How Inventory Management Helps Restaurants Improve Online Sales

Young delivery man delivering chinese take away food for young woman, standing at the entrance door and holding two plactic bags in hands.

Few urges are as difficult to satisfy as the craving for a certain food. Many of us know how it feels to want a late-night sushi roll, or a mid-afternoon dessert to power through the rest of the work day, which is why online delivery services such as Grubhub and DoorDash have been so successful. There is still a gap in the performance of such online sales platforms, including inventory management associated with online sales, which is why more companies are entering the space in an attempt to disrupt the $600 billion food and beverage industry.

Food and Beverage Retail

According to Business Insider, food and beverage, the largest retail category, has been “the least disrupted by e-commerce,” with less than 1 percent of sales taking place online. Considering that everything from transportation to communication has been radically altered by advances in mobile technology, logistics and cloud computing, it’s surprising that the business of eating has not undergone a similar transformation (and no, the way we photograph and share pictures of our meals does not count).

It makes sense then that Uber, which has already changed the way we call a cab with an easy-to-use app that utilizes location services and a fleet of drivers willing to participate in the sharing economy, would look to apply its methods to this arena. The company launched its UberEats service back in September 2014, but recently rolled out an expanded version to 10 citiesincluding Los Angeles, Toronto, New York and Austin. This new iteration of Eats allows for delivery outside of the lunch-rush and outside of specific, business-heavy neighborhoods, so users can get food delivered for a $5 fee throughout the day.

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Uber had previously made forays into the delivery space with its unveiling of UberRush, a same-day delivery service that businesses or individuals could use to send time sensitive orders (such as flowers, suits, food, contracts and more) to users in nearby areas. Uber’s platform, which allows for location tracking by both parties, is uniquely suited to tackle this need while providing the baseline level of accountability that Uber customers have come to expect from their rideshare service.


Related Article: FIVE REASONS TO MAKE INVENTORY TRACKING PART OF YOUR ONLINE BUSINESS MODEL

The benefits for small businesses and restaurants here is obvious: If you don’t have a way to deliver to customers quickly, as in within the hour or the day, you may lose their business altogether. The impulse buy is incredibly important to capitalize on, since as much as two-thirds of the economy is based on this urge. Food purchasing is particularly sensitive to whims, and fulfilling that immediate need can be the difference between guaranteeing their future business and never hearing from them again.

Subject: A take-out food delivery man delivering food package to customer's door.

Delivery isn’t always feasible for restaurants or other small food purveyors. The investment needed to integrate a delivery arm into the business model, which includes hiring delivery drivers and the logistics of adding new orders to the queue of in-house diners is sometimes more than they can handle. Why not hand off those responsibilities to a third-party that already has a system in place to do so? Any fees paid to that platform are likely to be returned by the increased business garnered by a new audience that can browse the menu from their phone and order seamlessly and quickly.

There are some unique advantages to using the UberEats platform. One of the biggest issues that people have with ordering delivery is the unknowable wait time between the confirmation of the order and the arrival of the food, especially if hosting guests. Eats eliminates that by allowing customers to track exactly where their order is at all times, not unlike how companies prefer to have complete supply chain visibility when tracking their inventory. Another perk is that, at least at this stage, Uber has the money to outspend competitors in terms of marketing and discounts, enticing users to build the habit of using Eats for delivery with bargain deals. It’s a short-term loss in exchange for long-term success.

Inventory Control & Tracking Systems

Because Uber (and its competitors) operate on a more technologically savvy level than we’ve previously ever experienced, it stands to reason that small businesses that want to use their services must meet them halfway. Even if part of the appeal for these companies and restaurants is that they don’t have to invest heavily in delivery logistics by teaming up with a third-party, inventory management is necessary in order to keep up with the new influx of requests. The only thing more dissatisfying for a customer than not being able to order a product is ordering it only to be told that their request can’t be fulfilled because of an inaccurate inventory count.

Restaurant Inventory Management

Inventory management is the oversight of the ordering, storing and use of finished products for sale, as well as the components of those products. For restaurants, both meals and the ingredients for those meals are inventory, and it’s often necessary to ensure that there is enough food, or bottles of soda, or other products from outside vendors, to satisfy customer demand, while not having too much on hand that some spoils or otherwise goes to waste. This is called balancing inventory turnover ratio, and automated software is markedly more capable of striking that balance than manual processes such as filling out Excel spreadsheets.

Despite the numerous perks of automated inventory management, from reduced carrying costs to decreased instances of theft, 48 percent of small businesses polled in the Wasp State of Small Business Report still do not track their inventory or use a manual process to do. This trend certainly spills over into the food industry, where many restaurants simply refill supplies when they’re out and rarely try to predict future demand. While this strategy may work for highly successful restaurants that can count on customers to return even if certain items are unavailable when they visit, the margin for error is much smaller for small restaurants that might want to take advantage of delivery services from third-parties like Uber. Promising Uber that you’ll have 500 units ready for lunch the next day, only to come up short due to a manual calculation error, can be devastating.

Inventory management systems don’t have to be overly complicated, Amazon and many other leading retailers use barcodes to track their products, to great effect. It’s this kind of technology that helps Uber, DoorDash, Postmates and other delivery services keep pickups and deliveries organized and ensure customer satisfaction. If a restaurant wants to reap the rewards of teaming with the future of delivery services, considering that 90 percent of same-day deliveries direct to consumers will be done by socially-networked freelancers by 2018, it’ll be in their interested to move to an automated tracking system as well.

How could implementing an inventory management system improve your online sales?

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Paul Trujillo

Paul Trujillo

Paul Trujillo is a Product Marketing Manager at Informatics specializing in Inventory Warehouse Management and Supply Chain product lines. His nearly 15 years of experience has put him at the forefront of industry technology and developing trends.