Ever wondered why there are restaurants that always seemingly know what to make and ones that are either out of the primary ingredients or even forced to clear bad food?
Not only are they good cooks, they are good at inventory management. Inventory management is not only trendy in the stock market in 2025 (Clear COGS), but it is actually a strategic move that will or will not make any restaurant profitable.
Some of the considerations are as follows: The average restaurant is losing 10 percent of its inventory per annum. That is not much to be heard; the previous year was more than 66 percent of the food waste that cannot be avoided with merely improving the inventory management (Food Waste 2025).
The largest offenders were vegetable disorders (11% discarded food), bread (less than 9%), meat (8%), and potatoes (7%). In a full-fledged restaurant, such figures would include lost revenue, customers who are not satisfied, and unnecessary costs of operation (Supy).
It’s a busy weekend night. The last table of the most rated restaurant in the city can be occupied by you and your friend. The vibration that is in the air, the odors are irresistible, and everything is cooked to perfection. Such a wonderful system of dining is the stage of an effective oil inventory system that ensures that all ingredients are fresh, all meals are delivered in time, and wastages are reduced.
Effective restaurants, whether it is a high-traffic food truck or a high-end kitchen, are based on shrewd inventory management. The witchcraft is what makes the kitchens run like clockwork, menus as bendable as possible, and profits healthy.
In this blog, the discussion will cover how restaurants can apply effective methods of managing the inventory, saving money, and leaving each customer happy, one plate at a time.
Restaurant Inventory:
The inventory management in a restaurant has to deal with the ordering of the right level of inventory. You should have enough food that the customers do not run out of it and also not too much that it goes to waste before you make use of it. Keep a track of the food consumed, disposed or eaten because of good inventory management.
Inventory management software is easier than managing inventory using spreadsheets. Your stock can be traced more efficiently with the help of the software. It is also used to give valuable information and can rearrange things as required.
The inventory management of a restaurant accomplishes 3 main things:
- Manages food costs
- Checks the contents of ingredients.
- Reduces food waste
Bloomberg reported that restaurants are not doing well, particularly the small restaurants located in the U.S. with millions of workers. OpenTable writes that the number of reservations has fallen by 99 percent since last year. Reservations have reduced to virtually zero. The first section discussed loans and rent (The Economist). We will now discuss how to assist and what new ideas can be attempted.
According to the James Beard Foundation’s Katherine Miller, the restaurant community is resilient and is going to bounce back.
Go Beyond Takeout
Samantha Safer of Brooklyn Otway noticed that takeout was expensive and not profitable. However, she now sells bread, coffee, and wine on weekends and advertises her business via Instagram (Gauth).
Avoid Delivery Apps
Delivery applications are expensive. Common Roots Café is another example of a company that provides contactless grocery and food deliveries by Danny Schwartzman (Star Tribune). He does this with a small staff; this is a strategy that is used to keep his business running.
Try the Tock to Go App
Nick Kokonas of Alinea Group relies on Tock to handle pickup and delivery times and inventory. It assists restaurants with better order and supply (Antoine Buteau).
Restaurants with stronger inventory management practices experience significantly lower food waste, highlighting a clear negative correlation between inventory discipline and operational losses.
What is considered Inventory in a Restaurant?
The inventory of a restaurant is all that you can serve clients with. This is not just about food, but also cooking utensils, fabric, and even uniforms worn by the employees (Sculpture Hospitality). These items are useful to keep a record in terms of food, drinks, and non-food items
Examples include:
- Food and dry goods
- Spices and seasonings
- Drinks, alcohol among them.
- Cooking equipment
- Linens and tableware
- Employee uniforms
NetSuite argues that good inventory management aids restaurants in knowing the quantity of food and supplies that they require, such as spices, equipment, and uniforms. It is also a way for them to consume perishable goods before they go bad (Sculpture Hospitality). With good inventory management, waste can be minimized, and the cost is reduced, as well as the relationships with suppliers can improve. It boosts consumer experience and earnings as well.
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 (Wapi). 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 in keeping 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 flourish.
Reduce Food Waste: Restaurants waste up to 10% of food before it reaches customers. Managing your inventory helps reduce this waste (Supy).
Lower Costs: Food costs make up 28% to 35% 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 Tips on Restaurant Inventory Management.
Inventory management does not only mean counting ingredients, but also means management of costs, losses, and waste, and a well-managed restaurant. The following are eight effective ways that can assist restaurants in maximizing their stocks in 2025.
Recipe Costing
It is important to know the precise price of each dish. The restaurant can determine how much each ingredient costs per dish and thus be able to serve their menus at the correct price to generate profit and ensure they do not purchase too many of a particular item. The proper costing of recipes is also used in planning the menu and managing food costs in the high seasons (Meez).
Menu Engineering
Not everything on the menu is equal. The menu engineering is a method of studying the popularity and profitability of each dish so that you can maximize what you are offering. Knowing which foods have a high margin, and which are not performing, restaurants can use the information to change the prices, the portion sizes, and the use of ingredients to improve the overall receipts (Liven Love).
Use Surplus Food Creatively
Waste is a hidden cost. Surplus ingredients can be used to make new dishes or daily specials to reduce wastage in the restaurant. As a case in point, the remaining vegetables may be incorporated into soups, sauces, or stir-fries, and their potential losses may be transformed into business gains (Liven Love).
Bonuses for Reduced Waste
Incidents of waste among your employees. Institute employee incentive programs or bonuses for any employee who limits waste by handling it carefully, portioning it, and creatively using the leftovers (Liven Love). The culture of accountability and efficiency is nurtured by rewarding mindful behavior.
Adjust Product Mix
Make your menu dynamic and not centered on unprofitable and low-performing products. Evaluate the sales frequently to maintain a balanced product mix that is able to meet the customer demand and maximize the profit margin. This will eliminate overstocking on slow-moving ingredients and minimize spoilage.
Daily Inventory Tracking
Record the high-use ingredients each day to maintain control of your inventory. Shortages, overstocking, and spoilage are avoided by daily checks. In 2025, digital inventory systems can help streamline the tracking and send alerts when the stock is low, and offer accurate real-time information that may be used to make better decisions.
Daily Sales Tracking
The association of sales information with the inventory can be used to identify discrepancies in a very short time. Restaurants will be able to process orders efficiently and predict the height of demand as well as eliminate wastage of food by observing day-to-day sales trends. The real-time sales tracking helps in identifying what is selling in real-time, as well, which serves as a guiding tool for what is being added to the menu and inventory.
Prevent Employee Theft
Theft-related inventory shrinkage may also have a major effect on profits. Introduce measures such as close monitoring of stock, inventory against sales, and security measures or POS integration. The intentional or accidental misuse is also minimized through staff training and accountability programs.
A successful restaurant is based on effective inventory management. Truly, by synergising smart costing, daily tracking, innovative utilisation of the ingredients, and encouraging the staff, restaurants will waste less, become more profitable, and be able to provide all of the customers with the same high-quality experience.
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 (Liven Love). 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 (Liven Love). 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.
