F&B tips & tricks: Fixing errors that impact gross profit

Can you really trust the numbers at the heart of your restaurant, pub or cafe finances? With iiko, it’s possible to spot any discrepancies, identify the causes and fix them quickly. Let’s see how …

Over coming weeks, we hope to bring you a series of tips & tricks made possible by iiko that will help you to solve business issues that pose a risk to performance.

In this first episode, we look at sorting anomalies around the cost of ingredients.

How good are your books?

Unless your figures are 100% accurate, then it’s impossible to know whether your latest Profit & Loss report represents a true picture of business performance. You might actually be doing better than anyone realised — or maybe there’s a serious problem lurking deep within your processes that no-one’s recognised?

Sometimes the clues are there. The numbers just don’t look right:

  • Why is Bar A busier than Bar B but it’s less profitable?
  • How come we’ve spent far more on food last month?
  • Is Supplier X raising prices and no-one’s noticed?

Without proper insight into spending, F&B businesses struggle for answers. With everyone so busy, staff can’t afford to devote hours of time scouring through endless spreadsheets and receipts. And even if they find the right documents, who’s to know which line entry is the root of the problem?

Let’s be honest. Unless figures are outrageous, then it’s more likely that any ‘irregularities’ get tolerated and so inefficiencies creep into the business, eroding margins, bit by bit.

But with iiko, you can solve the mystery and correct any mistakes to restore 100% accuracy — nipping any problems in the bud and ensuring your P&L is trustworthy. With our tools, you can dive deep into the numbers.

Here’s a real-life scenario …

A popular UK casual chain* used iiko to identify and fix something odd that was happening in their business. With iiko, managers could examine one location closely and compare it against others in the chain, which helped to narrow down the problem.

The issue arose with one of the brand’s best-sellers — Chilli & Avo Mash Toast. 

*The names of the stores and dishes have been changed from original.

The cost of ingredients was significantly different at Restaurant A, compared to Restaurants B and C. We’re only talking pennies per dish. But sales volumes were high and so the impact was significant.

To identify the discrepancy, managers could use iiko to examine the ingredients, one by one.

The recipe could be displayed, showing every ingredient, its weight and the cost per unit.

The team then began a deeper dive, starting with the first ingredient — Chilli Flakes Crushed.

Looking at the stock balance, the unit cost should match for all three restaurants, but this wasn’t the case.

It turned out that the purchase price for Restaurant A varied slightly from those of the other two locations, but the main issue was the initial stock—which had been priced at zero.

Virtually the same thing had happened with the next ingredient – sea salt.

And the same issue occurred with another ingredient – Drained Feta

As feta cheese influenced the price of this dish quite heavily, managers focused more closely on this and compared what was happening at each restaurant.

Restaurant A seemed to have an initial stock inputting failure as well as a strange price fluctuation that could be seen around the date 27/11.

Sussex Gardens

While Restaurant B didn’t have the initial stock issue, it also had a price fluctuation on the 27/11.

This provided valuable clues. Since the pricing issue was affecting two stores in exactly the same way, it was unlikely to be an input error at both locations. That would be too much of a coincidence. A charging mistake by a supplier seemed far more likely.

Restaurant C showed no signs of either issue.   

The outcome?

Normally, the price of goods can vary slightly from location to location. But it’s clear that some restaurants were failing to correctly input the cost of some ingredients— which was ultimately skewing the P&L. This was a human error that could be fixed with a little extra care or training.

But this simple investigation also suggested an error with supplier pricing. This could be checked easily with the supplier—and a refund agreed.

Ultimately, the restaurant could get the numbers right and see the true profit generated by one of its top-selling dishes.

Deep insights are made possible by iiko

With iiko, every ingredient in your inventory is recorded and tracked— from purchasing through to production, sale or wastage. There’s just one system for everything and it all works in real-time.

You can scroll back to any moment, pinpoint errors quickly and fix them. Ultimately, iiko gives you one version of the truth, actionable insights and greater confidence in your business.