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What is PAR Level and Why is it Important in Restaurant Inventory Management?

Restaurant Operations - September 14, 2020 Written By: Krista Dinsmore

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Proper food and beverage inventory management is one of the most important processes that any restaurant can implement into their backend operations. That’s because poor ordering decisions lead to wasted money.

Successful inventory management, on the other hand, helps you to identify best and worst selling items, empowers you to make better informed ordering decisions, ensures you are purchasing the right amount of stock and helps you find where you may be losing inventory - such as overserving or overpouring.

Implementing successful inventory management can completely transform your restaurant’s finances, turning wasted costs into additional profits.

Beverage and food inventory management systems are the most effective way to improve your restaurant’s inventory management processes, but it’s important that you combine this with PAR levels.

In this blog, Sculpture Hospitality takes a deeper look at PAR levels to help you understand exactly what they are, why they benefit your business and how they can be implemented into your inventory management processes.

What is PAR level inventory?

Periodic Automatic Replacement (PAR) is a system that figures out the minimum (and optimal) level of any given inventory item that should be on-hand at your restaurant at all times.

The PAR level is the optimal amount of an inventory item that should be in your restaurant at all times to ensure that you both do not run out of it, but also that you are not in excess of it either which would lead to waste.

Once your business finds the right PAR level, you will be able to ensure that you don’t run out of product but also that you don’t have too much cash tied up in unused inventory either.

A successful PAR level strategy will lead to benefits such as:

  • Reduced food waste
  • The creation of a healthy inventory turnover rate
  • Increased control over inventory ordering
  • Cost savings

How to calculate restaurant inventory PAR levels

To create a PAR level strategy that improves your restaurant’s inventory management processes, you need to first know how to calculate PAR levels. There are two main things you need for this: frequency of product delivery and inventory usage trends (you will need an inventory management system for this).

The industry-accepted formula for calculating PAR level is:

PAR level = (the amount of inventory used each week + safety stock) / number of deliveries each week.

To get the figures for this calculation you’ll need to look at historical inventory usage and come up with an average usage for a week, you’ll have to factor in safety stock for unexpected spikes (which, as a best practice, is around 25 percent of your average inventory usage) and you will need to note the delivery frequency of that product.

Once you have your PAR level, your restaurant can now start ordering inventory strategically. You can order just enough inventory to bring it back up to its PAR level, meaning you’ll have enough product in your restaurant, without the risk of under or over purchasing.

How can Sculpture Hospitality help?

PAR level is complex as it must be done for every single item in your restaurant if you are to truly take control of your ordering processes and save money. That’s why it’s important to automate your PAR level - manual processes are not just time-consuming, they also leave room for human error.

That’s why Sculpture Hospitality can help with the Sculpture inteliPar Report.

The Sculpture inteliPar Report is a tool which can be used to optimize on-hand stock levels. It works by referencing your current on-hand products for ordering purposes, based on previous usage.

To provide an accurate PAR level, the Sculpture inteliPar Report matches usage and data trends to PAR level calculations. The tool is used to;

  • provide your restaurant with an accurate item list to order based on usage and data trends;
  • optimize the on-hand stock levels with auto adjusting par levels;

The tool, which is based on actual weekly usage and automatically adjusts each week based on usage, can be tailored for your specific restaurant. You can change rules by class, category or specific items to work for your unique needs.

Are you looking to take the guesswork out of ordering, turning those saves costs into additional profits? Get in touch with Sculpture Hospitality today and find out how we can improve your restaurant’s inventory management processes.