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Inventory Control: How Much Is Your Menu Costing?

I propose that these chains have taken production and service automation to its uppermost limits and have continued to upgrade. Efficient menu engineering, inventory management, cost analysis, labor scheduling, and real time reporting have forged these dining concepts into quality, high volume, profitable eateries. Whether you run a neighborhood bistro or a formal hotel dining room, you don't want to have to compete against the likes of the Cheesecake Factory across the street.

Increased competition coupled with more demanding customers is driving the foodservice industry to explore more technological solutions. In addition to the ability to monitor profit and loss on a daily basis, technology is providing operators new tools to control costs and improve management efficiency.

"The most recognizable technological revolution in the management of critical functions for a foodservice operation is the automation of purveying," said Dick Williams, a Senior Vice President of HVS International. Williams, who is Director of HVS Food and Beverage Consulting and a restaurant owner, also said, "Gone are the days of the account representative who stopped by often to see if inventory was on par." Williams reminds us that some of the first inventory management software was furnished by food distribution companies.

Efficient Foodservice Response (EFR) is a joint project sponsored by 13 industry trade associations created to help foodservice manufacturers, brokers, distributors, and operators find ways to eliminate an estimated $14.3 billion in non-value adding costs from the supply chain. Some of the focuses of the project are supply chain demand forecasting, electronic commerce, and alliances. Back-office software developers for the foodservice industry play an important role in this initiative. "A strong relationship between food distributors and software developers has been forged in recent years and has increased the prominence of back-office automation," says Alexander Lynch of Culinary Software Systems, a Boulder, Colorado, based firm.

The products featured in this article support back-office restaurant, hotel, and catering functions for various sized operations. While the foodservice industry made the leap to POS and front-of-house automated solutions decades ago, back-office systems have spent more time on the back burner. Integrating these two areas makes sense to even the simplest of concepts and kitchens. The core feature of most packages is an inventory management tool, nevertheless the software products are differentiated by unique modules or interfaces which can provide a significant competitive advantage depending upon the challenges of the operation.

Perhaps the most refreshing newcomer to back-office foodservice management is Computrition's Hospitality Suite� Having met the foodservice needs of the healthcare industry for over 20 years, the migration of Computrition's software programs to a Windows® environment brought opportunities in smaller, related operations: spa resorts, hotels, restaurants and catering facilities. You've heard the adage about hospital food, but perhaps no industry has had to adhere to such high standards of cost control, safe production, efficient distribution, and concern for the nutritional intake of its customers.

Computritionâ„? features an obvious competitive advantage in nutritional analysis, but the most exciting feature is a self-developed inventory database that contains the density and specific gravity of almost every food product requisitioned by foodservice operations. The system accounts for "as purchased to edible portion" (AP to EP) ratios so that no conversion is needed between inventory costing and recipe costing. This allows for more accurate variances when measuring usage. Due to their nearly unrivaled experience in volume foodservice management, "Computrition has set an industry standard for electronic purchasing" says Ellyn Luros-Purdy, RD, founder of the Chatsworth, California-based company. "To date, less than 10% of food purchasing is done via the Internet, but this is expected to increase dramatically in the next few years facilitated by back-office systems," said Luros-Purdy. Computrition, Inc. has entered into a partnership with Instill, an e-commerce company providing purchasing solutions to the foodservice industry and currently has working interfaces with most major food distributors. The system processes order guides based on par levels and purchase orders that can be instantaneously transmitted to food distribution organizations.

Another foodservice trend demanding attention is increased food safety. Computriton's experience has spurred the development of an automated hazard analysis critical control point (HACCP) feature. All foodservice operations are required by law to have these processes outlined for their storage and production areas. The automated process has freed managers from the tedium associated with a high level of regulation compliance.

Symbiotic Systems Corporation (SSC), also located in Boulder, Colorado, has augmented its web-enabled inventory management programs with powerful human resources management tools, such as employee scheduling software. SSC provides flexible back-office solutions that can be integrated with any POS system currently in use by independent operators, corporate and franchised chains, or affiliated restaurant groups.

SmartSite Builder, by Symbiotic Systems leads the way for Internet-based marketing software geared towards the on-line consumer. Independent restaurateurs can create their own web site, and the on-line order processing software will allow for an easy transition into the "home meal replacement" market, in which more people will use the Internet to order quality takeout and delivery meals. The service is available at a fraction of the cost for a web-site design firm or individual who lacks relevant foodservice experience.

Culinary Software Services (CSS) agrees that a web-enabled purchasing function is something no back-office system can afford to exclude. "Reducing the labor time required for inventory management and menu costing activities is one of the greatest benefits of an automated back-office," said Alexandra Lynch, a marketing executive for CSS and also a former chef. ChefTec software organizes inventory not only by food category, but also by location. ChefTec PDA is a system enhancement designed to work with the Palm III from 3Comâ. A handheld unit can be carried throughout the storage areas for the most efficient method of entering and verifying inventory levels. Counts are then uploaded into the main system for costing and ordering processes.

ChefTec recipes can be cost or scaled in seconds. A static menu, one that is limited by the paper upon which it was printed, is becoming more archaic. Catering and foodservice operations have found that variety and flexibility wins customers. Consistency throughout a hotel chain is also a great motivator for using technology. Marriott International decided to use ChefTec Plus in 400 full-service properties for the delivery of standardized recipes and preparation methods, as well as on-line reporting enhancements served as a proving ground for corporate adaptation. MenuLink Computer Solutions, located in Huntington Beach, California, provides a powerful Internet reporting tool whereby POS data can be viewed real time at a corporate office or anywhere using an Internet browser. Authorized users can access data that was sent from remote POS systems within minutes. POS data is continuously integrated into the MenuLink HQ data warehouse from MenuLink's Back Office Assistant (store system) and sends real time data to the MenuLink HQ system. For a chain operation, the amount of time saved on corporate reporting, especially month end reports, allows managers to spend more time interacting with customers and employees.

Eatec Corporation, in Emeryville, California, has been offering enterprise-wide automation to foodservice operators for three years. Eatec's current Windows system provides real-time inventory tracking, par level maintenance and nutritional analysis; it also monitors depletion and raw-goods/product conversions, and provides reports, all from a central database. To raise their technology to the next level they are rolling out a new Internet-based version that brings all the strong functionality of their Windows system forward into a Microsoft Internet Explorer product requiring much less data movement across the connection. The stores benefit from having faster real-time updates to their database with the use of a standard modem. Additionally, with the Internet version less software resides at the store, equaling less training and maintenance, and system upgrades can be made to the single central Eatec server at the corporate office, relieving operators from having to apply upgrades themselves.

One popular food and beverage back-office system provider is Food-Trak, developed by System Concepts, Inc. Food-Trak is an established back-office management tools and no stranger to nutritional analysis, handheld inventory takers, web-based purchasing, and enterprise reporting. A recent Food-Trak innovation that should not go unmentioned is the Minibar Management System (MMS), a product to increase accountability between a hotel's rooms division and the food and beverage department. MMS keeps track of inventory levels and variances on stocking carts, as well as inventory placed in the minibars. It also tracks staff activity and reports productivity. Pardon my excitement, but speaking as a former hotel front-office underling, this is the solution to many inter-departmental disputes.

Recognizing that one of the most common obstacles to implementing a new system is the training period when productivity may be lost, many back-office system suppliers have developed self-paced, scenario-based training modules using CD-ROM technology. These on-line guides assist new users with basic navigational skills such as inputting recipes, taking inventory, costing menus, and processing purchase orders. The utilization of self-paced, scenario-based training modules allows foodservice operations to schedule in-house training in a flexible manner, thus optimizing learning.

Separate back-office systems, as opposed to a suite of products provided by a POS vendor, give a foodservice operation more flexibility. Open architecture and "best-of-breed" solutions have created highly efficient interfaces between multiple vendor systems. Back-office organization is no longer limited by the functionality of front-of-house tools. Time and money saved are the most significant advantages of back-office systems. Future product developments will continue to focus on the Internet and connect the foodservice operator directly to industry associations, banking institutions, labor pools, the USDA, and other regulatory agencies