How to reduce variances?

1. Reduce losses

There is always a proportion of food that can be wasted, which directly impacts the gross margin and profitability of the restaurant. These losses occur at different stages of raw material processing.

Regarding ingredient losses, these may include:

• an expired best-before date due to overstocking of this ingredient which was over-ordered
• an ingredient falling on the floor or being accidentally overcooked, which is called breakage.

As for finished product losses, these may include:

• an error in the kitchen, the cook or the waiter made a mistake in the order,
• poor anticipation of products to be prepared in advance: intermediate products to speed up dish assembly in fast food or finished products for display cases in sushi restaurants or bakeries.

All of these ingredients are counted as losses, as are finished products if they could not be sold at the end of the day.

An average loss rate is generally around 2% of turnover. If you have higher losses, your supplier order management process is not optimal so you must therefore act. At Inpulse, we have created the first Artificial Intelligence platform capable of automating restaurant supplies, which allows us to calculate the optimal cost of orders and to optimise the cost ratio. You will thus be able to supply your restaurants or bakeries on a Just-In-Time basis, limiting your losses and improving your cash flow management.

To ensure ultra-precise raw material management, we also advise our clients the FIFO (First In First Out) method which consists of methodically organising fridges. Foodstuffs are organised so that those with the shortest best-before dates are used first in the kitchen.

2. Respect recipe card portions

Replicating a concept is what makes restaurant chains successful; dishes are calibrated and consistent. However, if there is no means of control, the operational reality can be very different from the set objectives.

"We have a food cost to respect so we must rationalise all our dishes, have the same portioning between our restaurant in the 13th arrondissement and the one in the 10th. Inpulse really allows us to keep an eye on this. I mainly look at the meat. It's more or less 30% of food costs," as Kamel Zaoui, founder of Luks Kebab, points out, one of the main causes of consumption gaps is not following the recipe cards.

There is often a difference between the portions planned in established recipes and the reality of what will be used in the kitchen. To overcome this, restaurant chains implement systems to portion the most expensive ingredients during assembly or cooking. Each concept will need to find the right tool for portioning without slowing down the pace in the kitchen. Some chains prefer utensils such as ladles, plastic dispensers, etc.; others arrange for the conditioning of meats, for example, to be carried out by the supplier or the central kitchen to ensure a perfect pre-weighed portion.

3. Conduct regular inventories to better identify discrepancies

Only by having a clear vision of your stock will you be able to limit stock discrepancies. We recommend that our clients implement:

• A weekly inventory for key and high-rotation products.
• A monthly inventory for all products.

It is therefore thanks to the regularity of information reported from the field that consumption discrepancies can be identified. This has other beneficial effects.

On the one hand, it raises awareness among teams about raw material consumption and the importance of stock management.

And on the other hand, it reduces the rate of merchandise theft. Also known as shrinkage, it is one of the main causes of discrepancies. Few official statistics exist on the subject, and it seems difficult to avoid when there is a very high turnover rate. Establishments that are victims of theft are those that operate little or no stock control.

Implementing a stock management tool has the effect of deterring teams, as inventories are more regular and unusual stock entries/exits are quickly spotted.

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4. Adhere to a strict goods reception procedure

Even if your supplier is well-intentioned, there are many reasons why the quantities delivered and the invoiced selling prices may not match the purchase order. Change of meat cut, product unavailable, temporary shortage, substitute product in case of scarcity, unforeseen price changes, etc.

Are products missing? You will be obliged to make an emergency order at the last moment at higher prices.

Are others defective? If a wrong item has been delivered to you, and no control is made upon receipt, you increase your losses without realising it, with products that you cannot use. Finally, credit notes are quickly lost on paper, this is a sum that should not be overlooked, as it can be substantial over the year.

Inpulse offers a fully digitalised reception control module to:

• Verify that the quantity delivered corresponds to the quantity ordered
• Automatically generate credit notes to your suppliers
• Reconcile supplier invoices with quantities delivered

With a management software like Inpulse, you will drastically limit errors and save valuable time in managing credit note requests.

5. Simplify the updating of price lists

Price lists allow defining product prices and availability that are likely to change regularly and impact the consumption gap.

• ‍Price

If price lists are not kept updated, there is a risk of widening the gap between theoretical and actual material cost, as the value of goods is based on outdated data. If the prices of goods are not updated at the same pace as market fluctuations, the consumption gap will increase in value.

• ‍Product availability

If product availability is not updated when placing an order, then if a manager places the order, they simply won’t receive the desired products. They find themselves, at the last minute, obliged to place an emergency order at non-preferential rates. This causes an increase in the cost of consumed raw materials, and therefore the consumption gap in value.

With a purchasing data centralisation tool like Inpulse, updates and information transmission are simplified.

6. Declare known losses

All consumptions must be recorded for accurate stock tracking. At Inpulse, we identify four main categories of losses: breakage, expiry, staff meals, and promotional offers that can be reported in the tool to precisely track stock variations.

Often overlooked, staff meals must be declared to ascertain if these losses are consistent with the policy implemented by the network e.g., one dish per service per employee.

Using comprehensive restaurant tracking software like Inpulse allows you to report the status of both raw and finished product losses. You will thus be able to visualise any unusual losses and have a real overview of stock levels.