A Step-By-Step Guide on How to Manage Inventory in a Restaurant

As restaurant menus continue to get more extensive to attract customers, food prices continue to rise further, leaving most restaurants in the dining industry to struggle with the rocketing costs and food spoilage. That being said, a very high proportion of restaurants still fail to realize the importance of efficient inventory management as a key element of business success, and an effective player in combating rising food costs. The main purpose of conducting inventory counts is to calculate the amount of food, supplies and other products your restaurant uses over time, which can eventually be converted to cost of goods sold and facilitate a profit and loss analysis.

Follow this simple guide to establish an efficient inventory management system for your restaurant.

Step 1

Inventory management begins with revealing the numbers. To establish baseline knowledge of what you have at hand on your shelves and in your fridge, carry out a complete inventory count. 

Step 2

Having a well-organized inventory management system can make every aspect of the process rampantly easier. Do your research homework and set up an inventory management system most suited to your restaurant. There is a whole plethora of restaurant inventory management systems, each with its own pros and cons. It is essential to find a solution that’s compatible with your ordering, recipe, and invoice systems in order to easily monitor your cost of goods sold (COGS), stock valuation, and inventory trends.

Fully-integrated software solutions, such as the designed by eRestaurant, can prove to be instrumental in proficient inventory management. Not only do they combine the restaurant’s POS system with an ordering/shipping system but also offer the added advantage of an electronic physical inventory system.

Step 3

Restaurant inventory management only begins with setting up an appropriate management system. Regardless of the type of system you choose, make sure your business is deriving the maximum amount of efficiency from your inventory management system.

By establishing a procedure on managing and controlling inventory, you can ensure utmost returns from the arrangement. Set up a consistent schedule on the frequency and timing of an inventory count, daily or weekly for example, and enforce it. Frequent inventory checks are not only important to avoid food spoilage, but tracking your inventory perpetually through periodic physical counts also facilitates the comparison of stock figures to your general ledger balance.

Step 4

Train your team, even if you don’t intend to use them to conduct the stock count, so that everyone fully understands the process associated with this control element. Make sure your staff is adequately trained on the inventory procedure as your inventory management system is only as good as the people executing it. Even the most amazing management systems may fall short if your staff is unable to execute an accurate and consistent inventory count.

Step 5

Follow this step as if it is right out of a scripture: Instead of simply tucking away past inventory results, review them, and identify the particular products that face regular overstocking or backlogging issues.

After tracking the inventory for an extended period, you will be able to find an emerging pattern. Use it as a trend to compare actual usage with theoretical usage and investigate the stock variances. Competent inventory management solutions, like those proposed by eRestaurant, let you observe such patterns by laying them all out, this accelerates strategic decisions. 

While, inventory variance is a completely normal aspect of the restaurant business, significant variances from expected usage may indicate theft and should therefore be examined. Inventory management solution by eRestaurant is able to do this without much effort with a few simple clicks.

Repeat steps 4 and 5 to ensure the efficiency and consistency of your inventory schedule in order to be able to always see the stock variances. Effective inventory management is integral to your restaurant’s success as it minimizes product loss, determines the ordering process, and translates into costs and sales figures.

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