Tips for Proper Inventory Management in Restaurants

Monitoring all of the ingredients and supplies in the kitchen allows management to procure real-time data that helps to make better business decisions.

When there is a deeper understanding of inefficiencies and bottlenecks, restaurants can implement better inventory control practices to increase their profit margins and cut back on waste.

Here is a step-by-step guide to developing an effective restaurant inventory management system along with various techniques to streamline the process.

How to Develop a Restaurant Inventory Management System

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While there is no one correct way to develop an inventory management system, there are some best practices to start.

To effectively track inventory, take the following steps-

1. Create a Table
Use an inventory sheet or a customized inventory software solution to create five rows and label them accordingly-

  • Items
  • Measuring Unit
  • Inventory Amount
  • Unit Price
  • Total Expense
2. Document Items
Record all of the separate food inventory in the item column. This encompasses everything from restaurant food to a kitchen display system to cleaning supplies to silverware.
Make sure to review and track all of the required products and ingredients that help produce each menu item for the customers.

3. Include Unit Measure
Record the quantity of each item and how it will be measured. The measurement units will depend on how much food is sold and how the restaurant purchases its items from suppliers.

For instance, vegetables are often bought in pounds and spaghetti in boxes. Documenting the measurement units will help avoid confusion at later points of the process.

4. Count and/or Measure Items
Calculate the number of units of each item and put them in the Amount column. This will systemize all of the measurements and simplify the process of calculating expenses.

For instance, if there are 30 pounds of onions, it should be written on the column as 30. 4 boxes of spaghetti should be written as 4, and so on.

5.. Record the Unit Price
Write down all of the unit prices in the appropriate column on the inventory sheet. To perform these calculations, divide the cost of the price of one unit by the amount on-hand of that item.

For example, if one pound of lettuce costs $3 a pound and there is 1 pound in stock, then the unit price is $3.

6. Estimate the Total Daily Expenses
Now it's time to calculate the daily total food costs and inventory expenses. Divide the total stock cost for a particular purchasing time frame by the number of days in that time frame.

Total Inventory Expenses = Total Inventory Cost Per Time Frame / Days in That Time Frame

For illustration-
Total Inventory Cost for 50 Days = $100,000

Days in Time Frame = 50

100,000 / 50 = $2,000 Total Inventory Cost Per Day

7 Tips to Manage Inventory in a Restaurant

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Restaurant owners know that effective and accurate stock management will help save time, money, and improve the bottom line. Make sure to implement a full-service inventory management system by following these techniques-

1. Implement a POS System and Take Inventory by Hand
A restaurant POS system has predictive functionality, reporting capabilities, accounting integration, and automatic inventory tracking.

However, a point sale system does not take spoilage, inefficient kitchen prep, or a missed food truck delivery into account.

Unless a manual inventory count is inputted and any discrepancies documented, the POS system will not automatically know. Utilizing both a POS system and a handwritten system will ensure every inventory-related event is recorded.

2. Train Staff to Track Inventory Consistently
Appoint a few workers to perform inventory counts to make it easier to identify problem areas and inefficiencies.Because the same employees will be tracking inventory, it will be easier for them to find patterns and variations in the stock over time.

Consider providing a bonus to those workers who accurately track inventory over a given time frame. This will boost morale and encourage workers to take inventory management seriously.

3. Keep a Schedule
Follow a strict inventory schedule to know how many supplies and foods are used within a particular time frame. This will help to decipher patterns over time and promote more streamlined ordering processes in the future.

4. Use the FIFO Method
Use the first in first out method to organize the kitchen inventory and cut back on food waste. The FIFO method states that the first ingredients placed on the shelves or refrigerator should be the first ones used and vice versa. This will mitigate any spoilage, save money, and optimize kitchen organization.

5. Create a Food Waste Sheet
Utilize a waste sheet to analyze how ingredients are used to come up with ideas to minimize food loss. For illustration, if the sheet shows that one particular food item tends to spoil, owners can focus on better menu management to stop overordering that item in the future.

A point of sale system may allow users to input real-time food waste information digitally but management can also include it on their food waste sheet. They will want to input-

  • Time and date of waste
  • Item name
  • Quantity or Weight
  • Cause of Waste
  • Employee Signature
6. Make Good Use of All ingredients
If there are surplus ingredients stored in the kitchen, incorporate them into existing menu items and let customers know if there are any changes.

Or, introduce a special of the day where all of the extra ingredients are used for a specific menu item. This will avoid waste and save money for ingredients that would otherwise be thrown away.

7. Use Historical Inventory Data for Future Orders
Research in which inventory items and ingredients were overused or underused in the past to improve future orders.

This will help to make evidence-based ordering decisions in the future instead of using instinct and guesswork. Knowing daily/weekly inventory levels will give a better idea of inefficiencies so management can make improvements.


In conclusion, here are the key takeaways to remember about inventory management in restaurants-

  • Proper inventory tracking will improve efficiency, streamline the ordering process, and allocate resources more effectively.
  • To track inventory, create a table, document items, include unit measures, count items, record unit prices, and estimate the total expenses.
  • Best practices are to use a POS system, train staff, keep a schedule, use the FICO method, implement a food waste sheet, use all ingredients, and analyze historical data to make better business decision.

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