4.4 Impact on cost and operations
Effective inventory management has a direct impact on financial performance. Research shows that even minor improvements in stock recording at smaller restaurants can reduce operating costs by up to 7% without requiring additional labour expenditure.
Conversely, stockouts – when an item is unavailable – have serious consequences for service. It has been shown that a 15% increase in stockout frequency can reduce guest satisfaction by 20% and lead to a 5–8% loss of revenue. Applying a TCO approach (Total Cost of Ownership) ensures that managers consider the total cost of inventory holding (storage, shrinkage, ordering cost) rather than purchase price alone.
Stop blaming low sales for your high food cost percentage
