Inventory or yield variances represent the difference between what should have been consumed and what was actually consumed. This discrepancy between theoretical and actual consumption has a direct impact on the restaurant's operational efficiency and profitability.
How can we identify the causes of these discrepancies? What actions can be taken to reduce them?
Here are our methods for defining the causes of these gaps and the actions to be taken to reduce them as much as possible.
The inventory variance or yield variance is the difference between the theoretical quantities and the quantities actually present after inventory.
Example: You have a theoretical stock of 100 kg of chicken in your restaurant. However, after carrying out an inventory of this product, you find that only 80 kg of chicken are in stock.
You therefore have a difference of 20 kg of chicken.
Unknown markdowns are a specific category of inventory variance and make up the majority of the overall variance. It represents the portion of the inventory variance that cannot be identified or attributed to known causes.
Conversely, if the reasons for a product's disappearance are identified, we speak of "known markdown". This is why identifying and reporting losses is essential in identifying shrink.
Case study: Suppose a restaurant has an initial stock of 200 bottles of beer.
New stock: the restaurant receives delivery of 50 additional bottles.
Out of Stock: 220 bottles of beer were sold during the week.
Known markdowns: During the same week, 5 beer bottles were broken and reported by the teams.
Theoretical final stock: 200 bottles + 50 bottles - 220 bottles -5 = 25 bottles
Actual final stock: At the end of the week after inventory, teams count 20 bottles in stock
Shrinkage calculation: 25 bottles - 20 bottles = 5 bottles
In this scenario, shrinkage is 5 bottles.
When all this adds up, the financial losses can be substantial, so it's crucial to know the causes.
Inventory variances are often the result of a variety of factors which can lead to discrepancies between forecasts and actual inventories.
Identifying these causes enables us to implement preventive and corrective strategies to optimize inventory management.
A surplus of unsold perishables means unnecessary purchasing and storage costs. Forecasting errors lead to costly over-purchases, which impact the restaurant's finances. Similarly, stock-outs, often the result of inadequate management, lead to direct sales losses, affecting the overall profit margin.
Inventory discrepancies disrupt smooth operations. Service delays, ordering errors and last-minute adjustments stress staff and can affect service quality.
Stock discrepancies lead to shortages, affecting the consistency of the dishes on offer. This can lead to dissatisfaction, negative reviews and loss of customer loyalty.
Forecasting demand accurately and ordering accordingly can have a significant impact on reducing your inventory variances.
Thanks to its forecasting system, Yokitup lets you order the right quantities at the right time, thanks to order recommendations. Your teams no longer need to think about the exact quantities to order, and just let themselves be guided.
Make sure staff are well trained in inventory management procedures. Regular training sessions will make them aware of the issues at stake and improve accurate data entry.
Place new products behind old ones to reduce the risk of spoilage of perishable ingredients and minimize losses.
Use sales history to anticipate fluctuations in demand. This will enable you to adjust your orders accordingly, reducing the risk of oversupply or out-of-stock situations.
Carry out regular inventories to detect any anomalies at an early stage. Proactive monitoring enables you to identify and correct discrepancies before they affect operations. We advise you to carry out one inventory per week on the most expensive or fast-moving products. In addition, increased monitoring of stock levels discourages theft (the primary cause of discrepancies).
Everything you need to know about setting up inventories in the foodservice sector 👉 5 easy steps to making inventories?
Meticulous recording of all losses is an imperative for the meticulous monitoring of your inventory. At Yokitup, we have developed an application to facilitate the reporting and identification of losses. Breakage, out-of-date best-before dates, staff lunches, etc., are all entered into our tool, providing precise traceability of stock variations. This approach enables you to visualize any unusual losses, providing a true picture of stock levels for optimum management.
At Yokitup, we've designed a 100% customizable dash board where all your data is accessible in real time. Restaurant owners can generate detailed reports on procurement expenses, sales trends and loss rates.
By analyzing the performance of each outlet, you can easily identify areas where savings can be made to improve the overall profitability of your restaurants.
Want to find out more? You can now make an appointment with our team to set up the best inventory management strategy for your restaurants.
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