Categories: Restaurant innovation

Deep Dive: Cloud Inventory Management Can Solve Back-of-House Woes

Inventory management is a constant struggle for many businesses, particularly QSRs. It is difficult to accurately forecast how much inventory is necessary to meet demand without purchasing too much, which could waste both money and food.

One notable inventory management challenge occurred last year when the fried chicken QSR chain Popeyes introduced a new chicken sandwich. The item became a national phenomenon due to a widespread belief in its superior taste and a viral marketing campaign highlighting its availability on Sundays, unlike the offerings of competitor Chick-fil-A. It was so popular that some municipalities had to shut down their Popeyes drive-thrus due to overflows, and all of the chain’s nationwide restaurants nationwide were sold out of the sandwich less than two weeks after its introduction.

Such shortages are common in the restaurant industry, but the scale of the Popeyes incident was particularly remarkable: Two months passed before the chain could bring the item back. Felipe Athayde, Popeye’s president for the U.S. market, attributed the shortage to a vast underestimation of demand.

“We thought we wouldn’t have any problems at all, at least until the end of September,” he told The New York Times. “We made a decision to stop, but technically, it wasn’t a decision. We came to the realization we were stopping. There was no alternative.”

Popeyes’ chicken sandwich shortage can teach QSRs many lessons, including the value of real-time inventory management and how best to restock on demand. Cloud-based systems can help restaurants mitigate these issues and avoid the wrath of hungry customers.

Keeping QSRs on Top of Inventory

Cloud-based inventory software offers restaurants several advantages in operational efficiency, including real-time tracking. Such features prevent QSRs from having to pay staff to conduct time-consuming and tedious manual counts after hours. McKinsey & Company estimates that productivity in companies with connected tools — like cloud management software — is improved by up to 25 percent compared to those without such supports.

An up-to-date view of on-hand inventory also helps restaurant managers better understand ideal restocking practices. Many cloud-based systems are equipped with automated purchasing capabilities that remove the responsibility and pressure entirely from managers’ shoulders. Nathan Pickerill, senior director of product strategy at restaurant operating system provider HotSchedules, likens cloud inventory management tools to smart wearables that track steps and calories burned — easy tasks for computers, but tedious for humans.

“We use smart technology in our everyday personal lives to handle simple tasks, [so] why can’t restaurant managers use the same type of technology to automate theirs? Intelligent inventory software is going to be able to crunch that data way faster than a busy manager, and that busy manager will know exactly what to focus [his or her] attention on," Pickerill explained to QSR Magazine.

Cloud inventory management software can also mitigate the industry’s constant struggle with food waste. Most retailers can reduce their upcoming shipments and sell excess inventory before restocking, but restaurants do not have this luxury due to food spoilage.

Cloud solution providers have found that precise stocking done through inventory management systems can increase order efficiency by up to 50 percent and reduce food costs by up to 5 percent — numbers that represent the difference between being in the red or in the black. Many restaurants that utilize these tools are already seeing them pay off, and even small, typically slow technology adopters are becoming adept in their use.

Cloud Management in Action

Numerous chains now use cloud-based inventory management software to improve their in-house efficiencies and boost profits. Nationwide QSR giants like Five Guys, KFC and Wendy’s leverage these tools, and smaller chains like Bruegger’s and Dog Haus are also realizing their benefits.

Cambridge, Massachusetts-based Clover Food Labs, which has 12 locations and 300 employees, is another small chain utilizing cloud technology. Its flat-screen menus are connected to inventory management software via a cloud-based operating system, allowing for dynamic menu updates based on what the restaurant has in stock. The menus stop displaying products that rely on out-of-stock ingredients and connect to restaurant managers’ iPads for further real-time adjustments.

Additional restaurant chains of all sizes will likely join these ranks as cloud-based inventory management tools become more advanced and accessible. This technology may prove to be the key ingredient behind keeping high-demand items on the menu.

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The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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