Ryan Williams
Jeremy Julian

‘Sorry, We’re Out of That’: Proper Restaurant Inventory Management

October 31, 2019

Restaurant inventory management may not sound like the most glamorous element of the business, but it’s certainly one of the most important.

Run out of the ingredients you need for your most popular dishes and you won’t just be disappointing your customers, you’ll likely be losing valuable revenue as well.

Conversely, in a business of notoriously tight margins, you can’t afford to be throwing away unused foodstuffs that have gone past their sell-by date because you over-ordered.

So getting their ordering exactly right is a continuing challenge for all restaurant managers, particularly in the build-up to holiday periods or when planning promotions. But there are some practical steps you can take, with the aid of modern restaurant POS systems, which will help you to be as cost-effective as possible.

Strategies for Sound Restaurant Inventory Management

1. Use a Good Restaurant POS System

Despite the name, modern restaurant POS systems offer far more than just efficient ordering and check out functions.

Your system should be able to record your available inventory items at the beginning of each shift and to update in real time during each session; taking into account every eventuality which may affect inventory, such as spillage and spoilage, or dishes being returned due to customer complaints or improper preparation.

You will be able to keep constant track not just of the quantities but also the cash value of your inventory and to monitor your actual usage against projections, making it much easier to calculate the real (as opposed to the purchase) cost of your inventory and to work out your real profit margins per dish.  

Standard reports and prompts will give you early warning of low stock items, allowing timely alterations to menus. But a good system will also help you to produce longer-term or seasonal usage reports and to predict future ordering needs.

2. Assign, Train and Motivate Staff

A POS system is only as good as the staff who use it, so the provision of comprehensive training for all staff is essential.

Depending on the size of your establishment, it may be a good idea to assign one or more reliable members of your team to be responsible for inventory management. However good your technology, there’s no substitute for practiced human eyes gaining daily experience of the patterns and idiosyncrasies of the flow of inventory through the business.

These designated staff will also likely be the first to spot any unfortunate, but all too common, incidences of in-house theft which may occur. 

All staff should, in any case, be made aware of the importance of careful inventory management and a bonus system may be a good way to motivate high levels of performance in this aspect of the business. 

3. Keep to a Consistent Schedule

Whether you assign particular staff to the task or not, it’s important to keep to a regular schedule when counting inventory.

Perishables and essential ingredients for your most popular dishes or house specialties may need to be counted every day, and at the same time of day, whereas canned or bulk items may only need to be looked at weekly.

Either way, a regular schedule is essential for discerning usage patterns and for accurately establishing the data on which your POS system will operate.

4. Implement a First In First Out (FIFO) System

FIFO sounds like mere common sense as a way to avoid food wastage through missing sell-by dates, but sticking to it is easier said than done in a busy kitchen trying simultaneously to prepare multiple dishes with numerous different ingredients. 

The solution lies in the careful organization of all storage areas including freezers, fridges, storage rooms and shelving, as well as clear, easy to understand labeling of everything that comes in. It may seem like a headache, but the positive effect on your business’s bottom line will make it well worthwhile.

It may never be possible to eliminate the waste and loss of inventory entirely. But apart from the staff, your raw materials are likely to be your single biggest controllable cost, so it should be your aim. And with a strong emphasis on systems and training, backed by modern POS technology, you should be able to achieve some very significant cost savings with proper restaurant inventory management.

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