Buy your way to a profitable restaurant

In an industry beset by thin margins, the importance of careful purchasing cannot be overemphasised.

By Ian Said

Stock and cost control are vital aspects of most businesses. For restaurant owners, accurate stock control that allows them to analyse their stock on hand and the stock they need, is necessary in order to maximise profits.

Analysing costs
Cost control is a significant consideration for any business. The first step is to consider the value your current suppliers offer in terms of pricing and efficiencies. If two suppliers have identical delivery accuracies, it would make sense to use the cheaper supplier. However, choosing a supplier based purely on price, even though they do not deliver the correct products or quantities, would be counterintuitive.

Given the seasonal nature of many products, some variation is to be expected, but a large company should be able to deal with the variation and deliver accurate quantities as ordered.

When buying larger quantities, it is often possible to negotiate bulk discounts and it may be worth contacting suppliers directly when ordering substantial amounts of one product. Negotiation is key and accepting a slightly higher price on one product can make purchasing another product in bulk worth it — assuming you need it.

Accurate stock control
Ensuring accurate stock levels is paramount, particularly with respect to perishable items. For example, if you have large quantities of meat — traditionally one of the larger costs for a restaurant or catering service — you want to maximize your use of it.

Wastage resulting from out-of-date products could increase costs substantially, so taking advantage of bulk offers, particularly on perishable items, is not always practical. Perishable items always have a just-in-time philosophy — it is not advisable to store large quantities of those items because they will eventually expire before you have a chance to use them.

A good stock control or point-of-sale (POS) system should provide hard data as to the history of what was used and when. By checking the previous year’s sales figures of similar items for a particular period, and then factoring in differences in menu and local conditions (local advertising and competitions, for example), restaurants owners/managers should be able to (more or less) accurately judge their current requirements.

Reducing costs
Being able to purchase with greater accuracy will ultimately minimise the storage space required and reduce wastage, thereby enabling restaurants to realise profits even on relatively small margins. Similarly, using the data provided by the POS system will enable owners/managers to anticipate peak trading times and ultimately reduce electricity and staffing costs.

Controlling/managing costs will enable restaurants to realise higher profits and employing a just-in-time philosophy that reduces the quantity of stock on hand will ensure that owners and managers spend their time serving customers rather than sorting out expired products. n