”