Food and Beverage Manufacturing ERP

How Food and Beverage Manufacturing ERP can Reduce Costs and Improve Profit?

Food and beverage manufacturers can reduce costs and improve profitability in many ways. Manufacturers and distributors need to understand all the costs which are associated with developing, marketing, producing, selling, and delivering products so that all the food and beverage items can be priced appropriately. A stable price of raw materials and products helps to improve profits. Moreover, opting for manufacturing ERP can allow you to improve productivity, reduce cost, and ultimately increase profit.

Here are a few ways that help to reduce costs and improve profits in the food and beverage industry-

1. Keep an eye on wastage and reduce it -

Food waste is one of the big problems in the food and beverage industry which impacts and hits badly the entire manufacturing process. Check a list that included some tips to reduce food waste-

  • Portion Sizing - You need to keep the portion size small so that drinks won’t be wasted anymore. It also helps to control leftovers.
  • Kitchen Prep List - A daily cooking list helps to control ingredients quantity, and how much of each ingredient is needed for cooking. It helps to reduce kitchen food wastage.
  • Reuse - Reusing plays a vital role in the food and beverage industry. You can turn unusable food products into something different item which also helps to control food wastage. For example- instead of dumping stale bread you can make croutons, breadcrumbs, or bread pudding.

Reducing food waste and making the most of the ingredients can make a huge difference in the food and beverage industry and help to increase profits.

2. Keep the lower cost of your food -

Make a proper plan with the help of food and beverages manufacturing ERP to reduce food costs by using the food cost formula on each menu item.

Formula -  Food cost percentage = total cost of ingredients/menu item price 

Food cost percentage will allow you to how much you’re spending on food ingredients and compare the price of each item on the menu.

Ideally, your goal should be to keep the percentage between 15-30% because it stands that your revenue will go per item 70-85%.

If you will decide to keep the percentage over 30%, it means, you are spending too much. In this case, you should cut down the cost or you can look for less expensive ingredients or you need to decide on the menu prices.

When you start to focus on developing relationships with your suppliers, you can negotiate deals to reduce food costs. You can buy the item in bulk so that you will get the best deals.

3. Manage the Stock -

You have to be great in terms of managing your stock. You should have a clear idea of what you’re spending on and how much you are spending on everything. If you aren’t able to manage your stock effectively, it refers to the situation where you are holding up a lot of extra stock which is included with a lot of cash. However, manufacturing ERP can help you in this situation as it helps to provide real-time information to manage your inventory level accurately.

You need to have a clear picture of a few things and consider them when it comes to stock:

  • Do you have the right products in stock?
  • Ever run out of stock and decrease in sales as a result?
  • How you will know when stock levels are low?
  • Due to excess stock, are you losing money?

4. Reduce your Utility Bills -

The food and beverage industry is included with a lot of operational cost expenses that the company incurs to generate revenue. Because costs money help to make money!

One of the main expenses in the food and beverage industry is utility costs. Utility usages are like -

  • Electricity Usage
  • Heating bills
  • Gas bills
  • Internet Bills
  • Phone cables
  • Water bills

It is a fact that you can’t always control the utility bills, but for small and medium-sized businesses you can take the cost-saving deals which help to reduce your total utility bills.

  • You can try to negotiate the package deals
  • Negotiate rates with the utility providers
  • Try to reduce the consumption
  • You can opt for an Omni channel POS system like a store hub

5. Make a Budget -

Budgeting is one of the main points that help to reduce costs and determine financial limits by using food and beverages manufacturing ERP. A budget framework helps to control financial decisions.

You can consider a few points while setting your budget for the food and beverage industry:

1. Define the accounting period -

Before making a budget, you need to define the accounting period, an accounting period is the length of time that is covered by your company’s financial statements.

2. Collect Data -

Once you are done with the accounting period, you should have a look at the main pieces of data that you need to focus on in your budget. You can consider a few points under the main piece.

  • Fixed costs
  • Semi-fixed costs
  • Variable costs

3. Set the budget targets -

  • Sales Events
  • Competition
  • Economic Trends


Keep the above points in mind to reduce overall business costs and increase profitability.

At Absolute ERP, you will get manufacturing ERP to simplify and streamline all your operations. With years of experience in the industry, we can help you stand out uniquely in the food and beverages industry.



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