How many of you believe that inventory management is simple arithmetic?
Well, it can be fun when you have 1 outlet and 10 items to offer. But if you work for growth, and diversify your menu or outlets, it is no simple task.
Point to note: it is not a task to ignore as well.
Managing your inventory effectively can:
- Help you manage food costs
- Catch any theft or pilferage
- Avoid dead stock
- Save money spent on storage
- Plan your purchases better
- Plan for special occasions
- Make operations simpler
Confused on how to start?
Luckily, in this post, we’re talking about the most basic method of inventory management i.e par inventory. We’ll take you through setting up a par inventory system using spreadsheets for your restaurant.
What is par inventory?
Par inventory is a method of restaurant inventory management.
In this method, restaurant owners establish a minimum level of inventory required at any particular period of time. They put into account the regular stock usage and any other emergency stock requirement to plan when and how much to order.
What does par level mean?
As restaurant owners, you want everything at your restaurant to be ‘up to par’, it’s a standard you’ve set whether for food quality or staff performance.
Similarly, when you set a standard for the level of stock you want at any point of the day, it is called the ‘par level’.
How to calculate the par level?
Here’s the equation:
Normal Inventory Used Per Week + Safety Net for Stock = Par Level
Need an example to simplify things?
One of your core raw material is burger buns. It is restocked every Monday. So your set par level for it will be your weekly usage + the safety net stock in case of an emergency or special occasions.
Let’s say your weekly usage is of 300 bags of burger buns. And you want to keep a 10% safety net.
Then your par level will be:
300 + 30 = 330
In this way, you’ll set the par level for each of your raw materials. And whenever your stock goes below the par level, you’ll know that it is time to re-order.
How to set up a par inventory sheet for your restaurant?
Having a par inventory sheet is a good starting point if you haven’t been tracking any inventory earlier or have been using pen and paper methods. It’ll give you visibility to make informed decisions.
1) You can set up a par inventory sheet either in Microsoft Excel or on cloud platforms like Google Sheets.
2) Columns to be added in your restaurant par inventory sheet:
- Raw material name
- Par level
- Amount in stock right now
- Emergency par stock amount
- Order amount
3) Now you can arrange this sheet in two ways:
- By the kind of raw materials – This way you can divide your materials by vegetables, dairy, grains etc.
- By different suppliers – You can divide the sheet by the name of the supplier and under it a list of ingredients you are ordering.
4) Now fill each of the columns you added earlier with the right amounts.
5) Remember you’ll have to manually tally and update the amount in stock every day or every week (depending on how fast you use up the stock.)
Calculating order size with par inventory sheets
Here’s your go-to equation:
Par level – Amount in Store = Order Size
You can use basic subtraction formula in a spreadsheet to automatically calculate this for you.
Basically, whenever you place a order, compare the actual amount of food and your set par level. Your order size will be the amount you need to restock to reach the par level and not the par level itself.
If you take the burger bag example again. And assume that your current stock is 198 bags.
Then, you’ll need to order
330 – 198 = 132 burger bun bags.
Frequently asked questions about the Par Inventory System:
1) What is par stock in a restaurant?
Par stock is not any actual stock. It is the ideal amount of each raw material that you set as the par level.
In our burger buns example, 330 bags that you should have can be called as the par level of stock or par stock.
2) Should I arrange Par Sheet based on suppliers or food-type?
If you have 1 or 2 suppliers for all your raw material requirement, then you can arrange the sheet on the basis of the materials. This is because you wouldn’t have to keep a track of multiple sources of orders and their details, rather your focus will be on the type of raw materials.
If you have more than 2 suppliers, it is advised to maintain the sheet supplier-wise. This way you can keep a track of different deliveries and order necessary items together from each supplier.
3) When should my order size exceed par levels?
In special cases like a cricket match day or the New Year’s, you know that you might require inventory that’s more than your regular par level.
In such cases, your order size will be:
(Par level – Amount in Store) + Emergency/Special Event Stock = Order Size
There you have it, easy as that!
By analysing the data about your sales trends in place, you can even predict this number better.
4) What is safety stock in par inventory system?
Safety stock is the extra stock you want to keep over the normal usage level just to have a safety net in case of emergencies. Generally, 10% of your normal usage is taken as the safety stock.
You are on your way!
Now that you have all this information in hand, go set up your restaurant’s own par inventory sheet.
It’s a good way to bring organisation in your restaurant’s operations and avoid last minute panic.
But, is there an even smarter way to do inventory at your restaurant?
While maintaining a par inventory sheet is much better than no inventory tracking, having an automated inventory management software is the modern solution.
It takes the burden out of your hand and keeps manual or mathematical errors out of your way. And let’s not forget about the man hours it’ll help you save.
Your POS, inventory, analytics – all connected and working together, isn’t that the ultimate restaurant operational dream?
Well, it’s your chance to make it a reality now.