Last week, we mentioned three key ways to become a trusted advisor for restaurant accounting clients during the COVID-19 crisis: maximizing inventory, negotiating with vendors, and managing plate costs with appropriate menu modifications.
Today, we’ll take a look at inventory management. With take-out and delivery being the only options to generate sales, it’s important to make the most of what you have on hand, and with cash tight, it’s important to note that inventory represents cash sitting on the shelves. Any way to convert that inventory into revenue is good advice. We’ve seen several of our restaurant clients implement creative ways to generate sales during COVID-19, including selling bottles of rare wine and bourbon.
We’ll look at what that means for most restaurant operators, and how you can make recommendations to help your restaurant accounting clients to streamline the process and save money.
What is inventory management?
Restaurant inventory management is the act of tracking the goods currently stocked at any given location, as well as the weight, value, and size of those goods. Inventory management in restaurants can be much more complicated than other businesses, such as retailers, because of perishability and all of the moving parts involved.
Deliveries from vendors are coming in at any given time before, during, or after a service, and the prices of each ingredient can change without warning; orders from customers are unpredictable and have a direct effect on the items that the back of house has on hand at any given time. And let’s not forget to mention all of the goods that can be misproportioned, go bad, spill, or even go missing in a kitchen.
These complications, combined with the quick pace of restaurants, can make it very difficult to manage restaurant inventory accurately. This is where your guidance comes in.
How can I help my restaurant accounting clients manage their inventory?
Every piece of inventory in a restaurant has a value attached to it. With the front of house less chaotic and every dollar making a difference in light of COVID-19, advise your restaurant clients to take inventory more frequently.
Though most restaurants likely take inventory once a week or once a month, daily counts will give your clients insight into exactly what they have on hand to sell, as well as the value of what’s sitting on their shelves on any given day.
Plus, daily inventory counts will allow you to more closely monitor P&L statements, empowering you to raise a red flag on spending for your restaurant clients more quickly if you waited for the end of an accounting period.
Thanks to wide variation in pack sizes, units of measurement, and item weights for purchases, most restaurant operators won’t be able to get an exact dollar value of their inventory without a modern management tool. Some software solutions can track those exact values through digital invoice capture that automatically recognizes units of measurement, pack sizes, and price fluctuations over time. This drastically decreases manual data entry and, therefore, room for error — which is mission critical for accountants.
Consider recommending the use of a restaurant-specific software solution like this for your restaurant clients, especially for those who historically struggle to accurately track the value of their inventory, or even lack discipline in assigning GL codes to that inventory.
Tools that offer AP management allow your clients to scan all incoming invoices, then assign GL codes to line items just once. Machine learning and AI will apply the correct code to future purchases of the same type. This allows for granular expense tracking for all goods in a restaurant’s inventory, as well as the consistency you need as an accountant to make accurate calculations.
A software solution not only helps your restaurant accounting clients streamline their inventory processes, but also gives you a significant helping hand in processing paperwork. Rather than entering and analyzing data manually, tools like xtraCHEF do that work for you, giving you more bandwidth to make strategic financial decisions and take on additional restaurant clientele.
Take the next step to become a trusted advisor
It’s anyone’s guess when restaurants will be given the go-ahead to open their doors to dine-in service once again, so restaurant operators will be looking to their accountants and accounting firms now more than ever for support.
Now that you know how to empower restaurant operators with tips and tricks to maximize their inventory, check back next week to learn how you take your support a step further to empower better vendor negotiations for your restaurant clients.
Until then, request a demo of xtraCHEF to see how our software can support your restaurant accounting clients both during and after COVID-19.
Author Bio: Libby Peck is a writer, editor, and strategist out of Philadelphia. As the Content Marketing Manager at xtraCHEF, Libby creates educational content that empowers the restaurant industry.