When you picture opening your own cafe, you’re probably envisioning a cozy space where the rich aromas of percolating coffee and fresh-baked goods mingle with gentle music and cheerful conversation. You may not necessarily be picturing the part where you have to order the exact right amount of coffee beans for next week’s morning rush hours or the part where a sudden surge in milk prices requires you to rethink your menu.
But if you want the cozy space with the delicious aromas, you have to deal with all that other stuff. You have to learn how to manage inventory in a small cafe.
And that’s because small cafe inventory management is about more than just tracking and restocking ingredients. It’s also about minimizing waste, protecting your profit margins, and making smarter decisions about things like pricing, recipes, and portion sizes.
But here’s the good news. You run a relatively small business, which means your inventory management strategy doesn’t have to be particularly complicated. With the right combination of cafe inventory management best practices and technology, you can streamline your operation and even improve your bottom line.
Before we get into cafe technology, let’s start with a few of the basics. These are the everyday cafe inventory management best practices that you and your team need to establish as a way to bring order and consistency to the inventory process.
Whether your small cafe is a two-person operation or it runs on staff of 10, the following are some essential cafe inventory management best practices.
*If this is the first time you’re hearing about “data-driven demand forecasting,” don’t freak out. All this really means is that you can use historical data (such as how many customers you served, and how many coffees you sold, last month) to estimate how much coffee, cream, and sugar you’ll need to order for next month.
And as you’ll see in the next section, your POS system already includes a lot of tools that can help you track this data and make sense of it. In fact, the right technology can help you monitor stock levels, track waste, forecast demand, and more, with far greater efficiency, accuracy, and precision.
So does that mean you need to go out and get yourself a standalone inventory management system? Not necessarily, at least not just yet. If you’re already using a POS (point of sale) system like Square or Toast, you already have access to most of the basic inventory tracking tools you’ll need.
The typical small cafe usually has a limited menu with pretty fast ingredient turnover. You’re probably not dealing with complex vendor orders, and chances are that demand is relatively stable and predictable. This means the tools included with your POS system will likely be good enough for your needs.
Your POS system should allow you to handle the following basic inventory tasks:
While the tools included with your POS system can handle a lot of the basic inventory functions, adding a recipe costing platform to the mix is a relatively affordable way to incorporate a few more advanced features.
A recipe costing platform is a set of tools that can help you track inventory, food costs, and profit margins for your cafe. A good recipe costing system can help you:
If you do decide to add recipe costing software to your tech stack, be sure that you choose an option that integrates fully with your POS system. Your food costing system will rely on data from your POS system to forecast demand more accurately and identify opportunities for improved profit margins.
Let’s say you’ve figured out how to manage inventory in a small cafe using the tools provided by your POS system along with a good recipe costing system. So why would you consider upgrading to a full inventory management system?
There are a few good reasons actually. First and foremost is waste. Even a small cafe has to worry about basic causes of waste like stockouts, overstocking, and spoilage.
When you over-order and your unneeded inventory sits around collecting dust, you’re wasting precious capital. When you under-order and run out of key ingredients, you’re wasting precious sales potential.
In either case, you’re losing revenue. And in all likelihood, your inventory management practices are at the root of this waste. This is where it may actually make sense to invest a little more in an inventory management system.
Bear in mind that your POS system likely includes an add-on inventory management system for an additional charge. And this may be a good option for you if the cost is right.
But you can also consider going with a standalone inventory management vendor like MarketMan or MarginEdge, where you’ll typically have access to more specialized features and more direct customer support.
These standalone inventory management systems provide advanced features like automated reordering, real-time food cost tracking, and insights into your primary sources of waste.
If your cafe reaches a point where this waste is cutting significantly into your profitability, it’s time to think about adding this type of tech to the mix.
There are a few other reasons you might want to incorporate advanced inventory management into your small cafe tech stack.
The constant fluctuation and general upward trend of food costs means you need constant, real-time visibility into changes in food costs. You also need enough data to make informed decisions about ordering, recipe modifications, and menu optimization.
Adding new items to your menu creates more room for waste and human error. So does expanding the number of vendors you work with and the frequency of your orders.
Adding a second location or adding a new revenue stream like catering can also add several layers of complexity to your ordering and inventory management strategies.
If you find yourself grappling with how to manage inventory in a small cafe under these conditions, you may want to consider adding a full inventory management system to your tech stack.
Not sure exactly which tools and tech make sense for your small cafe?
I’m happy to talk you through your options. Reach out for your free, personalized consultation and we’ll work together to figure out what makes the most sense for your business.