Perception About Inventory Management and Control at Quick Service Restaurants

Perception About Inventory Management and Control at Quick Service Restaurants

DOI: 10.4018/979-8-3693-0669-7.ch011
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India's quick service restaurant market has expanded significantly in recent years. For small-scale QSRs, inventory management continues to be an essential challenge. Inventory management enhances the efficiency of business operations by influencing the stockpile and supply of essential products and materials. The research aims to highlight the importance of inventory control and management in QSRs. Primary data was collected from 120 operational QSRs in Bangalore in Karnataka and 30 from Kottayam in Kerala. It was found that most of the respondents felt that proper inventory management and control could help to improve their service quality and help to reduce costs. It has been found that the factors service, savings, and risk have a strong positive correlation with inventory cost. Several techniques and strategies like techniques for cooking with no waste, menu planning with fewer ingredients, networks for local sourcing, matching demand and supply through seasonal planning have been identified to increase the performance of QSRs.
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Effective inventory management, a crucial step in the supply chain management process, is essential for quick-service restaurants (QSRs). As they operate in a very dynamic and competitive environment, QSRs must focus on effectively managing their inventories. Due to its quick service, low prices, and convenience, QSRs have grown in popularity recently. They play a significant role in the food service sector, fostering its overall expansion and generating job possibilities. (Ottenbacher & Harrington, 2009). The Indian quick service restaurant (QSR) market was estimated to be worth about $71.5 billion in 2021 and was expected to increase to $85 billion by 2023, according to a report by the “National Restaurant Association of India” (NRAI). According to the report, QSRs generated roughly 2.1% of India's GDP in 2018 and were projected to increase that percentage to 2.8% by 2023. The NRAI report cited several factors, including as the growing urbanisation of the population, rising disposable incomes, and shifting customer preferences, that are fuelling the expansion of QSRs in India. However, the report also noted several industry challenges, such as high real estate costs, intense competition, and a lack of skilled labor.

When compared to the manufacture of other products, there are key aspects of the food service industry that set it apart. The decisions that are made regarding production and service delivery are influenced by this distinctiveness. The first trait is that there is a high demand for food at mealtimes like breakfast, lunch, and dinner. There are slack periods in between these periods of high demand. Second, because demand for food might change depending on the season and sporting events, output must be adjusted. Both food production and service require a lot of labour, both skilled and unskilled. Food must be handled carefully before, during, and after preparation as it is perishable. Additionally, output may fluctuate daily because menus are subject to daily revision. These traits make it difficult to schedule workers and production, which may make it tough to staff and result in high labour and food costs (Kanyan, Ngana, & Voon, 2016).

The amount of inventory to procure is determined abruptly as most shops prefer to order it just before the stock ends. It creates a lag in the whole service delivery as various factors affect the smooth functioning of the delivery partner. Transportation time is one of the crucial factors in QSR industry (Salin & Nayga 2003). If there is an unprecedented demand during peak hours, some QSRs are not able to meet them due to non-availability of required raw materials. Due to lack of adequate storage space customers' needs are turned down when there is an unexpected demand during off-peak hours.

Although the number of cafes, restaurants, small kiosks, and other food-related businesses in India has increased significantly, QSRs (quick service restaurants) are a significant economic driver. These establishments typically offer foods such burgers, fries, sandwiches, tacos, and other items. Customers may expect their orders to be delivered in 5 to 7 minutes. All of the major metropolises, including Mumbai, Bangalore, Chennai, Delhi, and Pune, are home to popular brands like McDonald's, KFC (Kentucky Fried Chicken), Burger King, and Taco Bell, which have successfully tapped into the expanding young market (Shende, Rasal, & Thorat, 2019). QSR is a booming business in Bangalore as the number of tech companies and educational institutions are steeply increasing. This has attracted growth of QSRs to meet the demands of the rising population in Bangalore. The right choice of target market and customers makes it imperative to meet the break-even point and yield profitability in business. Despite QSRs being an important part of the Indian economy and a necessity for the urban population, literature on the inventory control and management, especially with respect to the Indian context is limited. Hence, this research aims to highlight the importance of inventory control and management in QSRs.

Key Terms in this Chapter

Inventory Management: Monitoring and controlling the flow of goods from manufacturers to warehouses and then to retail stores or customers. The goal of inventory management is to ensure that a business has the right amount of stock available at the right time, neither too much that it ties up resources nor too little that it causes shortages.

Correlation: Correlation refers to a statistical measure that describes the extent to which two variables change together. In other words, it quantifies the degree to which a change in one variable corresponds to a change in another. The most common measure of correlation is the correlation coefficient, often represented by the symbol “r.”

Centralised Warehousing: A distribution system where a company or organization consolidates its goods and products into one main storage facility. This central hub then serves as the primary location for storing, managing, and distributing inventory to various retail outlets, wholesalers, or directly to customers.

Quick Service Restaurants: Quick service restaurants (QSRs) are eateries that prioritize speed and convenience in their service.

Cloud-Based Solutions: Cloud-based solutions refer to software, services, or resources that are provided over the internet and hosted on remote servers, rather than on a local server or a physical infrastructure. Instead of installing and maintaining software or managing servers on-site, users can access and use these services through the internet.

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