How to reduce inventory discrepancies in your restaurant

Inventory discrepancies, or yield variances, are the difference between what should have been consumed and what was actually consumed. This gap between theoretical and actual consumption directly affects a restaurant’s operational efficiency and profitability.

How do you identify the causes of these discrepancies? What actions can you take to reduce them?

Here are our methods to pinpoint the causes of these discrepancies and the actions to take to reduce them as much as possible.

Understanding inventory discrepancies in restaurants

What are yield variances in restaurants?

An inventory discrepancy, or yield variance, is the difference between theoretical quantities and the quantities actually on hand after an inventory count.

Example: You have a theoretical stock of 100 kg of chicken in your restaurant. However, after counting this product, you find that only 80 kg of chicken is actually in stock.

You therefore have a 20 kg chicken discrepancy.

Inventory discrepancies and unknown shrinkage

Unknown shrinkage is a specific category of inventory discrepancy and accounts for most of the overall gap. It is the portion of the discrepancy that cannot be identified or attributed to known causes.

Conversely, when the reasons a product disappeared are identified, we speak of “known shrinkage”. This is why identifying and reporting losses is essential to pinpoint unknown shrinkage.

Case study: Let’s say a restaurant has an opening stock of 200 bottles of beer.

Stock in: the restaurant receives a delivery of 50 more bottles.

Stock out: 220 bottles of beer were sold during the week.

Known shrinkage: during the same week, the team reported 5 broken bottles of beer.

Theoretical closing stock: 200 bottles + 50 bottles - 220 bottles - 5 = 25 bottles

Actual closing stock: at the end of the week, after the inventory count, the team counts 20 bottles in stock.

Unknown shrinkage: 25 bottles - 20 bottles = 5 bottles. In this scenario, unknown shrinkage is 5 bottles.

Added up, these financial losses can be significant, so it is crucial to understand their causes.

Identify the causes of inventory discrepancies in your restaurant

Inventory discrepancies often result from various factors that create gaps between forecasts and actual stock levels:

• Human error, such as incorrect entries during inventory counts
• Delivery delays or errors
• Mistakes when placing supplier orders
• Expired use-by dates caused by over-ordering
• Breakage or internal theft
• Failure to follow the quantities on recipe cards

Identifying these causes lets you put preventive and corrective strategies in place to optimize inventory management.

The consequences of yield variances in restaurants

Impact on profitability

A surplus of unsold perishable products leads to unnecessary purchasing and storage costs. Forecasting errors lead to costly excess purchases that weigh on the restaurant’s finances. Likewise, stockouts, often the result of poor management, cause direct lost sales and hurt the overall profit margin.

Operational consequences

Inventory discrepancies disrupt the flow of operations. Service delays, ordering errors and last-minute adjustments put staff under stress and can affect the quality of service.

Customer satisfaction suffers

Inventory discrepancies lead to items running out, which undermines the consistency of the dishes on offer. This can cause dissatisfaction, negative reviews and lost customer loyalty.

Our practical tips to reduce inventory discrepancies in your restaurant

Improving operational processes

#1 Anticipate your raw material needs

Accurately forecasting demand and ordering accordingly can significantly reduce your inventory discrepancies.

With its forecasting system, Yokitup helps you order the right quantities at the right time thanks to order recommendations. Your teams no longer need to work out exact quantities to order: they simply follow the suggestions.

#2 Train your staff regularly

Make sure your staff is well trained in inventory management procedures. Regular training sessions will raise their awareness of what is at stake and improve the accuracy of data entry.

#3 Set up a stock rotation system

Place new products behind older ones to reduce the risk of perishable ingredients spoiling and to minimize waste.

Reducing inventory discrepancies with data

#4 Analyze your sales history:

Use your sales history to anticipate fluctuations in demand. This lets you adjust your orders accordingly, reducing the risk of overstock or stockouts.

#5 Monitor stock levels regularly:

Carry out regular inventory counts to quickly detect any anomaly. Proactive monitoring helps you identify and correct discrepancies before they affect operations. We recommend counting your most expensive or fastest-moving products once a week. Closer monitoring of stock levels also deters theft (the leading cause of discrepancies).

Everything you need to know about setting up inventory counts in your restaurant 👉 How to make your inventory counts easier in 5 steps

#6 Track your losses:

Carefully recording every loss is a must for close monitoring of your stock. At Yokitup, we have developed an app to make it easier to report and identify losses. Breakage, expired use-by dates, staff meals: everything reported in our tool gives precise traceability of stock variations. This approach lets you spot any unusual loss and gives you a true picture of your stock levels for optimal management.

#7 Set up an automated inventory management system:

At Yokitup, we have designed a 100% customizable dashboard where all your data is available in real time. Restaurateurs can generate detailed reports on purchasing spend, sales trends and waste rates.

By analyzing the performance of each location, you can easily identify where savings can be made to improve the overall profitability of your restaurants.