While not the biggest factor in running a profitable restaurant, being able to limit waste can still have a significant impact on your ROI. This is because waste is essentially a part of your investment that did not pay for itself, let alone make a profit. While waste is inevitable, there are ways to limit it so that it doesn't eat into your profit margins worse than it should be. Let's take a look at some of the best methods of limiting restaurant waste so that your business can be more successful.
1. Inventory Costing
Managing your inventory is a big part of managing your waste. There are many methods for inventory management, but three of the most popular are FIFO, LIFO, and WAC. Here's a brief explanation of each:
FIFO
First-in, first-out, is a fairly standard model of inventory costing for restaurants as it works to sell older products before newer products. This means a FIFO restaurant can cut down on waste due to spoilage.
LIFO
Last-in, first-out is rarely used for restaurants because of how expiration dates work. Due to how gross margins and net income works, LIFO is typically used strategically to lower a business' tax burden.
WAC
Weighted average cost is a method of inventory costing that values all goods equally. It does this by calculating the total cost of the inventory is divided by the number of goods to produce a figure representing the average value. This method is good for satiations in which it is hard to determine the specific value of individual items, such as ingredients that are combined before being sold.
While these methods of inventory costing are all situational, FIFO is the most commonly used for restaurants for obvious reasons. It is also the best at helping to limit waste as well. That said, there may be situations in which one of the other two methods could be more beneficial in the grand scheme of things.
2. Avoid Getting Ghosted
In most cases a restaurant will place an order to it's suppliers on a regular basis to get new goods such as ingredients, cleaning supplies, utensils, etc. However, failing to place an order when you're supposed to can lead to something known as "ghosting."
Ghosting in the restaurant business is when a supplier sends you whatever products they feel like because you failed to place an order. This can lead to a variety of problems, such as not having the goods you need, or in some cases, having too many. This can quickly lead to there being an excess of waste that lowers your profit margins.
3. Keep an Eye on Your Employees
It's no secret that in the restaurant business employees like to help themselves to the food when they can. In some cases this may be allowed, such as letting the workers at the end of a shift take some leftover food home, but sometimes workers will take food without permission.
Security cameras can discourage theft, and even if workers are allowed to take leftover food, it still needs to be counted and marked as waste. If you don't keep an eye on how much food is being taken by your workers, you won't have an accurate count of how much waste you're producing.
Knowledge is Half the Battle
If there is anything you take away from this, it's that knowing how much waste you're producing is the first and most important step in limiting it. Find an inventory costing method that works for you, make sure your employees don't forget to place orders for new supplies when needed, and keep track of how much food your employees are taking home with them. If you can keep track of these factors, you can begin to limit the amount of waste your restaurant produces.
Best Ways to Limit Restaurant Waste
While not the biggest factor in running a profitable restaurant, being able to limit waste can still have a significant impact on your ROI. This is because waste is essentially a part of your investment that did not pay for itself, let alone make a profit. While waste is inevitable, there are ways to limit it so that it doesn't eat into your profit margins worse than it should be. Let's take a look at some of the best methods of limiting restaurant waste so that your business can be more successful.
1. Inventory Costing
Managing your inventory is a big part of managing your waste. There are many methods for inventory management, but three of the most popular are FIFO, LIFO, and WAC. Here's a brief explanation of each:
FIFO
First-in, first-out, is a fairly standard model of inventory costing for restaurants as it works to sell older products before newer products. This means a FIFO restaurant can cut down on waste due to spoilage.
LIFO
Last-in, first-out is rarely used for restaurants because of how expiration dates work. Due to how gross margins and net income works, LIFO is typically used strategically to lower a business' tax burden.
WAC
Weighted average cost is a method of inventory costing that values all goods equally. It does this by calculating the total cost of the inventory is divided by the number of goods to produce a figure representing the average value. This method is good for satiations in which it is hard to determine the specific value of individual items, such as ingredients that are combined before being sold.
While these methods of inventory costing are all situational, FIFO is the most commonly used for restaurants for obvious reasons. It is also the best at helping to limit waste as well. That said, there may be situations in which one of the other two methods could be more beneficial in the grand scheme of things.
2. Avoid Getting Ghosted
In most cases a restaurant will place an order to it's suppliers on a regular basis to get new goods such as ingredients, cleaning supplies, utensils, etc. However, failing to place an order when you're supposed to can lead to something known as "ghosting."
Ghosting in the restaurant business is when a supplier sends you whatever products they feel like because you failed to place an order. This can lead to a variety of problems, such as not having the goods you need, or in some cases, having too many. This can quickly lead to there being an excess of waste that lowers your profit margins.
3. Keep an Eye on Your Employees
It's no secret that in the restaurant business employees like to help themselves to the food when they can. In some cases this may be allowed, such as letting the workers at the end of a shift take some leftover food home, but sometimes workers will take food without permission.
Security cameras can discourage theft, and even if workers are allowed to take leftover food, it still needs to be counted and marked as waste. If you don't keep an eye on how much food is being taken by your workers, you won't have an accurate count of how much waste you're producing.
Knowledge is Half the Battle
If there is anything you take away from this, it's that knowing how much waste you're producing is the first and most important step in limiting it. Find an inventory costing method that works for you, make sure your employees don't forget to place orders for new supplies when needed, and keep track of how much food your employees are taking home with them. If you can keep track of these factors, you can begin to limit the amount of waste your restaurant produces.
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