Restaurant inventory management is a crucial part of running a restaurant. If you don’t know what inventory you have on hand, you could run out of customer favorites or over-order certain food items. You could also find discrepancies in your accounting software or system if you don’t have the details of your stock and its comings and goings.
Restaurant owners must keep a close eye on their inventory to avoid this type of problem.
But if you don’t know where to start with restaurant inventory management, don’t worry. We’re here to help you with this comprehensive guide. We’ll explain what inventory management is, why it matters, and how you can set up a system that works for your business.
Restaurant inventory management means keeping track of all your inventory — what you have in stock, what’s been sold, and how you’re storing it. It’s an integral part of restaurant management because it allows you to monitor what you need to order, how much, and when.
Managing your inventory turnover means you’ll know exactly how much product you have, how much you use each day, and how much is going to waste.
Inventory tracking is vital in all business areas because it lets management staff keep an eye on precisely what they have in stock. It can also help restaurant managers better understand their food costs and overall cash flow, which could in turn help them improve their bottom line and increase profit margins.
A sound restaurant inventory management system can also help restaurant owners understand which menu items are most and least popular; you’ll find yourself placing orders more often for more popular items to meet customer demand. Tracking this data can help you plan the next season’s menu.
Managing inventory levels is particularly important in the restaurant industry because restaurants have high quantities of perishable items. Ordering only what you need helps to reduce waste — of both food and money.
Food waste is a big issue in the U.S., with an estimated 30%-40% of all food being wasted. Fluctuations in your restaurant orders are normal, and some waste is to be expected — but tracking your inventory more closely could both help the environment and maximize long-term profits.
Now that you know why you should be tracking your restaurant inventory, you might be wondering what you specifically need to track.
It’s not as simple as just writing a list of ingredients you need to order. Effective inventory management means tracking the following:
All fresh or perishable food items
All dried and canned food items
Spices, sauces, and seasonings
Drinks — both soft and alcoholic
Front-of-house supplies, such as napkins, tablecloths, and cutlery
Back-of-house equipment, such as pots, pans, wooden spoons, plates, and bowls
Plus, in addition to tracking your inventory, you must keep an eye on the expiration dates of all your food items. This is essential for adhering to health and safety regulations, but it will also ensure that the food you serve your customers is as fresh and delicious as possible.
There are a few different ways of keeping track of inventory items, each with pros and cons. Here are three inventory management systems for you to choose from. Think about which would work best for your business.
The simplest method of restaurant inventory management is to take inventory manually by doing it yourself (or by assigning it to specific staff members). You can track your inventory using a dedicated inventory sheet or Excel spreadsheet.
Start by counting your beginning inventory — what you currently have in stock. Keep track of your daily sales, spillage, and spoilage of any sitting inventory. From this, you can work out your projected ending inventory for each day, week, or month, then manually count whether your stock levels match your expectations.
You should also keep track of the expiration dates of all foodstuffs. Remember to check your walk-in fridge and dry storage area. Toss out anything past its use-by date, and mark this on your inventory sheet as spoilage.
Manually tracking your inventory like this is easy enough, and you won’t have to pay for any software. However, there are a couple of downsides:
Time: Manual inventory control is very time-consuming. It could also increase your labor costs if you need to account for time spent on inventory management.
Human error: Manual inventory sheets are highly susceptible to human error, so you could make mistakes that negatively impact your business — whether financially or in terms of customer satisfaction. Mistakes like this can be costly whether you’re a large or small business.
A practical alternative to manual inventory tracking is to bring tech into your business with restaurant inventory software. By automating your food inventory management system, you’ll get:
A real-time inventory count
Metrics to help you track your inventory data
Detailed inventory reports to help you understand the bigger picture
A streamlined approach to inventory management
There are several types of software to track your inventory levels. Some even have purchase order management integration, meaning the software can automatically send emails to the relevant vendors to reorder items that are running low. Automatic ordering functionality like this can be convenient for large restaurant companies without cash flow issues, but it might not be a good option for small restaurants that need to keep a close eye on their inventory costs.
Different inventory management software will offer a variety of functions. Some may include the following features:
Recipe costing: Get a full breakdown of the cost of goods sold (COGS).
Cloud-based systems: Enjoy easy access to your inventory management tools while on the go.
Vendor management tools: Receive real-time alerts to see when your vendors process your orders.
The right software for your business will depend on what tools you need — the smaller your business, the less functionality you’ll need.
Suppose your budget for restaurant operations software is low, but you want to reduce human error through automated inventory management. In that case, you can use your point-of-sale system (or POS system) for specific restaurant inventory management tasks.
Many types of POS software have inventory management tools built in. Square’s Restaurant POS, for example, offers essential inventory management tools to help you keep on top of your inventory. You’ll receive alerts when items are running low, and you can manually adjust reports for issues like spillage, spoilage, or loss.
You can even use this functionality in conjunction with self-service kiosks. Any items sold out due to low inventory on your Square POS will be marked as unavailable on your self-service tablet screens. Plus, as customers order in-stock items, your stock counts will update in real time.
Working with your POS’s functions means you can enjoy the benefits of inventory management automation without having to pay expensive premiums for additional software.
Restaurant inventory management is essential to day-to-day operations within the restaurant industry. If you’re in charge of business decisions within a restaurant, you’ll need to choose the right inventory management tools to simplify and improve the accuracy of the process.
An app like KioskBuddy can help owners easily set up self-service kiosks at an affordable price. All you need is a tablet, a Square Kiosk mount, and the KioskBuddy app. With that mighty trifecta, your kiosks will be up and running in no time. Plus, KioskBuddy synchronizes with Square Inventory Data, so you can:
Update your stock counts in real time as customers place orders.
Set stock thresholds to prevent over-selling.
Automatically mark menu items as “sold out” when stock runs out or hits your stock threshold.
Sign up for KioskBuddy today and enjoy a 30-day free trial.