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Sitting Inventory and What It Really Costs

Hello EdgeReaders!

As a restaurant/bar owner or manager, the key is to manage inventory 24/7. Cost of Good represents 20-40% of your left cost. While you need to have a certain amount of inventory on hand to make sure that you can serve customers their favorite drink (mine is piña colada!) or their favorite dish there is no point in having all of your ingredients up in inventory and being there on your shelves for over a month! All those dusty bottles, mayo, flour, wines -you pick- represent money that you could be investing back into your establishment. 

So… what should your turnover rate be?

Let’s have a scenario. Covid19. Yup, you read that right. Let me get you back to March 2020, everything was normal as you planned to be. You were about to go to pick up your children from school/kindergarten, or you were going to finish watching your favourite series on Netflix, (I was at the beach with some friends celebrating a birthday) … Out of nowhere, they let us know that there is a new virus from China. We didn’t care at that point because we thought “oh it’s far away”, but then, it enters our country. The news started to say it can kill people and you didn’t know how you could get it, so you have to quarantine (while I am writing this, it just gives me the chills). Anyways, the first thing we bought (I still don’t know why) was toilet paper.

So, days went by and we had to take care of the toilet paper (because it doesn’t last forever), literally piece by piece, or square by square. Everything is closed, you start running out of toilet paper. What would you do if you didn’t buy for 3 months and only for 1 month? It just does not sound good at all when you come to that end. So, this is basically what happens with food! The longer managers can put off taking inventory, the better because simply, it isn’t fun. Just remember always the toilet paper situation.

Less Inventory = Less Lost Inventory

That is right! When it comes to inventory costs, you can often start losing money due to generous waiters or bartenders, or, if they know that there are plenty of more bottles under the bar and or plenty of shrimps in the freezer, they are more likely to hand about freebies and heavy pours with abandon. Excess inventory also makes you more prone to accidents, like broken bottles or recipients.

It is important to think of your inventory as real money. You wouldn’t leave a bunch of cash just sitting around for weeks, right? Well, the same rule applies to your inventory.

But I Hate Taking Inventory…

I am sorry to tell you this but even if you are the master of counting and recording, taking inventory simply isn’t fun and it ties up your time when you could be managing other aspects of your business. 

Just think: If you speed up your turnover, you could take inventory weekly or bi-weekly, but there would be less to count. While you might be doing it more often, it will actually go faster and you can get back to enjoying the fun parts of your job or simply catching up on sleep (that sounds amazing). 

It is Time to Invest in Technology

The single best thing you can do to bring down inventory costs is invest in inventory technology. DiningEdge allows you to scan products and place orders online. You can even generate charts that track how you are doing, where you are seeing losses and how certain brands are performing. These tools take all the guesswork out of the equation and streamline the entire process. 

Figuring out the best way to handle purchasing for your business, bar, restaurant does come down to staying organized and not procrastinating. Using DiningEdge. Get a free demo can help make the entire process a lot less painful, which means that you are more likely to stick to a weekly or bi-weekly schedule and enjoy the benefits of having extra cash in hand and not tied up in your inventory. 

So, start to work smarter, a little bit harder, while also saving time and reducing risk of loss!

See you in another EdgeBlog! 

Is Online Ordering Really Important?

Today’s blog is important, especially now with all of the post-pandemic scenarios all over the world.

By now you may have an idea that the biggest weapon you have in your restaurant’s -apart from great food- is your website.

Online ordering is now a highly sought after by customers, and becoming more of a standard requirement for most customers than ever before.

It’s all about having options, because sometimes customers will want to walk through your doors and have a couple of hours to relax (if your state has admitted that option), but sometimes they don’t, or cannot (so it exists the pick-up option).

Having an online ordering option is a major priority when looking to increase sales. 

Pick-up vs home delivery? This can be a tricky one. Online ordering has many conveniences to it, but offering delivery as well as pick-up can certainly entice more orders. Its acts as a further incentive for people to patron your establishment rather than your competition, who may not offer such accessibility.

And free delivery? A further bonus.

To app or not to app? Having an App is really important? It definitely depends really on what you’re trying to do. For example, if you aim to have more of a majority -say 90%- online ordering, or if you are a large restaurant chain then yes, it is probably worth seriously undertaking an expert to create an App. For those who can do without it, the main way to stay best friends with technology and all its users, is to maintain your site and ensure it is smartphone and tablet friendly.

But no is my answer…, okay well let me tell you that someone else is stroking a white cat and twirling their moustache willing and waiting in the wings to get your business. It’s that simple, sorry.

The main thing to keep in mind, in the beginning and through your marketing plan, is to have a great initial launch and then keep talking about what you offer. Making your potential clients aware of your online ordering capabilities is where your involvement with social media can come into its own. 

Updating and maintenance is so important and it makes perfect sense, because if you want to increase sales, it needs to be current, clear and continuously updated. This is especially true when it comes to the food service industry. Can you imagine a customer after taking the time and effort to order, only to receive a phone call advising ‘sorry, that item is no longer offered’. I can hear the doors slamming now.

Payment options… Again, options are really important (I told you!).

If you only accept cash for orders you may be excluding a number of not only hungry customers, but those who don’t carry cash on a regular basis -that’s me! Especially now with all of this covid19 situation-.

Orders online can come from anywhere. You just need to be ready.

Ease of use is essential for your potential and continued patronage. The more you can facilitate convenience and ease, the more your competition will fade from your immediate view.

Sure, it takes some thought and planning but as a restaurant owner you would be used to that.

It’s all worth it in the long run!

Here’s the link to get a free demo with DiningEdge. Let us help you get the best of your business in one app. 

Advantages Of Comparing Prices From Multiple Vendors

When ordering items for your restaurant, do you shop around for the best deals? Or do you feel more comfortable making all your purchases from one vendor?

Of course there are advantages to sticking with one vendor. You get one big delivery instead of several small ones, you get to know your delivery guy, and you feel like it saves you time. But in the long run, does it really pay to stay loyal to one vendor?

Here’s our take on it.

With one vendor, although it seems like you’re getting a great deal, that is often not the case. You often end up paying more for items that fluctuate in price (seasonal items for example), prices tend to slowly increase over time, and you are limited to only the products they offer.

With multiple vendors you have the advantage! You are able to find the best price available on any item, you have access to even more products, and when vendors find out that you’re shopping around they will often bargain their prices to gain your business. Not to mention, restaurants that shop multiple vendors with RebateEdge are able to save 8-12% (on average) over restaurants that stay loyal to only one vendor.

Of course saving money sounds great to everyone, so maybe the bigger question here is, “Who has time to shop around?”

The great news is there is now a way to save both time and money. With DiningEdge Technology, you can compare live prices from multiple vendors, replace discontinued items, and find comparable products. Reporting and the ability to order directly from the platform is also built in, so you can stay on top of your game.

Contact us today for a free demo. We would love to show you how ordering from multiple vendors can save you money.

10 Best Practices for Counting Inventory

Here are 10 things that should be part of your best practice on counting inventory

  1. Take inventory frequently. For some items it should be done daily, for others twice a week. At a minimum it needs to be completed before placing weekly orders.
  2. Take inventory after the restaurant has closed or before it opens. You cannot take accurate inventory while goods are being sold. Whatever time you pick, stick with it. If you always take inventory on Tuesdays, but sometimes you do it at night and sometimes in the morning, there will be fluctuations in week to week results.
  3. Take inventory before a new shipment arrives and then add the new stock to your counts. Do not attempt to take inventory while deliveries are being made. Items will end up being double-counted.
  4. Clean out and organize your stock areas before taking inventory. Throw out items that have expired, move similar items to the same shelf and in general, tidy up.
  5. Use Inventory Count Sheets. Have one for daily, one for weekly and one for monthly counts (or whatever periods you use) and standardize the items included and the unit (pounds, number of items, boxes etc) each item is tracked in. Changes in what items are tracked can cause large fluctuations in recorded inventory.
  6. When taking inventory, make part of the practice ensuring that items are being used on a First In, First Out (FIFO) basis. Older goods should be rotated to the front of shelves so they are used first. Additionally, try to keep the amount of items you have on hand as low as possible to reduce theft and spoilage.
  7. Use two people to take inventory. They should count items separately and then compare results for anomalies. Pairing reduces errors and the temptation to manipulate results or pocket goods.
  8. Use the same staff to take inventory. They will not only get faster, but they will tend to be more consistent.
  9. If you use scales to weigh inventory and measure portions, calibrate them weekly.
  10. Use FIFO (First in First out) costing. The price of many items (like ground beef) changes week to week. Using the latest price is not accurate in costing.

Purchase Order to Bid Price Management

Good Invoice management should start with creating a Purchase Order (PO) with bids on all products within an inventory software that will help you manage your Cost of Goods.

You can read my earlier blog on buying smart to learn more about bidding on products.  Many times, the manager/chef that is receiving the goods is not the same person that ordered them, so having a PO on a clipboard or tablet by the back door helps with receiving.

With today’s technology you can have all of your invoices automatically import into your inventory software. No more manual importing or coding invoices.  But automation can lead to increased costs.  Included in your automation should be PO to invoice discrepancy reporting.


Discrepancy reporting should include the following information

  • Price change from bid to PO
  • Catch weight adjustments
  • Items shorted
  • Replacement items
  • Invoice number

Best Practice when automating this process

  1. Create PO’s whenever possible that included bid price
  2. Continue to check and sign all paper invoices
  3. Verify paper or scanned copy of paper invoice against accounting software before paying invoice

Buying Smart

I spend my days talking to restaurateurs and chefs about their purchasing and inventory practices. It’s very interesting to hear so many different ways of running a restaurant, especially when it comes to managing food cost. When you get into food cost, it’s all about vendor selection and what they have to offer.

There are 2 schools of thought around vendor selection. Some restaurants prefer to purchase from one broadline purveyor and others like to shop prices each week and buy from multiple purveyors.

Here are some Pros and Cons of each:

Pros and Cons – Single Broadline Vendor
• One order and one truck Delivering
• Strong Relationship with sales rep
• Contract Pricing
• Pay more for products that fluctuate
• Price creep up over time
• Limited product options

Pros and Cons – Multiple Broadline Vendor
• Multiple orders and trucks to check in
• Best Price on all items
• Larger Variety of products
• Sales people fighting for your business weekly

As you look through the Pros and Cons, do you think are there others that affect you? Do the Pros outweigh the Cons?

If you could save 8-12% off purchases ordering from multiple vendors, would it be worth it? Does that help the Cons outweigh the Pros to purchase from multiple vendors?

The largest advantage to multiple vendors is the ability to compare pricing, but this can also be a very difficult and time-consuming process.

To help keep food cost down, DiningEdge can do this for you automatically:
• Import vendor pricing automatically via EDI, Online portal or Email
• Parse the pack and size to the lowest common denominator
• Compare like products
• Discrepancy report from Purchase Order to Invoice

Email: Naomi.canning@diningedge.com or Contact Us at 561-880-2970 for more information.

Why do Most Restaurants Fail?

Most independent restaurants fail because they don’t spend the time to understand their largest cost, the cost of goods. Cost of goods represents as much as 18-40% of every dollar in sales. If not controlled, it can be much higher, and unfortunately, some restaurants don’t even know this number.

Calculating the Cost of Goods Sold (COGS).

COGS = Beginning Inventory + Purchases during the period – Ending Inventory

Take this quick Survey!

Do I have processes in place to manage my largest cost? Are these processes documented, and all my staff trained?
Do I shop multiple vendors?
Am I doing all I can to manage my inventory
Is this on my mind each and every day?
Do I count Inventory at least monthly?
Based on sales, do I know how much inventory I am missing based on least my high-cost items?
Do I know the theoretical cost of all my menu items?
Do I manage my rebates?

If you answered NO to any of these questions, you can benefit from taking advantage of a Purchasing and Inventory system and/or company to help you manage your costs.

In upcoming blogs, we will breakdown managing your inventory into small steps that, if followed, will help you have full control over your largest cost.

1. Rebate Management
2. Purchase Smart
3. Verify bid price matches invoice price
4. Accounting integration
5. Count Inventory
6. POS Integration
7. Recipe Analysis
8. Analysis your business

Email: Naomi.canning@diningedge.com or Contact Us at 561-880-2970 for more information.