Running a restaurant business can be hectic in and outside of the kitchen. Before the work in the kitchen begins, you need to source the ingredients you’re going to use.
The Ultimate Guide to Restaurant Logistics
Prior to reaching your kitchen, the transportation and management of goods are both just as important as how you prepare them in the kitchen.
The restaurant supply chain involves working with suppliers and distributors to source fresh, high-quality ingredients—making it a key aspect of your business. To ensure your restaurant’s always stocked, you need a reliable supply chain with an organized inventory.
When it comes to purchasing ingredients, managing supplies, and organizing your delivery operations—restaurants need a proper logistics strategy in place. In this ultimate guide, we’ll talk about how logistics can help in these areas.
Before we proceed, let’s have a quick refresher on what logistics involves.
What is Restaurant Logistics?
Restaurant logistics is the process of managing the acquisition, storage, and transportation of resources from one location to their final destination. In restaurants specifically, this can be everything from farm-fresh ingredients to your takeout containers and cutlery.
As part of supply chain management, its role is to make sure that the movement of goods through the supply chain is done correctly.
The 7 ‘Rights’ of Logistics
The primary goal of logistics is to satisfy the customer. To achieve this goal, there are 7 ‘rights’ that logistical processes need to meet. The 7 Rights require logistics to have the Right Product delivered to the Right Customer, with the Right Quantity, in the Right Condition, at the Right Place, at the Right Time, and at the Right Cost.
In a nutshell, restaurant logistics is one of those under-the-radar things that makes sure everything runs smoothly from supplier to kitchen to consumers.
How to Improve Your Restaurant Supply Chain
Restaurants have two primary concerns regarding the supply chain: Purchasing and Inventory. By improving these areas, your restaurant can cut costs, establish efficient systems, and provide better service.
Tips to Optimize Purchasing
Before serving your customers, restaurants need to source raw ingredients and supplies. And so, to do that you need to have good purchasing practices from the very start. Here are ways you can optimize your purchasing practices.
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Make a list. Although it sounds simple, having a clear list of things you need can help you purchase more efficiently. Looking at the items one by one, you can also assess your budget for each and start allocating expenses.
Consider the Quality of Goods. The quality you need for a particular ingredient will depend on how relevant it is. For example, if you own a steakhouse, your priority will be sourcing quality beef. Another concern involves supplies. Napkins, for example, don’t need to be of superb quality as long as they get the job done.
Choose the Right Vendors and Suppliers. The relationships you establish with these parties are essential because they’re the lifeline of your restaurant. Ideally, you’ll work with them as long as your restaurant is operational. Consider the following when choosing suppliers:
- Search for local suppliers. If you need fresh produce and other goods, opt for local farms near your area. The quicker ingredients reach your kitchen from the farm, the fresher it will be.
- Use large suppliers for certain ingredients. For canned food or condiments, opt for distributors or wholesale retailers.
- Merge deliveries to reduce delivery and shipping costs. If you can find vendors that can supply multiple things, it will be more efficient for both managing incoming deliveries and tracking inventory.
- Assess your prospective vendors. Find out what you can about your vendors, such as the consistency of their ingredient quality, timeliness, and reliability. This is especially important when consolidating deliveries.
- Ask what their payment options are. Inquire about credit periods, wholesale rates, and finance purchasing.
- Consider how they handle problems. Inquire if they provide warranties, accept returns, and what their return processes are.
- Assess how transparent they are with sourcing and transportation management of ingredients and supplies. There’s a growing awareness and concern people have with the food they consume. Providing information to such customers is now a necessary part of a restaurant’s duties.
- Create a projection of long-term costing with suppliers and vendors. This can also help you assess if your partnership will be profitable.
Additionally, try to maintain a good relationship with your vendors and suppliers. Since they’re providing the fundamental parts of your restaurant. As you expect them to be dependable and consistent, they expect you to be as well.
Plan and Price Menu Items. You can do this by comparing preparation cost and sales profit. This is an important step in planning what you need to purchase and how much your budget should be. With the right technology, you can use menu engineering services that use margin analysis to help maximize your food items’ profitability.
Streamline operations. After you’ve listed down what you need, allocated budgets, and have chosen suppliers, streamline operations for it to run smoothly. One way you can do this is by having an efficient Point of Sale (POS) system that helps you automate your purchasing.
Some helpful features in such POS systems are:
- Predictive analytics to improve sales forecasting and optimize inventory procurement
- Monitoring how much you spend on vendors and goods
- Automated purchasing when stock levels dip at par-level driven ordering
- Customer approval processes for orders, including batch orders
- Tracking and managing requisitions between outlets
- Connect with suppliers when you need to communicate
With a fully equipped POS system, you can monitor orders and transactions, automatically purchase for when stock is low, and communicate with your suppliers easily.
Make a contingency plan. If your vendors or suppliers can’t make a delivery, you’re going to need a Plan B. As part of your contingency plan, make a list of grocery stores, local farms, and wholesale retailers that provide similar ingredients and supplies. Be sure to include their payment options and delivery schedules as well.
Tips to Optimize Inventory and Stock
After purchasing, you need to manage your inventory. Inventory management lets you know when you need to replenish your stock and start placing purchase orders. Apart from this, proper inventory practices provide information on expenses, food waste, and shrinkage.
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Assign staff to help with inventory. Designating the responsibility of inventory management to a few staff members will be more efficient since their growing familiarity with the stock will help identify inconsistencies. Other than that, the more they do this task, the more efficiently they can accomplish it.
Schedule regular tracking. A schedule helps you manage your inventory’s depletion—the rate food and supplies are consumed in a specific time period. It also helps identify if there’s shrinkage—when the actual stock is less than what’s listed on the inventory.
Use the FIFO method. The acronym FIFO stands for “First in, First Out.” Part of tracking the inventory is knowing which ingredients will go bad first, so you should use these before the others. This method is important for combating food waste. You can also create a list that shows the ingredients and their expiration dates so you can practice the FIFO method more efficiently.
Be diligent with inventory reports. The different reports in your inventory will reflect your costing and usage. Here’s a list of the common inventory reports and their functions:
- Sitting Report—The current amount of ingredients and supplies on hand.
- Variance Report—The theoretical usage vs. the actual consumption of ingredients and supplies.
- Waste Report—How much a certain ingredient is wasted in contrast to how much is in stock. This is particularly important in identifying shrinkage, overbuying, and minimizing waste.
- COGS report—The Cost of Goods Sold report. This determines how much your ingredients cost. This report can also show how much money you’re taking from your sales to replenish your stock. Ideally, you should be using less than 30% of your sales to make good profits.
Use these inventory reports to create your future orders. With the data and analytics from these reports, you can adjust how much of a certain ingredient or supply you’ll place in your next order.
Integrate a POS system. As mentioned earlier in the article, a POS system provides many advantages. The system can forecast data, plan orders, and track inventory based on customer orders. Some POS systems even have automated purchasing when your supplies are low.
A POS system can ease the load of responsibilities for people. However, it can’t do everything. As of now, it can’t track food waste, shrinkage due to human error, and so on. For effective inventory tracking, you can use a combination of both manual tracking and a POS system.
Integrating More Technology. The Covid-19 pandemic has forced restaurants to change how they operate. Ever since the pandemic started, fewer people opt to dine in, resulting in an exponential increase in deliveries.
With these tips, you can better your purchasing and inventory practices so that your restaurant runs smoothly.
As Times are Changing, Keep Adapting
In order to survive in the food industry, you need to keep up with the changes and adjust your operations accordingly. Especially during the time of Covid-19, the supply chain, restaurant business, and people’s dining behavior are rapidly and constantly changing.
It can be difficult to keep up, but remember—a diamond is formed from a lot of pressure. Power through these changes, like a diamond, and you and your restaurant will come out stronger.
Mosaic Solutions provides services to help you handle these changes—from purchasing, analytics, and even partnerships with courier services. If you have a problem, Mosaic Solutions could be the answer.
Looking for ways to grow your restaurant business? Contact us today and let’s work together.