If you’ve spent any time on the operational side of a restaurant, you know that inventory management is a main ingredient. It ensures item availability, avoids last-minute runs to the grocery store, and keeps patrons happy. When customers get excited about a dish on the menu only to be told it’s been eighty-sixed, it’s a recipe for disappointment — and possibly a bad review.
Strong restaurant inventory management avoids worst-case scenarios and keeps kitchens running smoothly. Here’s how to implement it.
Understanding food inventory management
Managing a restaurant’s inventory involves closely monitoring the ingredients and supplies that establishments use every day. The process includes tracking items in stock, identifying what’s running low or nearing its expiration date, and placing orders so menus stay fully operational.
Counting the items on the shelves is one step, but managing inventory is more complex than knowing what you have. You also need a system in place that highlights usage patterns, forecasts demand, and strikes the right balance between overstocking and understocking. The result? High-quality dishes, minimal food waste, and happy customers who rave about your restaurant.
Key restaurant inventory terminology
Restaurant management has its own vocabulary, especially when it comes to inventory. Here are some of the key terms to know.
Cost of goods sold
The cost of goods sold (COGS) is the total cost of all the ingredients and supplies used to prepare the dishes you serve. Tracking COGS shows how much it costs to produce menu items — a vital metric for pricing dishes effectively and earning a profit.
PAR levels
Periodic Automatic Replacement (PAR) levels represent the minimum quantity of each item you need at any given time. They should include how much stock and supply you need for every service, as well as a buffer in case things change. Once you know what you need, you can set reorder points, which show when it’s time to place a new order to avoid stockouts of key ingredients.
Sitting inventory
Sitting inventory is the stock you currently have on hand. Assessing it regularly identifies what’s available and what needs replenishing.
Usage
Usage tracks how much of each ingredient or product you use over a specific period of time. Monitoring this helps you spot patterns and identify what quantities are necessary to run the restaurant, leading to data-driven ordering decisions.
Variance
Variance is the difference between the inventory numbers in your records (based on usage and purchases) and the inventory there actually is on the shelf. A high variance could be a sign of issues like waste, theft, or recordkeeping inaccuracies.
7 benefits of food and restaurant inventory management
Let’s take a closer look at what solid inventory management can do for your restaurant.
1. Enhanced product quality
Have you heard the saying, “Garbage in, garbage out?” It refers to how poor ingredients lead to poor outputs — but the opposite is also true. High-quality ingredients elevate food’s taste and presentation and keep your restaurant’s reputation for top-notch meals intact. Managing inventory ensures that only the freshest ingredients make it to the plate.
2. Reduced waste and food costs
The best-managed restaurants order just the ingredients they need and use them before they go bad. One of the most common ways to achieve this balance in the food and beverage industry is with the first in, first out (FIFO) method, which uses expiration dates to track stock and use older ingredients first. The FIFO method avoids throwing money away on spoiled or unused products, eliminating food waste and cutting costs.
3. Increased productivity
An effective inventory system gives employees what they need to do their jobs, streamlining kitchen operations, boosting efficiency, and allowing everyone to focus on what they do best — preparing and serving great food that keeps customers coming back.
4. Improved customer satisfaction
When you always have necessary ingredients and supplies on hand, you won’t let diners down. Consistently delivering on menu promises — and doing it well — earns strong reviews and turns first-time visitors into regulars.
5. Data-driven decision-making
Managing inventory with data-tracking software provides valuable information on usage patterns and food costs, leading to more informed decisions about purchasing, menu planning, and pricing. This data-driven approach helps you optimize operations and improve profitability.
6. Better vendor management
A reliable supply chain reduces the risk of running out of key ingredients or receiving low-quality items that you can’t serve. With a solid inventory management system, you can track supplier performance, negotiate better deals, and ensure deliveries arrive on time.
7. Increased profits
At the end of the day, better inventory management means bigger profits. By cutting food costs and reducing waste, you set the restaurant up for long-term financial success.
8 quick tips for effective restaurant inventory management
It’s hard to track inventory without a system in place. Setting guidelines and standards helps everyone on a restaurant’s team keep tabs on what’s in stock and what needs replenishing, leading to more effective operations.
Here’s how to make your new system the best it can be:
- Create an inventory consumption sheet: Use an inventory sheet to track daily usage, or depletion, better understand consumption patterns, and adjust ordering strategies accordingly.
- Establish reorder points and safety stock levels: Reorder points avoid stockouts and help you set PAR levels to protect against spikes in demand.
- Leverage technology and automation: Automated systems optimize inventory receiving, putaway, and storage to keep things organized and easy to access.
- Perform regular inventory checks: Conduct routine physical inventory counts to maintain accurate records and catch discrepancies early.
- Track important performance metrics: Monitor key performance indicators (KPIs) like COGS, food waste, and variance to assess your inventory management processes and set goals accordingly.
- Train staff on proper inventory practices: Teach every team member the importance of accurate inventory management and train them on best practices. Everyone will be on the same page and can more easily work together.
- Implement precise forecasting methods: Historical data and trends help you predict future demand and adjust inventory levels for maximum accuracy.
- Invest in inventory management software: Use tools like Fishbowl to streamline operations, automate tasks, and provide real-time inventory level insights.
Key features of food and beverage inventory control software
There’s no shortage of food inventory software solutions out there. Here are the key features to look for when choosing one.
Lot and batch tracking
Lot and batch tracking capabilities monitor specific groups of ingredients — from receipt through usage. This helps you manage perishable items and trace any issues back to their serial numbers.
Tracking and monitoring expiration dates
Automated expiration date tracking avoids spoilage, reduces waste, and maintains product quality. The right software alerts you when items near their expiration dates so you can prioritize their use and prevent losses.
Quality control parameters
Quality control features let you set and monitor standards for ingredients and supplies. With the right software, you can be sure that every item meets quality requirements, leading to consistent, high-quality dishes.
Real-time inventory visibility
You can’t make informed decisions without accurate, real-time information. Solutions like Fishbowl provide up-to-the-minute data on what’s in stock, what’s running low, and what you’ve ordered, avoiding disruptions and managing inventory more effectively.
Compliance and regulatory support
Compliance with food safety regulations is non-negotiable. Your inventory control software should support compliance by tracking necessary documentation, managing allergens, and providing detailed reports that you can easily generate for audits and inspections.
Streamline your inventory management with Fishbowl
Fishbowl’s all-in-one inventory management solution handles tracking so you can focus on operations. It can help you navigate audits, streamline your supply chain processes with precision, and make sure your restaurant stays compliant with industry regulations. The platform even integrates with QuickBooks to reduce the need for double data entry and promote financial visibility.
Are you ready to take control of your restaurant’s assets and gain end-to-end visibility over your operations? Schedule a demo today.