Do you want to deliver products on time and grow your restaurant business? If YES, here are 50 best restaurant inventory management tips & tricks for 2022. Managing a restaurant presents a plethora of challenges and one of the most important is how to keep track of the restaurant’s inventory. Inventory management is the management of inventory and stock.
As an element of supply chain management, inventory management includes aspects such as controlling and overseeing ordering inventory, storage of inventory and controlling the amount of product for sale. With your slim margins, controlling cost is the key to success and ultimately more profit. As food and labor are typically your largest expense, it is imperative to have a restaurant inventory management process and policy for your business.
Table of Content
- What is the Importance of Taking Inventory in a Restaurant?
- a. Restaurant Inventory management plays a very crucial part in all aspects
- b. Know your financial status
- c. Track Expected Use of Inventory
- d. Decrease Food Waste
- e. Combat Theft
- f. Prevent Over-Ordering
- Begin with Your Critical Items
- 2. Establish Pars for Each Item
- 3. Implement a Process for Restaurant Inventory Management
- 4. Use Accounting Software for Restaurant Inventory Management
- 5. Conduct yourself and Spot Check
- 6. Train Your Staff on Inventory
- 7. Track Your Sales Daily
- 8. Carry Some “Just In Case” Inventory
- 9. Start from the Beginning
- 10. Establish company policies for inventory control
- 11. Set up your inventory management procedure to involve two people if possible
- 12. Keep Track of Your Usage
- 13. Prepare your Point of Sale to track your inventory
- 14. Prepare your staff (or yourself) for the inventory routine
- 15. Take stock of your surroundings
- 16. Create a schedule for manual stock takes—and then follow it
- 17. Record waste (and why it happens)
- 18. Make sure inventory is up to date before taking deliveries
- 19. Create sections
- 20. Group like items together
- 21. Make it habit
- 22. Incentivize
- 23. Don’t Ignore Unused Inventory
- 24. Don’t Allow Food Waste
- 25. Don’t Estimate Quantities
- 26. Don’t Fail To Investigate Theft
- 27. Get Staff to Buy-Into inventory management
- 28. Schedule It On the Regular
- 29. Complete Inventory Pre-Delivery and after a big delivery
- 30. Perform Spot Checks
- 31. Lock It Up
- 32. Don’t Buy Too Much
- 33. Automate Your Inventory
- 34. Develop a System and Train All Your Staff
- 35. Manage Inventory regularly and consistently
- 36. Enact a First in First out (FIFO) Mentality
- 37. Take inventory after the restaurant has closed, or before it opens
- 38. Clean out and organize your stock areas before taking inventory
- 39. Raw Material Management
- 40. Recipe Management and Costing
- 41. Shelf Life Management
- 42. Reporting and Analytics
- 43. Use cloud-based inventory management software
- 44. Link quality control to inventory management
- 45. Reexamine your safety stock
- 46. Plan your storage space
What is the Importance of Taking Inventory in a Restaurant?
The main purpose of taking inventory is to measure the amount of item your restaurant uses over time, to compare that with your sales and to investigate the gap between the production value and sales. Restaurant inventory management is also very important in keeping your store in order and it is also useful in reducing wastage of ingredients and resources.
The importance of inventory management cannot be over emphasized in a restaurant business. Your food inventory plan keeps everything in place, organized, and connected – and one tiny oversight can result in a drastic change for your business.
Keeping track of your kitchen inventory leads to more informed planning and decision-making. If you don’t track inventory effectively, your forecasting could be off, causing your supply orders to be inaccurate, which will waste a great deal of time, resources and money.
Even though some managers do not see inventory management as important, it is kind of a big deal. Statistically, 16% of your food ends up in the trash. 75% of employees say that they have stolen from their employers at a point, representing a staggering 7% of your revenue. And restaurants who take regular inventory can increase profits by up to 24% a year. Here are other reasons to do restaurant inventory regularly.
6 Ways Inventory Management Can Help your Restaurant Grow
a. Restaurant Inventory management plays a very crucial part in all aspects
From the supply orders that you make to the customer orders that you take. Because this part of the job will always be there, dedicating time to understand how to do inventory and adopting inventory management software is an investment that is well-worth it.
b. Know your financial status
Measuring the financial health of a restaurant business goes far beyond knowing how much is in the bank account. This figure won’t tell you how much product you have at hand or the amount of money that those on-hand goods represent.
With the help of an efficient inventory, you will be able to easily calculate figures that are essential to understanding the financial health of your business…like Cost of Goods Sold. When compared to revenue, cost of goods sold gives you the best insight into your profit margins.
You can make use of this simple formular:
- (Cost of Goods Sold + Labor Costs) / Total sales = Prime Cost
- If the number you get is over 60%… you’re in for trouble.
c. Track Expected Use of Inventory
Normally, it is the same quantity of items that is used from the pantry on a week to week basis. So unless there was any special event that occurred, you will have to find out why there was a significant change in the number of supplies that was used from the pantry. With a regular restaurant inventory, you’ll be able to:
- Identify significant increases or decreases in food usage immediately
- Increase ordering to avoid a shortage
- Decrease ordering to avoid a surplus
d. Decrease Food Waste
Food waste impacts a restaurant’s success as well as the society at large. In the united states alone, about 133 billion pounds of food were wasted in the year 2010 alone. And despite stringent strategies to combat this trend, the figure has remained relatively stagnant since. The truth however still remains that no matter how hard you try, there will still be some supplies that will go bad before you can use them. But you should do everything you can to reduce this loss for the wellbeing of your restaurant.
The first step in reducing waste is identifying your waste rate… which you can’t do without a reliable inventory. Average waste rates are 3.11 percent for a full-service restaurant. If you run your calculations and you discover that you average rate of wastage is above 3.11 percent, then you are wasting food unnecessary and thus losing money.
e. Combat Theft
As much as you would like to trust your employees, there is no denying that there is a big probability that you could hire a bad egg who will try to steal from you. Businesses in the United States lose between $40 to $400 billion due to employee theft annually. This theft contributes to the failure of 50% of all businesses.
By keeping a consistent inventory and investigating any glaring irregularities, you will be able to curtail and even catch theft. Nothing encourages a thief like knowing that there is no system on ground to check mate his or her actions. As a bonus, visibly taking and reviewing your inventory could be all the deterrent employees need to not stick anything in their bags before shift’s end.
f. Prevent Over-Ordering
Like mentioned before, wastage is a big issue for a lot of restaurant businesses. Granted, you don’t want your backroom to be empty. But you also don’t want the contents of your backroom to account for a disproportionately large percent of your restaurant’s capital. By carrying out regular inventories, you will be able to know how much groceries you need and as such, prevent over-ordering.
Bearing this in mind, it is clear that inventory management is very important for the success of a restaurant business. Knowing the right time to restock certain items, how many of such items to buy, how much to pay, when to sell and at what price can become difficult choices to make without the right information.
Given the significant costs and benefits that is associated with inventories, restaurants spend a lot time trying of find out what constitutes the optimal level of inventory that should be maintained at all times so as not to have too much or too little of stock at any point in time.
Here are 50 best restaurant inventory management tips and tricks that are guaranteed to help your business.
50 Best Restaurant Inventory Management Tips & Tricks for 2022
Begin with Your Critical Items
Your menu is a very critical portion of your restaurant business and as such it is a good starting point for your inventory management. There are likely a few items that are top sellers on your menu (especially those with high value but low cost), so you cannot afford to mismanage the inventory required for these items. You should have the “tightest” control on your critical items. These items should be inventoried every shift and at the very least every day.
2. Establish Pars for Each Item
In inventory, “par” is the level at which the stock is replenished. Setting par allows you to keep enough inventory on hand as that you don’t run out of what you need. Many operations set the par at daily sales level plus delivery time, to ensure the business is never without those essential items.
Only knowing how much you have on hand is of no value unless you tie that number into your production and sales. Be sure to add the par into your on-hand count to know when and how many to order. This will also help to keep up with your sales units.
3. Implement a Process for Restaurant Inventory Management
Take the time to implement a process and stick to it! Establish the best time to do your inventory that ties into your ordering process and delivery. Be sure to take the time to do the inventory or hold your managers accountable to complete the inventory. Remember, the more complex and diverse your menu is, the more important it is that the inventory is completed faithfully.
4. Use Accounting Software for Restaurant Inventory Management
Even though you can still count with a pen and paper, it is still vital that you should input it into software that ties to your sales. The restaurant business has become too complex and time demands are too tight to try and keep track of inventory with a manual tool such as pen and paper. Invest in a good software and you will not regret it.
Set up a software-based inventory control system. Even if you are just running a small restaurant, you will have at least a few dozen items in inventory, and larger operations could easily have several hundred. The real convenience of a software-based inventory system is the automatic calculation feature, and with software you can preset orders to be triggered at certain inventory levels.
5. Conduct yourself and Spot Check
As soon as you have established a process for inventory management, be sure to be the first one to complete the process yourself. Then, when your team is responsible for conducting inventory, spot check the process at intervals you’re most comfortable with, whether it’s once a month or once a quarter. Remember, your inventory is your sales that are not rung through the register yet, so be sure to keep an eye on what is in the back of the house.
If managed correctly, you should have just enough inventory at hand to be able to prepare everything on the menu, but not too much that products begin to spoil. It can also keep you or your staff from being “tempted” by those “great deals” your suppliers are running – check your inventory and usage before buying that “bargain”.
6. Train Your Staff on Inventory
Thrusting the inventory clipboard or software into the hands of just any employee and sending him or her back to the stockroom is a recipe for disaster. Inventory management cannot fall entirely on one person – especially in enterprise restaurants or businesses with multiple locations. Managers and shift leaders should be delivering detailed inventory reports whenever they clock out and alerting the team of any major outage or issues.
This responsibility also falls on your line cooks and back-of-house staff, who should be making notes of spillage, errors, and rotten food whenever they come across it. Teaching your staff to become inventory experts or dedicated mathematicians might be tough, but it’s easier if you incorporate an easy-to-use inventory system for your employees.
To ensure maximum consistency and inventory reliability, you’ll need to have two to three dedicated inventory takers on your team. Pick some of your most detail-oriented employees and “promote” them to inventory taker status. Once you’ve made your selections, take the time to train them on proper inventory management. From there, choose a select few of your in-house, order-receiving and shelf-stocking experts to make sure the processes put in place runs as it should.
Once your well-trained group is up and running, further refine the process. Divide different inventory-related duties across your key staff members. Assign team members to tackle the following inventory-related tasks:
- Organize the stockroom
- Receive orders
- Count inventory
- Do price lookups
- Calculate Cost of goods sold
- Send financial reports
By assigning these tasks, you’ve just created your own list of point people to ask when you need a question about inventory answered.
7. Track Your Sales Daily
Even if it’s just a daily five-minute review leading up to a weekly deep dive into your data, the best practice is to track restaurant sales every day. When you check sales daily instead of weekly, bi-weekly, or monthly, you stay in tune with the immediate changes in your restaurant so you can make quick and timely adjustments to your restaurant’s inventory planning and your provision deliveries.
For instance, if you have a seasonal item that you plan on removing from your menu, you can easily see when it’s phasing out in the eyes of your customers day-by-day instead of taking it off your menu too early or too soon.
Granted, sales tracking and data analysis can be quite difficult if you don’t have the right technology. Instead of computing everything yourself by hand from an inventory sheet or shrugging your shoulders and guessing by intuition, make sure you can access data right from your point of sale system. This way, you can pick up on variances and try to figure out the source of loss.
8. Carry Some “Just In Case” Inventory
Your restaurant should keep an extra supply of provisions that tend to go fast. In the event of an emergency, you can use these extra provisions to fulfill orders and satisfy customers. Just be sure to switch out this ‘just in case’ inventory regularly so that it doesn’t go bad by the time you get around to using it.
9. Start from the Beginning
Start from scratch and do not build on what is already on ground. Whether you are the new owner, general manager or kitchen manager of a restaurant, you must verify your inventory so you know where you stand.
Perform this initial count yourself, even if you plan to delegate responsibility for inventory control. There is no substitute for seeing what you have on your shelves and in your cooler as baseline knowledge for managing a restaurant and supervising inventory control.
10. Establish company policies for inventory control
Make sure that accurate inventory records are kept and that at least one party is specifically responsible for inventory management. Many restaurants today conduct inventory on a daily or even near-real-time basis, and almost all at least weekly.
11. Set up your inventory management procedure to involve two people if possible
Not only do two sets of eyes make it less likely that anything will be missed during the inventory count, it is also a good general safety and anti-loss measure. Pairing reduces errors and the temptation to manipulate results or pocket goods.
12. Keep Track of Your Usage
Confirm expected usage and investigate significant variances. Restaurants can track the exact numbers of each item on the menu sold each day, and therefore also have a pretty good idea of what ingredients are used and how that should be reflected in inventory. However, inventory variances are part of the restaurant business.
Sometimes an employee accidentally ruins a large batch of food, or spoilage occurs due to a banquet cancellation or another expected demand that does not materialize. Significant variances from expected usage could, however, represent theft, and should be investigated.
If you are managing inventory for a larger restaurant, consider a barcode optical scanning or radio frequency ID inventory control system. These systems further automate the inventory control process and make it much easier for management to track usage and investigate losses.
13. Prepare your Point of Sale to track your inventory
First, you need to enter every single ingredient that goes into your food. You may sell cheeseburgers and milkshakes, but you’re buying beef, cheese, ice cream, and milk (among other things). Define minimum levels of each ingredient, and associate them with your suppliers.
When stock gets low, the Point of Sale can alert you to this fact and even generate a purchase order to replenish supplies, ready for you to sign. Adding all the menu items comes second since they’ll be based on recipes using your ingredients. By doing it this way, your Point of Sale can automatically update the quantity of any and all ingredients in whatever meal you sell.
14. Prepare your staff (or yourself) for the inventory routine
While everyone should at least be made aware of what the procedures and expectations are, you should ensure that one or two people are responsible for it like mentioned previously.
For even better results, make sure it’s two people who aren’t you. In any case, whoever’s handling inventory today should also the one who handles it tomorrow and the next day. The need for consistency extends to the personnel, too: over time, the task will go quicker and smoother if it’s the same team handling it every time.
15. Take stock of your surroundings
Now, that everything is all set to be counted at the Point of Sale, you’ve got to count them all yourself first. Never mind if you counted the day before. You’re starting a new regimen here, and it’s best to start from scratch. You’ll be able to perform the stock take right from your Point of Sale.
Count everything that can be counted. Weigh everything that needs to be weighed. Update all the quantities and save the changes. Then, and this is really important, get someone else to do it again. When all your numbers are in agreement, then you know that you are done.
16. Create a schedule for manual stock takes—and then follow it
The idea of a daily, manual stock take might seem like a waste of time if you’ve got a Point of Sale automatically updating inventory with each sale, but sales don’t tell the whole picture with inventory. Liquids spill, leafy greens wilt, meat can spoil, and meals can be sent back by customers. It’s important to check ingredients and verify whether reality conforms to expectation. When you stick to your schedule, you’ll have weeks, then months, then years of data to go back and analyze.
As for doing the manual stock takes, perishable items need to be checked daily for quality, so you might as well count them while you’re there. Non-perishable items should be counted once or twice a week, depending on how fast you go through it. You should always do this when you’re closed, and preferably before you open.
The important thing is to stick to the schedule as if your business depends on it. You can’t put it off, and it’s not as if you can do it twice the next day to compensate. The more you supply your Point of Sale with regular, reliable data, the better your understanding of your purchases and usage.
17. Record waste (and why it happens)
Like mentioned previously, wastage can and will happen from time to time irrespective of how well you try to curtail it. However, any time food gets deducted from your inventory, you should know the reason why. Most of the time that reason is found in sales reports. But when food doesn’t get sold and still gets taken off the shelf? You need to know that too.
As you do your manual stock takes, don’t just toss out expired ingredients and update your inventory. Record the waste, and add the reason. The same should be done when something spills, or a customer sends something back. Great inventory tracking isn’t just about knowing what you have on hand. When you know what you’ve wasted, you can put dollar signs to those losses and make sense of the impact. When you know why you’ve wasted, you can take measures to prevent it from happening again.
18. Make sure inventory is up to date before taking deliveries
Anytime you know you’ll be taking deliveries, make sure you’re starting from a freshly verified count. This prevents the possibility of confusion when adding new stock in with what’s already on the shelves.
19. Create sections
Is your storage sectioned? Do you have a space for pastas, veggies, fruits and condiments? If you’re intermingling your produce and dry goods, inventory management is going to be a bit more difficult.
Sectioning your storage space not only makes inventory less cumbersome, but also makes it easier to instruct staff to get something from the storeroom. Instead of sending your employees on a scavenger hunt, a clearly defined section for each item makes it a breeze to retrieve items.
20. Group like items together
Counting boxes of cups is easier than counting shelves or individual cups, right? But for a busy worker who needs a 16-ounce juice cup (and who’s not thinking of that inventory check coming up later in the week), opening a new box instead of looking for an already open one seems like the quickest option. Remind staff that using open packages first is essential to a quicker inventory process. And don’t forget to tell them it makes their job easier in the end, too.
You’ll likely end up with two open boxes from time to time, but if your staff understands the importance of the process, they’ll think twice before tearing into a new box.
21. Make it habit
A step-by-step process increases inventory reliability and improves the consistency between different inventory takers. Your process should detail where the inventory taking should start and stop. And what works for one restaurant won’t work for all. Decide which style you think best fits. The options you can use include:
- Working clockwise and moving around the room, starting with the door as 12 o’clock
- Counting from front to back and top to bottom
- Counting the cooler first and then moving to the dry storage
You will find out that if you develop a system, your job will be easier to carry out. Once you’ve got your process down, you’ll be able to see at a glance how far through the inventory process your employees are just by stepping into the storage space.
Already doing all of the above and your inventory is still questionably accurate at best? Tired of scolding the individual who miscounted or mis-shelved? If you’re not, he or she probably is. Instead, try using positive reinforcement. Reward your most reliable and consistent inventory takers.
The incentive doesn’t always have to be in dollars and cents either, give your inventory taker a sharp looking new uniform shirt or reward employees with an hour off with pay. You’ll likely see a boost in enthusiasm as well as inventory reliability.
23. Don’t Ignore Unused Inventory
Your stockroom and pantry should be dynamic places. When they’re not, unused inventory is idle… taking up space… costing you money. So whatever you do, don’t ignore it. Taking inventory gives you a serious advantage— the opportunity to actually do something with items you have too much of.
Say you order 2 bags of salt a week like clockwork. Instead of blindly placing the order only for it to pile up in the stockroom, look at your inventory, adjust your order, and hang on to more of your cash. When you recognize a supply surplus, cut that item from your next order… and keep it cut until you’ve burned through most of your back stock.
24. Don’t Allow Food Waste
Food wastage happens. But one of the primary benefits of inventory taking is you can see how much you’re wasting. You then have a chance to curb waste in your restaurant. Empower your employees to feature surplus ingredients in daily specials. They can play an active part in preventing over-ordering-related food waste by selling specials. If you’ve found yourself with an extra case of frog legs, dream up a frog-leg containing appetizer to offer your diners.
Instead of printing special menus, have your servers verbally present the special to hungry patrons. You will not only put otherwise wasted food to good use…You’ll also remind your employees just how much the restaurant stands to lose from over-ordering.
25. Don’t Estimate Quantities
A lot of time, people who feel that they are “experienced” just end up making estimates instead of actually doing a count. For instance they may say “that looks like about 3 dozen eggs”, without actually opening the cartons.
This is totally unacceptable. An estimated inventory is of no use to a manager and to the restaurant at large. If you’re using an Excel spreadsheet or a manual paper count method… you do actually have to count each and every item, every time. If you’ve got just-the-right technology on your side, you can more confidently engage in calculated guesses, minimize the possibility of miscounts, and still have the financial numbers you need.
26. Don’t Fail To Investigate Theft
Even though you may not be a Sherlock Holmes, if your inventory suggests an employee (or maybe two) is stealing, you need to take action. The unfortunate fact is as much as 43% of retail loss (including the food service industry) is attributable to employee theft.
And shockingly, 75% of all employees report having stolen from an employer at some point in time. So how do you know if an employee is stealing? Watch for variance between your cost of goods sold and your on-hand quantities. If there is a difference, it doesn’t necessarily mean that someone is stealing… your chefs may simply be too heavy handed with an ingredient.
But it should trigger additional investigation… is this food waste or is this theft? Of course, if the items that keep coming up missing are your best bottles of wines or even your finest cuts of meat, you probably have a case of employee theft on your hands.
The fact is… even the best employee isn’t immune from temptation. If you’ve trained your employees on the importance of inventory, you may see an additional benefit: Showing your employees that keeping accurate inventory is a good way to keep their jobs.
27. Get Staff to Buy-Into inventory management
You know how important your inventory is… but do your employees know? If your staff do not understand how utterly critical inventory is to your restaurant’s health, they may not dedicate much effort to making sure they’ve got it right.
Take time to formally train your employees on inventory importance and practice. Your employees need to know that having accurate figures can improve your bottom line. And that directly impacts the restaurant’s success and their job security.
28. Schedule It On the Regular
When do you take inventory? If your answer is during your downtime, then that is not good enough. To make sure inventory actually happens, schedule a consistent time to take it each week. Maintaining a regularly set schedule improves the dependability of your stock count figures. Because you’re taking it at the same point in the week each week, you should see consistency between figures. Schedule inventory for the quiet time between lunch and dinner to make the process as painless as possible.
29. Complete Inventory Pre-Delivery and after a big delivery
If your stock room looks disorganized, you are far from alone. Even if you have a place for everything, and everything’s in its place… delivery day is going to be hectic. If you get your deliveries on Thursday, make inventory-taking a Wednesday task. Your inventory takers will appreciate this thoughtful gesture.
30. Perform Spot Checks
You can’t count each and every item each and every day. But you can pick a few to spot check from time to time. Select 4 particularly pricey items each week… or a few items on which you consistently seem to be running low… and inventory these products daily for a week. Spot checks are particularly helpful in situations where you already suspect certain items are going missing
The information you collect will give you a better idea of when the missing items may have walked out of the kitchen. When performing spot checks you should try to be unpredictable, so that you staff cannot guess the particular group of items you will try to take an inventory of.
31. Lock It Up
Treat your inventory like you do your cash. Because it does, in fact, represent dollars and cents. Keep your inventory’s reliability safe by keeping it locked up. With your inventory in a secured location, you can be rest assured that it’s not being tampered with and that your figures are just as dependable as they were the day you got them.
What do you keep under lock and key? Items that you care about most. If your staff sees you taking steps to ensure the security of your inventory, they’ll know how much you care about it… which can inspire them to care a bit more, too.
32. Don’t Buy Too Much
One of the easiest ways to keep your restaurant financially fit is to limit your inventory. But how much is enough? This question has plagued restaurateurs for years. You don’t want to tie all of your money up in inventory or risk losing lots of money due to spoilage. But you also don’t want to run out of your most popular produce or priciest proteins. It is advisable to keep your inventory at 1.5 times your weekly cost of goods sold.
33. Automate Your Inventory
There’s no way around it… you should be automating your inventory process. You don’t have time for paper-tracking sheets or manual spreadsheets… especially when the last 5 years have produced easy-to-use, affordable restaurant apps. Sure, there are lots of ways you can do inventory. But there are a few universal truths to consider when deciding which method is best. Spreadsheets are far from good in this modern age. There really is no other way to say it.
From tedious manual entry to time-consuming formula creation, spreadsheet-based inventory methods are full of tasks you simply don’t have time for. Apps will make your life a whole lot easier and there’s a financial benefit. By automating your inventory taking, you can do it faster… you can do it more accurately… and you can make the task simple enough that anyone can do it.
Do yourself and your business a solid favor, use an app or specifically designed software to take your inventory. The time savings, the simplicity, the ease of report pulling… all of these features will have you wondering why you waited so long. The modern restaurateur doesn’t have to go it alone when it comes to inventory taking. You can increase the efficiency and accuracy of your inventory by putting the right process and technology to work.
34. Develop a System and Train All Your Staff
To ensure a restaurant process becomes evergreen in your operation, train all your staff on it. Yes, it’s unlikely you’ll need your entire staff for every inventory check but the idea is that if necessary, anyone could jump in to help. Specific inventory items will vary from restaurant to restaurant, but train your staff on these universal inventory management terms:
- Sitting inventory: This is the amount of product (or dollars’ worth) you currently have in-house. Whatever increments you use, be they measures or dollar amounts, ensure you’re consistent everywhere.
- Depletion: This is the amount of product (or dollars’ worth) you’ve used within a set window of time. Set your windows to daily, weekly or monthly increments, and calculate using the sales data from your Point of Sale (POS) system.
- Usage: This is the amount of sitting inventory (or dollars’ worth) divided by the average depletion, within a set window. So, if you have 4 gallons of sauce in your sitting inventory and your depletion rate is a gallon a week, the sauce’s usage is 4 weeks.
- Variance: This is essentially the difference between your theoretical usage (usually “calculated” by your POS) and your actual usage. So, if you record beef usage at $100 in a week, and your POS “predicted” $90 your variance is $90(theoretical) – $100(actual) =-$10 or -10%.
- Yield: This is the percentage of a product that’s actually being accounted for in sales vs the theoretical amount that the POS says should have been used. Calculate Yield by taking your theoretical usage and dividing by the actual. In the last example: The theoretical usage is $90 and actual usage $100 or $90(theoretical) / $100(actual) = $0.90 or 90%
35. Manage Inventory regularly and consistently
Taking inventory isn’t a chore, so don’t treat is like one! The data you collect from your inventory management efforts will determine your menu and ultimately, your entire restaurant’s future strategy. In all you do: be proactive, regular and don’t wait till you’ve almost run out of something to respond.
Always take your inventory around the same time of day and around the same time of the week. If you don’t, slight inconsistencies will throw it off between sessions. If you go one month taking inventory in the morning, then the next take it in the evening, you’ll find inconsistencies in data. Performing inventory at the same time week after week ensures your data is as accurate and reliable as possible.
36. Enact a First in First out (FIFO) Mentality
FIFO stands for “first in first out.” It makes no sense to use new items to cook when there is still some left over batch. FIFO suggests that you use the older food in your inventory first, ensuring nothing goes bad.
These four letters make up the gold standard for all restaurant inventory management and ensure you’re economizing on your sitting inventory. To employ an effective FIFO strategy, label all your food with the date you received it and the date it expires. Use those foods that will expire soonest before the other foods and keep vigilance over what’s about to run out.
37. Take inventory after the restaurant has closed, or before it opens
You cannot take accurate inventory while goods are being sold. Whatever time you pick, stick with it. If you always take inventory on Tuesdays, but sometimes you do it at night and sometimes in the morning, there will be fluctuations in week to week results.
38. Clean out and organize your stock areas before taking inventory
Throw out items that have expired, move similar items to the same shelf and in general, tidy up.
- If you use scales to weigh inventory and measure portions, calibrate them weekly.
- Standardize what your unit cost is. The price of many items (like ground beef) changes week to week. Use the latest price paid as the standard. It is the easiest to find and remember
39. Raw Material Management
Managing the inventory smartly is essential to avoid wastage. Use these points to make sure that your stock is efficiently used.
- Try to adopt minimal stocking approach for your restaurant inventory, especially in the case of the perishables.
- Also, ordering only when required helps avoid wastage.
40. Recipe Management and Costing
Standardization and Management of Recipe are essential for proper inventory management as it helps in curbing food costs. In a standard recipe, the quantity of each ingredient to be used is specified; therefore the inventory management system can easily judge the number of days the remaining stock will last. Random use of ingredients leads to an imbalance in the stock and causes the stock to dry up before time.
Feed in your recipes in the POS software to assess the usage of raw materials with respect to sales. This leads to a lower pilferage in the restaurant. For bigger chains, it helps to guarantee the taste of the dishes as the recipes will be same across the outlets. You can also get an estimate of how much preparing a dish would cost you by the help of recipe costing feature.
You just have to feed in the recipe along with the portion of each ingredient, and the restaurant inventory management system gives you the food cost for that dish. This further helps you decide the selling price of that product. Ideally, the food cost should be 30% of the menu price or selling price.
41. Shelf Life Management
Shelf life management is an integral part of inventory management for restaurants. Each item in the inventory has a specified shelf life. Some items like rice can last for years, while some, like vegetables, can spoil very quickly.
Therefore, managing the shelf life of perishables is essential. For each of the items in the inventory, you can specify for how long they can be preserved and subsequently used, before getting spoiled. If due to slow sales or some other reason, the items were not used during that period, you will be notified that they have spoiled and should not be used for preparing dishes.
42. Reporting and Analytics
Reporting and analytics is yet another important feature of restaurant inventory management that helps in restaurant operations. The sales reports and the raw material usage helps forecast and create future plans. Profit and loss reports are generated depending on the stock sale and consumption. This feature further helps you to;
- Analyze inventory trends – You can analyze the inventory trends to make informed decisions such as deciding the menu. Detailed reports based on the consumption of each stock gives insights on which ingredient is the most popular, and needs to be utilized more in the recipes.
- Keep a track of stock and maintain accuracy – An accurate list of the available supplies helps you keep track of the daily and weekly usage
- Fine-tune your forecasting. Accurate forecasting is vital. Your projected sales calculations should be based on factors such as historical sales figures
43. Use cloud-based inventory management software
Look for software with real-time sales analytics. Look for a software that connects directly to your point of sale, so your stock levels are automatically adjusted every time you make a sale. Receive daily stock alert emails so you always know which items are low or out of stock so you can order more in time.
44. Link quality control to inventory management
Employees should be provided with checklists and/or computing systems that can assist them in following proper procedures when checking the goods they receive. All goods must be examined for signs of damage, including leaks, tears, or broken seals; discrepancies in descriptions – product colors, styles, and sizes must be identical to purchase orders; and prices and terms of sale. If product quality is lower than agreed upon, the item should be returned to the supplier. This measure also avoids unnecessary increase in stock levels.
45. Reexamine your safety stock
Sometimes restaurant managers may wonder on the quantity of stock that their pantry must not fall below. The simple answer is zero. Safety stocks are only useful if they are used. The whole point of safety stock is to protect against expected variations in demand and supply.
If you never use your safety stock, you have too much. On average, you should be below the safety-stock level half the time when replenishment is available, and above it the other half. If this is not the case, you need to re-examine what products you keep in each location to get the most from your inventory dollar.
46. Plan your storage space
Every inch of the pantry needs to be planned to maximize storage space. It is one of the best inventory management practices that can be implemented without much cost. The space has to be organized in such a way that allows for quick and smooth carrying of goods. There must also be adequate space for people to move around.
Finally you should be obsessed over your data. If you follow all these steps, you’re going to find that you’ve got a handle on your business like you never have before. You’ll be able to compare your usage with what you forecast and make adjustments to your purchasing accordingly.
You’ll know what’s coming in, what’s on its way out, what was wasted, who wasted it—the list goes on. When you obsess over your data in real time, you’ll have a better idea of how your business operates, of what it costs you, and of ways to save money.
In fact, the whole inventory exercise as a whole gets you closer to your business. The flow of inventory from the delivery door in the back all the way to your customers’ stomachs will become a clear picture, and you’ll be armed with the data to keep it that way. Having good software helps, but you’ve got to commit to doing it. The food in your kitchen is revenue waiting to happen, but it’s also an expense you’ve already paid for. Don’t overlook it.