Increasing inventory turns in the restaurant industry

Mar 29 2012

Inventory is an important consideration for businesses in a number of industries. Distributors, for example, often seek to increase the number of inventory turns they conduct each year, ensuring old products do not remain on their warehouse shelves taking up space and money.

Supply levels are of equal importance to restaurateurs, particularly since these businesses deal with perishable products. David Scott Peters, a consultant and restaurant "coach," wrote in an advice column for Restaurant Hospitality that entrepreneurs concerned about the rising cost of food and ingredients should take a lesson from distributors and look to increase their own inventory turns.

"You have to understand that inventory is money sitting on your shelves that you can?t pay your bills with," Peters wrote. "Worse yet, if you have too much inventory on your shelves, you risk employee theft because you have so much stuff sitting there you?d never know it was missing. Or it may simply spoil."

Peters noted that most full-service restaurants complete around four inventory turns per month ? completely shedding and then restocking their food supply on a weekly basis. However, an ideal number of inventory turns would be eight, ensuring that eateries shed and restock food supplies every three to four days.

In doing so, these businesses would be able to limit the potential for theft, provide fresher, healthier food to customers and leaving enough cash on hand to pay immediate expenses and organize billing.

At the same time, it may be difficult for restaurateurs to increase their number of inventory turns if their existing ERP software can only provide visibility into food cost and inventory after the end of financial reporting periods. By investing in a restaurant accounting software that allows weekly or even more frequent visibility of inventory levels, these business owners benefit from an improved ability to view and analyze supply levels, increase inventory turns and reduce spoilage and theft..
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Source: http://cbsi-corp.com/2012/03/restaurant-back-office-services/increasing-inventory-turns-in-the-restaurant-industry

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