Using Technology to Reduce Restaurant Food Waste

Food waste is the enemy of restaurant success. According to industry estimates, restaurants lose an average of one dollar (even more for high-end restaurants) on every meal order on account of preventable food loss, mainly due to poor inventory management. More than 10 percent of food goes to waste in fast food restaurants, with full service restaurants faring only slightly better, because of poor inventory management. By meticulously controlling both the quantity and flow of inventory, restaurants can reduce the cost of food waste, often by double-digit percentage points.

The COVID-19 pandemic brought the critical importance of food inventory management into even sharper focus. Restaurants that were able to keep their doors open during this period and maintain some level of business continuity had to become hyper-efficient in all aspects of their operations. For them, every dollar counted. Throughout the crisis, and as they continued to struggle to recover from the unprecedented financial fallout, the pressure to minimize food waste had never been greater.

During this period, particularly in the early months of the pandemic, minimizing food waste was no easy task. In times of extreme disruption and chaos, managing food and drink stock levels can become next to impossible. When uncertainty runs rampant and the historic trends data upon which restaurants normally rely to make their purchasing decisions is rendered obsolete, it can be a fool’s errand to try to make projections about restaurant traffic, let alone customer demand for specific menu items, into the future. To make matters worse, the prices of ingredients can fluctuate wildly during turbulent times, with frequent and prolonged shortages of key ingredients, due to broken supply chains and logistical challenges.

Under normal circumstances, however, this is not the case. restaurant owners and operators need to be able to make accurate projections about their food inventory needs into the future. Doing so can mean the difference between life and death of the business. Even in a “new normal” that may differ in fundamental ways from the past, they need to be able to analyze data and identify emerging trends related to the sales of specific menu items. They need to be confident that the data will enable them to optimally maintain their food and drink inventory levels and guide their future supplier purchase orders with only a small margin of error.

The key is to take a scientific approach. This starts with tools that enable restaurant owners and operators to compare the variances between physical inventory and POS data at a granular level. The tools should allow them to track quantitatively how even the smallest adjustments to menus and recipes flow down to ingredient usage. They should make it possible to monitor inventory levels and ingredient depletion in real time. Ultimately, the tools should make it easy to identify instances of preventable food waste due to spoilage, over-portioning, theft or for other reasons that, if properly addressed, can be readily mitigated or altogether avoided.

In the past, the art and science of making projections and placing supplier orders was generally based on nothing more than seasonal variances, the popularity of different dishes and planned menu specials. Restaurant owners and operators tended to rely on a cursory sense of existing stock levels and their own intuition regarding future demand for various ingredients. They often over-ordered supplies based on gut feel — “just to be on the safe side.” This approach may cause only marginal loss in the short-term. Over time, however, it becomes a recipe for disaster.

Until recently, the idea of being able to automatically manage inventory in a dynamic, fast-paced restaurant environment with a high degree of precision would have been little more than a pipedream. While restaurant owners and operators have always recognized the high price they pay for food waste, they could have scarcely imagined that technology could one day make it possible to apply deep analytical rigor to inventory and purchase orders. Now, with data-driven technologies that have rapidly evolved in recent years, restaurants can control food costs and optimize inventory levels in ways not previously possible or even fathomed.

Today, using a single, unified interface, restaurants can track raw materials from the time the kitchen receives and unloads a food shipment from a supplier through ongoing ingredient usage based on menu item orders. Some advanced solutions offer automatic purchase order generation based on par levels and minimum order quantities. Some solutions offer multi-unit features that include resource sharing to ensure optimal cost savings through bulk purchasing across all restaurant locations.

Data integration is imperative. An automated inventory management system integrated into a POS system allows restaurants to virtually eliminate the risk of human error, including miscalculations in over- or under-ordering of ingredients, as well as save on labor costs related to manual inventory management. Integration into suppler databases allows for real-time visibility into food costs, resulting in smarter purchase decisions (in terms of ingredient substitution, for example), more informed vendor negotiations and better insights into how fluctuating prices impact the bottom line and overall profitability.

How restaurants can using technology to reduce restaurant food waste is the topic recent research conducted by Starfleet Research in partnership with Infor, a leading provider of integrated restaurant management system software.