Restaurant Inventory Management is important for success. It reduces waste and boosts profits by handling perishable food well. Restaurants often waste about 10% of their inventory. Automated systems can further reduce mistakes, saving time and costs. According to Food Waste, Last year, restaurants could have cut food waste by over 66%. Vegetables were the biggest waste, making up 11%, followed by bread at 9%, meat at 8%, and potatoes at 7%.
It’s the weekend, and you and your companion get the last available table at the leading restaurant. The ambiance is joyful, the smells are amazing, and the staff serves scrumptious dishes.
Successful restaurants from food trucks to kitchens depend on good inventory management. It’s the secret ingredient to managing stock and crafting outstanding menus.
The following blog post shares how companies can put inventory control into action.
Table of Contents
Understanding Restaurant Inventory Management
Restaurant inventory control is about ordering the right amount of stock. You need enough food for customers but not so much that it spoils before you use it. Track food as it arrives, use it, or waste it with good inventory management.
While you can manage inventory with spreadsheets, inventory management software makes it easier. The software can track your stock more precisely. It also provides important data and can reorder items when needed.
A restaurant’s inventory management does 3 main things:
- Manages food costs
- Monitors ingredient amounts
- Reduces food waste
According to Bloomberg, restaurants are struggling, especially the small ones in the U.S. with millions of employees. OpenTable reports a 99% drop in reservations compared to last year. Bookings have dropped almost completely. In our first part, we talked about loans and rent. Now, we’ll look at ways to help and new strategies to try.
Katherine Miller from the James Beard Foundation says the restaurant community is strong and will recover.
- Go Beyond Takeout
Samantha Safer from Otway in Brooklyn found takeout costly and less profitable. Now, she sells bread, coffee, and wine on weekends and uses Instagram to promote her business.
- Avoid Delivery Apps
Delivery apps charge high fees. Danny Schwartzman of Common Roots Café now offers contactless grocery and food deliveries. He manages this with a small team, this approach helps keep his business going.
- Try the Tock to Go App
Nick Kokonas from Alinea Group uses Tock to manage pickup and delivery times and track inventory. It helps restaurants handle orders and supplies better.
What Counts as Inventory in a Restaurant?
Inventory in a restaurant includes everything you need to serve customers. This includes not only food, but also cooking equipment, linens, and even employee uniforms. It’s helpful to track these items in categories like food, beverages, and non-food items.
Examples include:
- Food and dry goods
- Spices and seasonings
- Beverages, including alcohol
- Cooking equipment
- Linens and tableware
- Employee uniforms
According to Netsuite, Good inventory management helps restaurants keep track of how much food and supplies they need, like spices, equipment, and uniforms. It also helps them use perishable items before they spoil. Managing inventory well can reduce waste, lower costs, and improve relationships with suppliers. It also enhances customer experience and increases profits.
Here’s an example:
Megan runs Basecamp Brew, a cafe that serves drinks and sandwiches. She’s having trouble keeping ingredients in stock, which leads to unhappy customers, lost sales, and lower profits. To fix this, Megan should:
- Organize Inventory: Label shelves to make restocking easy. Keep used items in an accessible spot. Use the “first expiring, first out” (FEFO) method for perishables.
- Maintain Low Stock Levels: Use a simple inventory sheet to track what’s needed, and keep waste to a least.
- Track Sales: Calculate how much of each item you sell over time and check your inventory. Have two employees double-check each other’s work.
- Use Technology: An inventory system linked to her POS can automate reordering. It can also provide insights into sales and forecast demand. Additionally, the system can create useful reports.
By doing this, Megan can keep her cafe running smoothly and keep her customers happy.
Benefits of Good Inventory Management
Adequate inventory management aids you keep the proper amount of food and supplies. This confirms you can serve all your customers without running out of ingredients or letting food rot. Restaurants that handle their inventory well are more likely to be flourishing.
- Reduce Food Waste:
Restaurants waste up to 10% of food before it reaches customers. Managing your inventory helps reduce this waste.
- Lower Costs:
Food costs make up twenty-eight% to thirty-five% of a restaurant’s total expenses. By reducing waste, you can reduce your costs and raise your revenue.
- Better Vendor Relationships:
Tracking your inventory helps you manage orders and payments to vendors.
- Automated Restocking:
With inventory management software, you can reorder items when stock is low, avoiding overstocking.
- Happier Customers:
Consistent inventory means you always have the ingredients needed to serve your full menu, keeping customers satisfied.
- Higher Profits:
Reducing waste means spending less and getting higher returns.
8 Restaurant Inventory Management Best Practices
- Organize Inventory: Tag racks to make items easy to locate and refill. Keep used items in the exact location.
- Keep Stock Levels Low: Use an inventory management system to keep enough stock to fulfill demand without overcrowding.
- Track Sell-Through Rate: Track how much of each item sells during a set period to adjust inventory levels accordingly.
- Track All Inventory: Track every item your restaurant uses, with more regular checks for perishable goods.
- Safeguard Against Mistakes: Have two employees manage inventory to double-check each other’s work.
- Employee Accountability: Train your staff to track inventory and involve them in the process.
- Automate Reordering: Use an inventory system to reorder items when stock levels are low.
- Use Technology to Forecast Demand: Use software to predict demand based on trends and seasonal factors.
8 Tips for Managing Restaurant Inventory
- Recipe Costing: Calculate the exact cost of each recipe.
- Menu Engineering: Assess menu items’ popularity and cost to optimize pricing and ingredients.
- Use Surplus Food: Use excess ingredients in new recipes to avoid waste.
- Bonuses for Reduced Waste: Reward employees for reducing waste.
- Adjust Product Mix: Balance high-performing, profitable items to keep the business flourishing..
- Daily Inventory Tracking: Track high-use items daily to manage waste better.
- Daily Sales Tracking: Keep a daily overview of sales to spot issues early.
- Prevent Employee Theft: Implement strategies to reduce theft, such as monitoring inventory and sales closely.
Restaurant Inventory Terms
- Sitting Inventory: The total amount of product on hand, measured in dollars or units.
- Depletion: The amount of product used over a period.
- Usage: How long a product will last before it runs out.
- Variance: The difference between expected and actual usage.
- Yield: The ratio compares sold products to what you used.
- Cost of Goods Sold (COGS): Total inventory cost after accounting for purchases and leftover stock.
- Dead Stock: Products that aren’t selling and may waste space.
- Par Level: The ideal amount of an ingredient needed to fulfill orders.
- Catch Weight: Measurement for natural products with varying weights.
- First In, First Out (FIFO): Use older ingredients first to avoid wasting food.
- Inventory Turnover Ratio: The index measures how much of the purchased stock you sell during a specific period.
How Much Food Inventory Should a Restaurant Carry?
Restaurants need less inventory than other businesses since they use fresh ingredients. Items like canned goods, flour, sugar, and rice last longer. You don’t need to replace canned goods, flour, sugar, and rice as often. Use perishable items within a week.
To manage inventory, calculate your monthly turnover. Split the cost of sales for the month by the average inventory on hand. For instance,
If you use $24,000 a month, your whole inventory should be between $4,000 and $6,000. This range suggests you’re turning over your inventory four to six times a month. If your inventory cost drops beyond this range, it might mean you have too large or too small an inventory.
What Is Restaurant Inventory Control?
Restaurant inventory control involves managing your food and stock to prevent spoilage and loss. It helps you decide when to reorder items. Inventory cost accounting is figuring out how much inventory to carry while minimizing costs, including storage and administration.
Conclusion
Restaurants need a system to control inventory, reduce costs, and track sales. Restaurant owners need a solution to manage their business better and increase profits. Whether you need a new inventory system or one that fits into your current setup, EA can help.
Expertise Accelerated inventory management services solve this problem. By using EA’s offshore inventory management experts, even new businesses can enjoy having a skilled inventory manager. SMEs can also rely on Expertise Accelerated to hire outsourced accounting professionals. This lets restaurant owners focus on key decisions while EA handles bookkeeping and accounting. EA’s unique staff augmentation model allows you to bring global talent into your team without the usual hiring hassles. Additionally, you gain the benefit of working with CEO Mr. Haroon Jafree, who has extensive experience in the CPG industry.
You don’t have to problematize managing restaurant inventory. By following these easy tips, you can diminish waste, control costs, and improve your profits.
