Running a restaurant means keeping track of a lot. One key part is handling your stock. A good inventory system helps you know what you have, what you need, and when to order more. It saves time and money, making sure you never run out of what your customers want. America discards about 40% of its food supply. Out of the roughly 125 to 160 billion pounds of food wasted annually, a significant portion remains perfectly edible and nutritious.
This is not only a waste of resources but also contributes to the global issue of food insecurity. As responsible business owners, it's important to implement effective inventory management practices in order to minimize food waste and maximize profitability. Let us show you simple and effective ways to manage your supplies so your restaurant can run smoothly!
What Is A Restaurant Inventory Management System?
A restaurant inventory management system is a set of methods and tools that help you oversee every part of your food supplies, simplifying everything from ordering to tracking usage. This system not only keeps costs in check but also ensures that you never run out of essential ingredients, maintaining the integrity of your menu and customer satisfaction. Cloud-based solutions can also provide real-time inventory insights, allowing you to manage from anywhere with internet access.
Advantages Of Restaurant Inventory Management
A kitchen with every ingredient on hand, just in time when you need it, is every cook’s dream. As a business owner, the benefits of proper inventory management go beyond that. Here are some of the advantages:
Loss Prevention For Food Inventory
One of the most significant advantages is loss prevention. You can keep close tabs on your perishables, minimizing food spoilage and waste. By using a restaurant inventory management system, you can track expiration dates, follow proper first-in-first-out (FIFO) practices, and set alerts when items are close to their expiration date.
Food Waste Prevention
Preventing food waste is akin to safeguarding a restaurant's most precious asset. You can reduce overstocking and unnecessary purchases. It also allows you to identify items that are not selling well, leading to smarter purchasing decisions in the future. Understand your inventory turnover rate to adjust your ordering to match customer demand and prevent excessive food waste.
Cost Control
Effective inventory management saves a restaurant time and money. Use accurate data on stock levels, food usage rates, and sales to forecast what items need restocking. This helps you plan your ordering schedule better, minimizing inventory carrying costs such as storage expenses and spoilage.
Reduce Overproduction
Consistency in delivering quality does not necessitate an invariable excess. An inventory management system enables the precise allocation of supplies, minimizing overproduction while ensuring you're fully equipped to meet demand. This is especially crucial for seasonal items that may not be available year-round.
Reduce Over-Ordering
By knowing exactly what's in stock and what's been used, over-ordering is no longer a mystery that eats into your profits. Additionally, you can keep track of your suppliers' delivery schedules and avoid duplicate orders to increase restaurant profit and reduce unnecessary costs.
Prevent Spoilage
Spoilage is an expense that can often be hidden until it’s too late. You may be tempted to order in bulk for cost savings, but it’s only beneficial if your kitchen can utilize the ingredients before they spoil. You can track expiration dates and plan for usage accordingly by using a restaurant inventory management system.
Vendor Management
It’s not just about what you have; it’s about where it comes from. Vendor management, as part of your inventory control, ensures that you are dealing with reliable vendors at an optimal cost. Tracking your purchases helps you identify areas where costs can be reduced and negotiate better terms with suppliers.
Automatically Track Food Supply
Automation doesn’t just remove monotony from the equation. It also plays a crucial role in making sure you never miss items on the verge of running out, always keeping a step ahead of your customer's orders. Automated systems are also much more accurate in tracking food supplies compared to manual methods, reducing human error and saving time.
Tips For Restaurant Food Inventory
Real progress begins with practical application. Here are some operational tips to make your inventory management system not only reliable but integral to your restaurant's success:
Managing Stock Items
The cornerstone of inventory management is the careful tracking of individual items that are monitored and updated often. You can have a granular view of every ingredient and supply, ensuring that each product is accounted for. Conduct regular inventory counts and update your records accordingly to keep your data as accurate as possible. Utilize barcode scanning for speed and precision during these counts. Train your staff to understand the importance of inventory checks, which will promote awareness and responsibility throughout your team. Maintain a streamlined process that can significantly reduce errors and discrepancies.
Track Inventory Regularly
Regular tracking of inventory is not just a suggestion—it's a necessity. Implement a tracking schedule that syncs with the flow of your restaurant's operations. Whether it’s daily, weekly, or monthly, a routine check keeps the numbers current and management informed. Invest in a platform that will integrate with POS, which can automate much of this process. This will help you identify and correct any discrepancies in inventory levels, ensuring that your data is accurate and up-to-date.
Hire Expert Staff To Do Inventory
Skilled inventory managers can be the difference between surplus and scarcity, profit and loss. Invest in individuals who are detail-oriented, able to navigate technology, and knowledgeable about food inventory. These experts can anticipate when stocks are low, or orders need to be placed, allowing you to handle other parts of the business.
Organize Food Inventory Storage
How you store food is as important as what you store. An organized storeroom ensures quick retrieval and proper stock rotation. Store items with shorter lifespans at the front and those with longer shelf lives at the back. Categorize your inventory by type, making it easier to find what you need in a hurry.
Inventory Usage Report
Details matter, and a usage report will reveal the story of your inventory and the trends that shape your ordering behaviors. You can see which items are used most often, those that need to be reordered more frequently, and the ones that are hardly moving off your shelves. Use this report to inform future purchasing decisions and optimize your inventory levels.
Take Trends From Databases
The data you collect can be a gold mine for your business. Analyze trends and patterns in your inventory to make informed decisions about what items to stock, when to order, and how much to order. Use this information to streamline your supply chain and minimize waste.
Effective Restaurant Inventory Terminologies
The technical language of inventory management can be mind-boggling, but understanding the basics is crucial to effective restaurant inventory management. Here are some key terms you should know:
Variance
Variance refers to the disparity between the cost of your product and the cost based on its usage amount. For instance, if you purchased 100 pounds of flour at $4 per pound but only used 90 pounds, the variance would be $10 (10 pounds x $1). Understanding your variances can alert you to potential issues with over-portioning or theft.
Usage
Usage is the sum of the value of sitting inventory and the average rate of depletion over a given time period. It provides insight into how much an item is being used and enables you to make informed decisions about purchasing the right amount. For example, if you use 80 pounds of tomatoes in a week and have 40 pounds currently on hand, your weekly usage is 120 pounds.
Sitting Inventory
Sitting inventory refers to the amount of inventory a restaurant is carrying in-house. It includes all items currently in storage, whether they are fresh produce or packaged goods. Tracking sitting inventory is crucial to avoid spoilage and overstocking.
Cost Of Goods Sold (COGS)
The final balance of a restaurant’s total inventory purchases is called the Cost of Goods Sold. It is an essential metric in determining how much it costs to produce your menu items and directly affects your restaurant's profitability. Keeping track of COGS helps you identify areas where costs can be reduced and streamline the ordering process.
FIFO (First In, First Out)
The FIFO method is the standard for most restaurant inventory management, ensuring that the first supplies are the first used, keeping your ingredients fresher and your operation fair. This method also minimizes the risk of spoilage and reduces food waste.
LIFO (Last In, First Out)
LIFO is often used for food inventory items that spoil quickly or have a short shelf life. In this method, the most recently purchased products are used first, allowing you to reduce waste and minimize spoilage.
Yield
The yield is the proportion of the product sales reported by your POS system to the actual amount utilized. This factor is calculated by dividing the sales of a menu item by its recipe cost. Knowing your yield can help you determine how much inventory to purchase and which items are the most profitable for your restaurant.
Depletion
Depletion indicates the quantity of inventory consumed within a set timeframe. It allows you to monitor the cost of goods sold and track usage trends, enabling you to plan for future purchases accurately. Tracking depletion also highlights any discrepancies if an item is being used at a rate different from what was originally planned.
Dead Stock
Deadstock refers to inventory that has not been used or sold for a certain period and holds no value. This can happen due to overstocking, lack of demand, or spoilage. Deadstock ties up capital that could be used for other vital areas of your business, so it's essential to minimize it as much as possible.
Organize Your Inventory With Automated Management
Implement automated inventory management systems to streamline inventory processes and minimize human error. These systems can help you track usage, depletion, and stagnant inventory in real-time, allowing you to make data-driven decisions about your restaurant's needs. Automated systems integrate with your POS for a seamless experience, making it easier to manage keep track of costs. Optimize your restaurant's supply chain and maximize profitability by investing in automated inventory management. With these tools, you can take control of your inventory and focus on running a successful restaurant.
