5 ways to improve your restaurant inventory management (2023)

5 ways to improve your restaurant inventory management (1)

The ultimate goal of any business is to make as much profit as possible, this goal is no different in the restaurant industry and keeping track of your inventory gives you the best possible chance of increasing your profit margins.

Tracking inventory can allow restaurants to quickly identify any stock problems and save money in as many areas as possible. Firstly, keeping track of inventory will explicitly identify trends in food wastage within your restaurant. If you are always aware of what you have, what you don’t have and what you are throwing away, you can make sure that there is no excessive inventory loss or wastage.

In addition, keeping on top of your inventory will inevitably boost your customer satisfaction as it ensures that the ingredients for all your menu items are in stock and available. By tracking your inventory, you can easily improve the overall customer experience.

How do restaurants keep track of inventory?

There are different methods to help business owners keep track of their inventory, from old school methods to digital solutions. Here are some of the most popular methods restaurants use to keep track of industry:

(Video) Your Complete Guide To Restaurant Inventory Management

1. Organized stockroom

One of the easiest and cheapest ways for restaurants to keep track of their inventory is to simply organize their stockrooms. By organizing your shelves in a logical way, it will be easy to see what you are low on, what you have too much of and what needs to be replenished.

2. Keep an inventory sheet

A similarly easy and cheap way to keep track of your inventory is to keep an inventory sheet. Keeping an inventory sheet and doing an inventory count on a daily, weekly, or monthly basis will allow you to keep a physical record of your inventory. Although this system is more precise than simply judging your stock by eye, it is also subject to human error.

3. POS system

Although some people still use manual methods for restaurant inventory management, there are digital solutions that work better and minimize the risk of human error. Point of service software allows your orders to be converted into ingredient trackers in real time that subsequently, which keep a continuous record of inventory levels.

How often should a restaurant do inventory?

Regular inventory management is an important factor in the success of restaurant and bar businesses. Unfortunately, many businesses fail to recognize the importance of inventory checks and underestimate the effect they can have on your bottom line.

Whilst many restaurants generally complete inventory checks at least one a month, the reality is that this is not an effective practice. Restaurant inventory management is not a monthly job. Instead restaurant managers should schedule weekly inventory checks.

There are many advantages to doing inventory checks more regularly. Firstly, it will allow you to accommodate for fluctuating costs of stock as you will be regularly reviewing your ingredients and their usage. You will therefore be able to track your food costs to see if you’re wasting money or if your suppliers are charging you more than they should be.

(Video) How to Do Inventory in a Restaurant to Lower Food Cost - Restaurant Business Tip #restaurantsystems

Moreover, by implementing frequent inventory checks you can follow up on your ingredient usage. When you regularly check your stock and inventory, it gives you the opportunity to regularly arrange your storeroom and make sure the first in first out method is adhered to as strictly as possible. This minimizes waste and helps you maximize your profit.

How can restaurants improve inventory management?

Here are some tips to help you improve your restaurant inventory management:

Hire specific inventory personnel

Although hiring extra people can appear as a counterintuitive measure, this will prove to be a good investment in the long term.

One of the main reasons inventory often goes unchecked is because employees simply don’t have the time to thoroughly check it due to their other responsibilities. Hiring someone whose sole job it is to stay on top of inventory will ensure there is always someone available for your weekly checks.

Moreover, you can train these individuals for inventory management. These employees will know exactly the amount of product coming in, the amount of product being sold, the cost of goods sold, the cost of ingredients bought so they will be able to spot trends in pricing and capitalize on areas of possible savings.

Invest in software

Investing in software is one of the most efficient ways to improve inventory management. This is the best technique to track and control your restaurant inventory as it offers you full control throughout the entire supply chain. It allows you to make decisions and instantly alter anything at any point.

(Video) How to Lower Your Restaurant Inventory without Software

Set par levels

Setting par levels is a great way to track your inventory levels. By setting par levels, you have a universal standard of stock levels, meaning you know the exact time when to re-order stock to make sure you never run out of stock or have too much stock on hand.

It’s also important to keep in mind that the amount of stock needed at any one time is subject to change. For example, the kinds of ingredients needed in the summer will differ from the kinds of ingredients needed in winter, so you may need to adjust your par levels according to your ingredient usage.

Communication

Restaurant inventory management is a practice that needs to be implemented throughout the entire inventory process. From ordering from suppliers to using the ingredients to make your menu items.

It’s therefore strongly advised to maintain good communication with everyone in the supply chain. Communication is the foundation for strong relationships. It’s important to nurture your relationship with your suppliers to negotiate favorable conditions and make sure you never run out of stock. Plus, nowadays strong relationships can be maintained through software systems that have inbuilt communication features to suppliers.

Accurately predict your inventory usage

Although this is an extremely difficult thing to achieve, if you’re able to predict your inventory usage as accurately as possible, you will be able to maximize your profit.

There are various things that you can do to predict your inventory usage such as taking into consideration upcoming promotions, analyzing the data from previous years, etc. If you’re able to predict what you are going to use, you can determine how much you will need to buy in advance.

(Video) How Do Restaurants Manage Inventory?

This knowledge will afford you a degree of inventory control and save you money.

What is the best system to manage the stock in a restaurant?

By now it should be evident that an inventory control system is a huge asset to any bar or restaurant. The amount of control and overview it affords its users is a key denominator in saving businesses money and ensuring customer satisfaction.

Despite the clear need for restaurant inventory management systems, it can often be a daunting process to pick a software that best suits your business. So, what exactly should you be looking for in a restaurant management system? Here are some things to look out for:

Firstly, a restaurant inventory system that integrates POS into its software is a must. Companies that provide this two-in-one system enable their clients to analyze data in real time and check stock levels that are constantly updated.

The best software also have in-app features that allow you to communicate directly with your suppliers. This allows you to quickly adjust your supply according to your usage. This is an easy way to keep your relationship with your suppliers strong.

As bars and restaurants are collaborative environments, this needs to be reflected in the software you choose to invest in. It’s therefore best to purchase software that is collaborative in nature. By this, we mean software that allows you to assign permissions to multiple users for better control.

(Video) Top 5 Restaurant Technologies to Help You Thrive

Overview

There are a lot of things that go into running a successful restaurant business, but ultimately, your end goal is to generate as much profit as possible. One of the easiest ways to do this is to have a strong understanding of your inventory and your stock. The solution? Investing in restaurant management system.

These systems give you a full overview of your inventory in order to allow you to make informed decisions about different things from stock supply to menu item costing. Investing in software like RapidBar could really give you the edge in the bar and restaurant world!

FAQs

How can inventory management be improved? ›

Tips for managing your inventory
  1. Prioritize your inventory. ...
  2. Track all product information. ...
  3. Audit your inventory. ...
  4. Analyze supplier performance. ...
  5. Practice the 80/20 inventory rule. ...
  6. Be consistent in how you receive stock. ...
  7. Track sales. ...
  8. Order restocks yourself.

What is inventory management in a restaurant? ›

Restaurant inventory management is the process of tracking the ingredients coming in and out of your restaurant. Inventory control traces the amount of product ordered, everything that comes out of the kitchen and bar, and what is left over as sitting inventory afterward.

What are 6 techniques that many small business restaurants use to manage inventory? ›

6 Inventory Management Techniques for Food Businesses
  • Start strong. You know it has to be done and it has to be done right. ...
  • Train your team well. ...
  • Minimise human error. ...
  • Do it regularly. ...
  • Minimise food waste.
11 Jul 2019

What are the 5 steps to effective inventory systems? ›

5 Steps to Successful Inventory Management
  • Create a System to Get Accurate and Accessible Information on Your Inventory. ...
  • Create a Unique Process Customized for Your Business Type. ...
  • Keep an eye on Contemporary trends in the industry. ...
  • Be prepared for fluctuations in supply and demand.
29 Sept 2021

What are the 4 ways of achieving proper inventory control? ›

Inventory control involves various techniques for monitoring how stocks move in a warehouse. Four popular inventory control methods include ABC analysis; Last In, First Out (LIFO) and First In, First Out (FIFO); batch tracking; and safety stock.

What are the 3 major inventory management techniques? ›

In this article we'll dive into the three most common inventory management strategies that most manufacturers operate by: the pull strategy, the push strategy, and the just in time (JIT) strategy.

What are the 4 types of inventory management? ›

The 4 Types of Inventory Management

The types of inventory management are Raw Materials, Works-In-Process, Maintenance, Repair and Operations or MRO and Finished Goods.

What are the 4 basic reasons for keeping an inventory? ›

The reasons for holding inventories can vary from case to case basis.
  • Meet variation in Production Demand. ...
  • Cater to Cyclical and Seasonal Demand. ...
  • Economies of Scale in Procurement. ...
  • Take advantage of Price Increase and Quantity Discounts. ...
  • Reduce Transit Cost and Transit Times.

How do restaurants maintain inventory? ›

7 Restaurant Inventory Management Tips
  1. Utilize a POS System, and Take Inventory by Hand. ...
  2. Have the Same Staff Member(s) Track Inventory. ...
  3. Maintain a Consistent Schedule. ...
  4. Follow the First In, First Out (FIFO) Method. ...
  5. Create a Sheet for Food Waste. ...
  6. Utilize Surplus Ingredients to Minimize Food Waste.
19 Jul 2019

What are the five 5 most important factors in choosing a restaurant? ›

5 factors to consider when choosing a restaurant
  • Of course, the food. It is evident that when we decide to go out to eat out, the first thing we want is to eat well. ...
  • Comfort and atmosphere. ...
  • The Service. ...
  • Prices. ...
  • Recommendations.
25 Dec 2020

How do restaurants keep track of inventory? ›

Restaurant managers install point of sale systems, also known as POS systems, at the check-out counter. This is usually where customers use cash or credit cards pay for the product. POS systems link to the actual inventory count, so that it updates the quantity with every purchase recorded.

What is a good inventory management? ›

Good inventory management software should:

Keep track of your inventory in real time. Help you forecast demand. Prevent product and production shortages. Prevent excess stock and too many raw materials.

What makes a good inventory management system? ›

The following are the key elements to a well organized inventory tracking system. Create well designed location names and clearly label all locations where items may be stored. Use well organized, consistent, and unique descriptions of your items, starting with nouns. Keep item identifiers (part numbers, sku's, etc..)

What is good inventory management system? ›

A good inventory management strategy improves the accuracy of inventory orders. Proper inventory management helps you figure out exactly how much inventory you need to have on-hand. This will help prevent product shortages and allow you to keep just enough inventory without having too much in the warehouse.

What is 5S in inventory management? ›

The 5S system consist of: sort, set in order, shine, standardize and sustain. Repeat it to yourself multiple times and write it down — go ahead, do it now!

What are the 6 steps in conducting an inventory? ›

  • Understand and characterize your demand. Inventory shortages or excess is the result of supply being out of sync with demand. ...
  • Characterize your supply and inventory costs. ...
  • Stratify your inventory. ...
  • Establish goals for each category and measure.
  • Develop a process to track and.
  • Refine goals and adjust processes.

What are the 6 types of inventory? ›

The 6 Main classifications of inventory
  • transit inventory.
  • buffer inventory.
  • anticipation inventory.
  • decoupling inventory.
  • cycle inventory.
  • MRO goods inventory.
29 Sept 2020

What are the 9 types of inventory? ›

9 Inventory types: From raw materials to finished goods
  • Raw materials inventory. ...
  • Maintenance, Repair, and Operating (MRO) inventory. ...
  • Decoupling inventory. ...
  • Work In Progress (WIP) inventory. ...
  • Finished goods inventory. ...
  • Safety stock and other types of stock. ...
  • Packing materials inventory. ...
  • Pipeline (or in-transit) stock.
3 Dec 2021

What are the 13 types of inventory? ›

15 types of inventory
  • Finished goods. Finished goods are items that are completed and packaged for sale. ...
  • Work-in-progress inventory. Work-in-progress inventory includes items that are partially assembled. ...
  • Raw materials. ...
  • Safety stock. ...
  • Packing materials. ...
  • MRO supplies. ...
  • Smoothing inventory. ...
  • Decoupled inventory.

What are inventory techniques? ›

Inventory management helps companies identify which and how much stock to order at what time. It tracks inventory from purchase to the sale of goods. The practice identifies and responds to trends to ensure there's always enough stock to fulfill customer orders and proper warning of a shortage.

What are the 2 methods of inventory control? ›

There are two key types of inventory control systems.
  • Perpetual inventory system. A perpetual inventory control system tracks inventory in real-time. ...
  • Periodic inventory system. A periodic inventory system is kept up to date by a physical count of goods on hand at specific intervals.

What is the most important aspect of maintaining an inventory? ›

One of the most critical aspects of inventory management is managing the flow of raw materials from their procurement to finished products. The goal is to minimize overstocks and improve efficiency so that projects can stay on time and within budget.

What are the most important elements in inventory management? ›

5 Key Elements of Inventory Management
  • Track your activity. As a business owner, you ought to know about any movement in your stock. ...
  • Daily counts. Managing your inventory is a daily inventory management task. ...
  • Manage out-of-stock products. ...
  • Clear description. ...
  • Organized work environment.
21 Sept 2016

What are the 3 types of inventory? ›

There are three general categories of inventory, including raw materials (any supplies that are used to produce finished goods), work-in-progress (WIP), and finished goods or those that are ready for sale.

How can a restaurant increase supply chain? ›

5 Best Practices for Restaurant Supply Chain Management
  1. Build strong relationships with your suppliers. ...
  2. Revaluate your vendors' prices and value often. ...
  3. Keep track of food safety. ...
  4. Ensure you have sufficient supplies before promotions. ...
  5. Boost restaurant performance with software.

What is the best way to manage inventory? ›

Inventory management techniques and best practices for small business
  1. Fine-tune your forecasting. ...
  2. Use the FIFO approach (first in, first out). ...
  3. Identify low-turn stock. ...
  4. Audit your stock. ...
  5. Use cloud-based inventory management software. ...
  6. Track your stock levels at all times. ...
  7. Reduce equipment repair times.
27 May 2021

What are the 4 methods of inventory? ›

There are four accepted methods of inventory valuation.
  • Specific Identification.
  • First-In, First-Out (FIFO)
  • Last-In, First-Out (LIFO)
  • Weighted Average Cost.

Who is responsible for inventory in a restaurant? ›

While the restaurant owner or manager is likely the one responsible for ordering, each employee should report inventory needs and shortages to the restaurant management team. This reporting can be as simple as writing down low-stock supplies on an inventory sheet.

How often should a restaurant do inventory? ›

To ensure you can gain actionable insights into restaurant inventory and avoid weekly changes in seasonality, consider doing two inventories for weeks that are split between two months. The first would be done on the last day of the month and the second would be done at the end of the week.

Why is inventory important in food service? ›

Food inventory for loss prevention

Keeping track of usage, dollar value and overall inventory levels is essential for restaurants to understand where the money they invest in food inventory goes. Equipped with that information, restaurants can improve their Cost of Goods Sold (CoGS) and maximize profits on each sale.

What are the 6 ways to make things run smoothly on managing the restaurant? ›

Follow these 6 tips for smooth restaurant operations:
  • Adapt to customer feedback.
  • Clearly define employee roles.
  • Advertise and market your restaurant.
  • Streamline the items on your menu.
  • Be disciplined in your cash management.
  • Keep your team motivated!
8 Jan 2018

How can I improve my restaurant market? ›

Restaurant Marketing Ideas Worth Trying
  1. Run an LTO (limited-time offer) ...
  2. Host events. ...
  3. Run ads on your target customers' preferred social media platform. ...
  4. Host a loyalty/rewards program for your guests. ...
  5. Do contests and giveaways. ...
  6. Come up with an amazing slogan:

How do restaurants increase cash flow? ›

Let's look at four of the best techniques you can use to improve cash flow in the current climate.
  1. Ensure that your accounting is updated. ...
  2. Trim the fat from your menu. ...
  3. Stay on top of inventory. ...
  4. Reduce overhead costs.
12 May 2021

Videos

1. How To Run A Restaurant: Take Inventory Weekly
(David Scott Peters)
2. 5 Tips for Improving Your Inventory Management in 2021
(Inventoro)
3. Boost Your Bottom Line with Restaurant Inventory Management
(The Fifteen Group)
4. Restaurant Inventory Management Tips
(GoFoodservice)
5. 7 Ways To Think About Your Restaurant Inventory - Cut Losses
(Spreadsheets For Business)
6. Easily Manage Your Restaurant Inventory & Ordering
(RASI - Restaurant Accounting Services Inc)
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