Controlling inventory is one of the most important aspects of restaurant management. Managing food inventory properly boosts financial performance as well as keeps the service running smoothly. Food shortages, food waste, and inaccurate forecasting can all result from errors in stock management. You should consider all of these factors when controlling food and beverage costs. Food print estimates that up to 10 percent of the food inventory purchased by restaurants goes unused, meaning they will not generate revenue from this food expense.
All of the things you prepare in your kitchen cost a lot. Are you aware of where you are losing money? You can see in detail what’s sitting on the shelves and where you’re losing money by looking at detailed Usage, Loss, and Sales Performance reports.
Increasing wages and food costs represent the biggest risk for the food & beverage industry. If you don’t get your costs under control, you won’t be able to improve profitability and grow your revenues. Keeping your current level of success requires that you constantly and actively reduce costs. Where can you reduce costs? Through improved efficiency.
You’ll learn about the basics of inventory management for restaurant food: what it is, what terminology you can expect, how to keep track of inventory, and the tools you can use.
- How does food inventory management work?
- The terminology used in restaurant inventory
- The best way to take restaurant food inventories
Let’s get started!
How Does Food Inventory Management Work?
Management of your restaurant’s food inventory involves knowing what items your restaurant has available at all times. The information gathered from that analysis can help restaurants optimize inventory purchases (i.e., buying the right amount of product), minimize inventory losses due to theft, spoilage or waste, and maximize profits.
The restaurant industry knows at any given time what good inventory management looks like:
- In what amount and what kind of inventory have you bought
- Inventories used on a daily basis
- After each business day, leftover inventory is counted
Inventory Management Has Many Benefits
Any type of food and beverage business can benefit from a stock control system, including quick-service restaurants, catering companies, and other types of establishments. Food and beverage businesses can manage their inventory more effectively, increase productivity, and control cash flow with an inventory tracking system, as discussed previously.
The whole market value of a product, as well as the manufacturing costs, are closely monitored in many industries. While some food and beverage, businesses don’t take the same care when selecting their menu. Keeping an inventory control system in place can reduce overhead costs, allow you to adjust menu pricing, and allow you to better manage portions.
You’ll be in a better position to make business decisions if you have a suitable control system in place. It might happen, for instance, that certain menu items have lower profit margins than you anticipated. When items go unsold in this example, you burn even more money, thereby negatively affecting cash flow. When you have access to this information, you can make changes that recover lost profits and prevent further pitfalls.
Loss Prevention Through Food Inventory
In order for restaurants to make the most of their food inventory investment, they must keep track of usage, dollar value, and overall inventory levels. Restaurants can maximize profits by improving their Cost of Goods Sold (CoGS) based on this information.
Additionally, being able to identify inventory that is lost for any of the following reasons will help you identify what inventory is faulty.
- Accidental spills
- Typical errors made by employees
- Meals for employees
- Dealing with dissatisfied customers
Achieving zero food waste
Maintaining profit margins can be achieved with a food inventory management system. The most significant expense your business faces is replenishing your inventory, along with labor costs. Stock control systems reduce food waste, allowing you to save money.
A staggering 30-40% of the supply of food in the United States is wasted, with food waste a major concern. Even small businesses can reduce their contribution to waste by implementing the right technology.
In order to save food, the first step is to determine how much you’re wasting. There are times when food waste cannot be avoided, such as when the customer does not like the dish and returns it to the kitchen. Nonetheless, errors such as cooking mistakes, food waste, and spills can be avoided. Employees who are trained and equipped with the right equipment understand food waste better and can minimize it.
Conduct an audit to determine where the food waste comes from if you’re concerned about how much food goes to waste. When your restaurant is busy, but your kitchen isn’t working at maximum capacity, this will produce the best results. Despite the importance of obtaining effective results from the audit, you want to avoid degrading the quality of your service by causing unnecessary delays.
These are five of the most common causes of food waste in restaurants, and the strategies you can use to prevent it.
It is common to overorder products for a variety of reasons. So what are the most common reasons? Chefs who order more product than they need due to an inefficient or poorly managed inventory system. It is important to keep your inventory updated regularly to reduce food waste and reduce the amount of food ordered that is not needed.
The risk of spoilage exists even if you do not overorder. The food you receive might already be going bad if you don’t inspect it carefully.
All incoming product needs to have a best-by date clearly indicated. FIFO (first-in, first-out) storage reduces the amount of spoiled food you keep on hand by labeling your food.
An overestimation of sales for a dish is another common cause of food waste. Preparing and cooking too much food to avoid an 86 is a common practice among chefs. Consequently, more food is wasted. When you track sales, you can create more efficient batches, decide if certain dishes need to be eliminated, and adjust your menu accordingly. To ensure your overhead costs are minimized, plan your staff meal around the extra ingredients.
The server forgets to add an allergy note to a dish that contains nuts. One of the lines cooks made the wrong dish based on an incorrect ticket. Errors can be detrimental to your business. These types of errors can be prevented through proper training and active management.
Portions poorly controlled
Every night, do you throw out untouched food bags? It might be a sign you’re not getting the right portions. By controlling your portion size effectively, you can extend your food budget further. When a guest doesn’t feel like packing leftovers, standardizing the measurements can keep too much food from being thrown away.
Food waste cannot completely be controlled. You can drastically cut the amount of waste you produce by taking a few simple precautions. In return, you save money, prevent food from going to landfills, and improve the appearance of your kitchen.
Terms Used in Restaurant Inventories
Those who are interested in mastering restaurant food inventory should become familiar with the following terms:
- Stocks on hand
- Lacking sufficiency
Stocks on hand
Stocks on hand refers to the amount of inventory (or the dollar value of inventory) a restaurant has on hand. When tracking sitting inventory, choose one unit of measure (dollar value or physical amount) and stick with it.
The insufficiency of an inventory refers to how much inventory has been used over a certain period of time (either in dollars or physical quantities). Depletion can be calculated using the data provided by your POS system each day, week, or month.
The percentage of sitting inventory that has been consumed is calculated by dividing sitting inventory (in dollars) by average depletion.
In the scenario of having 70 pounds of ground beef and using 10 pounds per day, you will have seven days to use it.
When it comes to your product, variance is the difference in cost between the usage amount and your product.
Take the example of drinking $300 worth of beer during a week, but your POS system reports only $250 worth of sales. You will have a variance of -$50 in this case, which means $50 worth of beer is unaccounted for.
A Good Way To Keep Track of Restaurant Food Inventories
We are getting close! As you’ve now become familiar with some basic inventory management terms and concepts, let’s examine some tips for taking accurate and consistent restaurant food inventories.
When should you schedule the inventory count?
It is essential for food and beverage businesses to manage stock items consistently. You have to handle a variety of perishable goods when you run a food and beverage business. To avoid food waste and to avoid selling expired items, you’ll need to take stock every day.
Making sure you conduct stocktaking at the same time every day is an important stocktaking rule. Take an inventory after the doors shut or before the doors open is best practice. Be consistent with your reporting, no matter what you decide. You can get accurate stock level data by following the guidelines as strictly as possible, despite how difficult it may seem.
Furthermore, avoid taking inventory while shipments are being made since this may result in doubling up on inventory. Consistency is also crucial when it comes to the staff members responsible for managing your stock. The process will not only be sped up but anomalies and errors will also be more easily spotted.
Arrange your pantry
How can you count inventory more quickly? Keep your product storage areas organized. Organizing large and diverse food and beverage programs, however, is not as easy as it sounds.
Taking stock is an uphill battle when your stockroom has been disorganized. Consequently, there is a greater risk of double counting and over-or underordering than there would be if the stockroom were organized.
Below are some ideas for keeping your pantry, stock room, and walk-in freezer organized through the year:
- Organize food items according to categories
- Organize your shelves with labels
Assign a team to take stock
When counting inventory, being consistent is essential. You should always have some members of your team in charge of stocktaking. In addition to receiving orders, these individuals should update inventory records as well.
As soon as you have a team in place, you should create an inventory counting schedule.
Your inventory should be counted on the same day and at the same time by your team. At the beginning and end of each day, we recommend counting inventory.
A consumption sheet should be created
You can figure out how much inventory you consume per day, what you waste, and how much you spend on inventory by using a spreadsheet that tracks inventory consumption.
When you track inventory consumption from day to day, you will gain a better understanding of how inventory moves into and out of your restaurant, as well as more accurate reordering.
There are a few things to keep in mind while creating an inventory consumption sheet for your restaurant based on what it sells:
- Identify the ingredient
- Measurement unit
- Quantity used
- The unit price for each ingredient
- Costs in total
- Taking inventory
- End of inventory
- Consumption rate per day
- Quantity of waste
- Cost of waste
Instruct your staff how to take inventory
Inventory management can’t be the responsibility of just one person, which is especially true for restaurants with multiple locations. If a member of the stock-taking team cannot count inventory, then the manager, shift leader, and other members of the staff must all be trained on how to do this.
Inventory management can also be performed by front and back of house staff. They should notify someone immediately if something happens to spill or spoil so that it’s added to the inventory consumption sheet.
Keep an eye on sales every day
In real-time, restaurants are better able to respond to changes in sales and inventory levels by monitoring sales and inventory levels every day. Suppose you sold more of a menu item than anticipated and are running low on ingredients. Instead of having to stop serving the item in the meantime, you can order more ingredients to keep up with demand.
Ensure you have enough supplies
You may want to keep some “just in case” inventory on hand for ingredients that your restaurant uses quickly.
You may want to keep extra fries in stock if, for instance, you’re a local burger shop and experience an unexpected increase in customers. Keeping track of the freshness of your extra inventory is helpful, as is switching it out as needed. Using unused excess inventory to provide staff meals is a good way to avoid wasting it.
Restaurant technology that works
If you don’t have the right tools to track inventory and sales, the process can be prohibitively time-consuming.
Restaurant owners and managers can easily dig into daily, weekly, monthly, and year-round sales reports using Lightspeed.
It may seem like a magical process to forecast demand, but getting it right will lead to fewer food wastes and fewer wasteful expenses. It’s important to use technology to forecast demand accurately.
Several platforms above can benefit your restaurant, and we recommend researching which is best for your needs. Tenzo, on the other hand, uses AI and your previous sales patterns to predict sales accurately and predict what inventory they need without overstocking. Using dynamic par levels, you will be able to order in your stock and keep track of your inventory in an economical and wasteless manner.
Make Inventory Management a Priority In Your Restaurant
In order to run a successful restaurant business, inventory management is one of the least exciting aspects.
Taking inventory management seriously has never been more important. Monitor everything and make sure each penny you spend is contributing to sales.