Restaurant Glossary
Par Level
Restaurant space is full of words that one might not be familiar with, and the restaurant glossary is here to simplify it all for you. It will help you keep up with updated restaurant industry lingo.
What is par level?
Using the Periodic Automatic Replacement (PAR) inventory control system, you may determine the amount of inventory you need to keep on hand to meet demand.
The ideal inventory stock to have on hand following each order delivery is determined by the Par level. However, Par levels can vary depending on things like the time of year, holidays, events, and even the day of the week.
This is crucial for businesses that deal with perishable items, and the food and beverage, hospitality, healthcare, and pharmaceutical sectors can all benefit from using Par levels.
What are the benefits of using Par Level in inventory?
- Helping against overstocking or understocking
Supply management may be erratic and expensive in the absence of Par levels. Items may easily run out, necessitating pricey rush orders. What’s worse is that staff might order excessive quantities of product in an effort to avert future shortages; yet, this stock might go unused and eventually expire.
- Saving time and avoiding human errors
If you want to properly take control of your ordering operations and save money, you must do Par level for every single item in your restaurant, which makes it complicated. Automating your PAR level is crucial because manual processes are time-consuming and susceptible to human mistake.
- Cost savings
Successful Par level methods provide to cost reductions in inventory management for restaurants and other businesses by:
- Assisting in lowering the waste of perishable goods & food
- Preventing overstocking and understocking
- Improving the inventory turnover rate
- Encouraging more discretion when placing orders for inventory
- Ordering the appropriate amount of inventory stock
How to calculate Par level?
You’ll need a few items before you can begin figuring out the inventory par levels for each ingredient in your restaurant:
- Timelines for each item’s delivery
- Each product’s demand from consumers (sales report)
- Standard inventory
- Inventory turnover rate
The following is a general formula for calculating par level:
To explain simply :
Imagine that your restaurant goes through 100 servings of french fries per week. Each packet of frozen french fries you buy is enough to provide 10 servings of fries in your restaurant. That means the amount of inventory used each week is 10 packs of fries. So, in this case, your safety stock safety buffer to cover spillage, waste, or unexpected demand is 20% – so 2 packs of fries and your supplier delivers bags of frozen french fries every Monday – so once a week.
So your par level for bags of chips is: 10 packs + 2 packs = 12 packs.