Familiar with the food service industry? Then you know the competition is fierce and the industry can be daunting. According to a Cornell report, about 59 percent of restaurants fail within the first three years, which is a cumulative statistic that includes chain restaurants and independently owned restaurants. Independent restaurants tend to fail more within the first three years at a rate of 61 percent.
Diving deeper into that statistic, the going is at its toughest for the smallest establishments. Overall, restaurants with fewer than 20 employees fail more often within the first year than other service businesses, Forbes notes. On average, restaurants with 5 or fewer employees last 3.75 years while other startups of the same size last 4 years.
The good news is the food service industry is growing. From 2015 to 2016, Data USA estimates the restaurant employment rate grew by nearly 2 percent and is expected to grow by 0.6 percent over the next 10 years. Worldwide, the food and beverage industry is growing at a rate of 5 percent, according to Plant & Food Research.
That means there are opportunities for restaurants and the industries that supply them to jump ahead of the competition through advanced inventory management. A leg up on logistics is particularly important for independent restaurants and small farms that face stiff competition. Food service excellence often comes down to juggling inventory logistics — including agricultural supply, hospitality products, and shipping — alongside the art of hospitality, the finesse of marketing, and the culinary craft. To say this is a lot is an understatement.
From farm to table, if you’re a small-to-medium-sized business in the food service industry, you can likely benefit from free inventory management software. The software streamlines your inventory process so you can compete with big business and have more time for the passion of ownership. Here’s a look at how Boxstorm’s cloud-based solution can work for you.
Agriculture and Manufacturing
Farms, ranches, and feedlots have to keep track of many different moving parts just to maintain a steady workflow. This includes cultivating crops, caring for livestock, purchasing and maintaining equipment, monitoring the health of their assets, and keeping up with other miscellaneous supplies. On top of all that, according to the Swedish University of Agricultural Sciences, there’s an “ever increasing consumer demand for food quality and safety and animal welfare.” Farms and ranches have to be incredibly efficient with inventory in order to meet consumer demand for quality, safety, and humane animal treatment.
In 2012, according to the National Academy of Sciences (NAS), 80 percent of consumer food dollars went to post-harvest manufacturers while 17 percent went to farmers. These numbers are staggering compared to 1950 when 40 percent of dollars went to farmers.
This means farmers are now tasked with producing food to meet higher demand at slimmer profit margins. The demand for organic food has grown about 20 percent annually, and, along with that, the NAS reports that “food sold directly from farmers to consumers is a small but growing segment of the market.”
When it comes to the food service industry, organic farms and small farms must have advanced inventory management in order to serve niche markets and supply a growing restaurant industry. Food costs have dropped to around 10 percent of the average American’s disposable income, meaning more people are able to eat out.
The manufacturing side of this picture collects the lion’s share of the American food dollar because many foods need to be packaged and prepared before they’re shipped to restaurants all over the world. Manufacturers aggregate, store, and process foods. Manufacturers include meat packers, bakeries, and farmer cooperatives. Small-to-medium regional manufacturers and local cooperatives can benefit from free inventory management software to cut down on costs.
How a Cloud-Based Inventory Management System Can Help Agricultural Businesses
Boxstorm’s cloud-based solution lets farmers and other agriculture professionals manage inventory directly from a smartphone. If you’re in the field or traveling, you’ll have easy access and the ability to coordinate with at least four other people, all via one app. For livestock managers, you can easily input stock data, cycle shipments out, track locations, and view transactions with meat packers.
Meanwhile, crop managers can track seed and harvest cycles, log shipments in and out, and minimize order processing costs by ordering the right quantities at the right times based on prior data. Boxstorm integrates with QuickBooks Online so that when it comes time to crunch numbers there’s no redundant data entry.
Food Distribution and Transportation
As we noted earlier, 80 percent of the consumer food dollar goes to the post-harvest process, and distribution takes a great deal of that dollar. Food distributors who are able to keep track of every item have an advantage because they know when and why losses occur.
Farmers and ranchers produce about 1 trillion pounds of crops, but by the time those crops make it to restaurants and retailers as food and beverage products, there has been a considerable loss of weight. Post-harvest, about one-third of product weight is lost, and some of that loss comes down to spoilage during shipping. In 2010 alone, $161.6 billion worth of food was lost.
Fresh produce and meat are valuable to the food service industry, and wholesale distributors are faced with a real challenge when it comes to warehousing and transporting valuable, fresh product that can spoil quickly. That being the case, efficient inventory management is essential. Distributors who minimize loss during transportation stand to make more money.
How a Cloud-Based Inventory Management System Can Improve Food Transportation Services
When it comes to distribution and food industry inventory management, a single word captures what you’re after: speed. The best inventory software allows you to quickly catalog every item, create new items, and track items from warehouse to vendor. Moreover, this software allows you to export data so you can analyze trends.
Speed is crucial to food service. Distributors who can rapidly log and track shipments have an advantage, and when you never have to pay for the software to do it, you can spend money where it counts. The more cash you have available to spend on personnel and equipment, the better you’ll scale.
Food Service Industry
The USDA notes 31 percent of food waste and loss happens at the retail level. Restaurants, cafes, and cafeterias are particularly aware of the challenge at hand: if you don’t have enough inventory available, you won’t meet the demand of customers. But order too much and you waste money when food goes to waste.
A food service establishment can analyze industry data and search for case studies about other similar establishments of the same size. However, inventory needs for other establishments aren’t necessarily predictive of your own, especially when you’re running a small-to-medium-size niche establishment. The best way to minimize waste and maintain enough supply is to constantly keep tabs on inventory, analyze trends, and place orders based on statistical analysis. Keeping detailed, useful records of inventory can inform everything from portion size to what dishes go on the menu, and when to retire unpopular items.
Here’s the crux of the issue for food service: the fewer orders you place, the less you spend. Especially when you’re ordering produce and meat, maximizing inventory efficiency is crucial for maintaining a profit margin. The only way to do it well is to keep extremely accurate books and understand short-term, weekly trends, seasonal trends, and event-based trends in your area.
How a Cloud-Based Inventory Management System Can Save Your Restaurant Money
Boxstorm’s free inventory management software allows you to scan items in and out with your smartphone. Once you’ve tallied sales numbers, you can export data via CSV files for further analysis. As you continue to analyze loss and sales trends over time, you’ll get a reliable picture of what your inventory needs will look like in the future. Then you can place large orders for items that you can store and repeat those small orders for perishable, fresh foods. This scientific approach to inventory management removes the guesswork and saves you money. Paper ledgers cost money, but Boxstorm is free from the get-go — and forever. Don’t pay until you’ve scaled your restaurant up to the size where you need additional services.
No more manual data entry — once tax time comes, Boxstorm’s software syncs directly with QuickBooks Online. Reduce waste, save time, and save money: that’s what running a sustainable food service business is all about.