5 Restaurant Inventory Best Practices That Will Help You Run A Successful Operation

Start running a successful and profitable operation by adopting some well-known (and some top-secret) restaurant inventory best practices.

They might take some getting used to but work at them until they start to feel like a second skin to you and your staff. And then watch in amazement as something complex, daunting, and time-consuming turns into a treasure trove of valuable cost-saving insights…

… because lower costs & skyrocketing profits is exactly what happens when you get inventory right.

But…it’s still okay if you want to let out a loud, exasperated groan right about now — inventorying is just that kinda topic.

Now that’s out of the way, let’s focus on why inventory management is a critical component of every successful restaurant operation.

In this post, I’ll share five restaurant inventory best practices that will show you how to set up your inventory management the right way, and how to ferret out the information that you need.

Here’s a list of best practices I’ll cover:

• Creating a stock-taking system (and sticking to it); 
• Speaking inventory lingo (and knowing why that’s important);
• Forecasting food inventory demand; 
• Keeping stock organized and tidy;
• Tracking food waste and errors (almost religiously)

Finally, we look at how food inventory management software saves you time and protects your margins.

Let’s dig in.

5 Cost-Cutting Restaurant Inventory Best Practices

1. Have a Stock-Taking System In Place

This first restaurant inventory best practice I want to touch on is quite simple — have a replicable stock-taking and inventory management system in place.

Any system.

For example…

… walking through the storeroom once a week and jotting down numbers in a dog-eared notebook…

… or wrestling with Excel sheets every month and recording everything in an endless forest of rows and columns…

Granted, these systems aren’t ideal but, if today you’re not doing anything other than a yearly inventory count, implementing any kind of a system, is a solid start. 

Having said this, restaurant inventory management software clearly outperforms any manual system.

More on this later.

Whatever your system — pen and paper, spreadsheets, or a dedicated software — aim to make it easy to follow and repeatable:

• Count your stock regularly (weekly and monthly, not just yearly) do frequent spot checks (preferably daily) of your more expensive items (wines, prime cuts, caviar, and similar);
• Do your counts at roughly the same time (early in the morning or late in the evening, when business is slow), and make sure that your teams have enough time to do it right;
• Have one team member you trust at every inventory count (head chefs, sous chefs, and shift managers) — have other employees help them so everyone learns the process;
• Make inventory data available to everyone who needs it (for example, regularly update a shared folder with the most recent stock counts and waste and error reports).

A final word of warning when it comes to inventory management systems — don’t put your trust in gut feelings, guesstimates, or eyeballing your stock counts.

You can’t be lucky all the time and small mistakes accumulate, especially for multi-outlet operations, where the all-too-real cost of guessing doubles with every additional unit.

2. Use stock calculations that teach you something

Restaurant inventory management is not really about counts and numbers.

Knowing how much of what you have in your storeroom will make you better at basic math but it won’t make your operation more profitable.

To get there, you need to know what to do with those numbers — and know the why of it all. And the why of it are inventory-specific calculations.

These calculations and percentages give you an overview of your operation’s health, help you identify cost-saving areas, and allow you to boost profits by making some minor (or sweeping) changes.

We definitely can’t cover them all in this short restaurant inventory best practice tip but here’s a shortlist of the most essential ones to get you started.

• Stocktaking (or stock counting) – is when you manually check and record all the inventory that your food business currently has on hand. It’s a vital part of your inventory control, but will also affect your purchasing, production and sales.
• Sitting inventory – the stock that you have in-house. Usually measured in cash, it tells you how much of your hard-earned cash is tied in perishables that you need to shift before they go to waste.
• Inventory turnover ratio – the rate at which the kitchen uses the stock. A useful decision-making tool for food costing, menu pricing, ordering, and more. You want your monthly turnover ratio to be between 4 and 9 — too low or too high means that you’re either understocking or overstocking.
• Cost of goods sold (CoGS) – actual food cost in a specific timeframe. CoGS is so vitally important for cost control and decision-making that we’ve written a separate blog post about it – Calculating Food Costs for Chefs & FB Managers.
• Par level – the minimum amount of inventory you need to meet customer demands (plus safety stock — a little bit extra in case of increased demand). Become a par level ordering genius and you’ll never waste food (or have to deal with unhappy customers who can’t order what they want because you’ve run out).
• Theoretical vs. actual usage and variance – the theoretical or ideal usage is what your usage should be based on your recipes and the sales figures in a certain period of time. The actual consumption is determined by the extent to which your stock has shrunk during that time. There will always be some variance between the two because of spillage, theft or over porting, but your ultimate goal is to keep the difference as small as possible.

Check out this post on Seven Causes for Variance Between Actual and Ideal Food Cost so you know what to look for when discrepancies arise.

3. Order Inventory Based On Historical Trends

Take a fine-tooth comb to your sales numbers, and you’ll soon see patterns emerging.

For example, you might notice that your big-ticket wines sell like hotcakes in December or around Valentine’s Day — but not so much in April.

Or that, try as you might, you’ll never make asparagus soup popular with your crowds.

Take time to figure out your historical sales trends – your ordering will soon become data-driven, your food cost will go down, and you won’t be up to your eyeballs in unused asparagus.

With Apicbase you have quick access to historical stock data and sales figures.

4. Keep Your Store Rooms, Coolers, and Freezers Organized

Want to manage your inventory quickly and efficiently?

This is an obvious, but important pro tip – make sure your teams keep the stockrooms tidy.

Stocktaking’s hard enough as it is. Tracking down stray bags of flowers makes the whole process unnecessarily heavy.

• Every ingredient has a place – vegetables are stored at the back of the fridge, fruits in the front, and the meat in the freezer. If an ingredient is removed but not used up, make sure that your employees know to put it back in the right place. Organize inventory into larger groups and consider labelling the shelves.
• Keep all ingredients visible – don’t overcrowd your shelves, this will only make counting more difficult. Have enough space on the shelves to physically separate counted items from the uncounted ones. 
• Create a map of your storeroom- help your team keep on top of inventory organization by creating a visual map of storage areas, fridges, and freezers. Tape it to storage room doors so everyone can use it as a quick reference.

If you keep your stock organized, your fridges orderly, and your shelves clean, you will breeze through your inventory counts.

5. Keep Track of Food Waste & Inventory Errors

When you have to replace an order because a server misheard the customer, you’re chipping away at your profits.

The same happens when your staff throws away a rotten onion or a corkscrew-y carrot they can’t use.

The worst part?

Your sales data won’t show this — there’s no record of this food being taken out so if you rely on PoS data for inventorying, your counts will always be off.

You’ll always have a deviation on your food cost numbers. A few weeks later, when you do a stock count, you have no idea why the difference is so big, and you’re stuck with a cost you don’t know the cause of.

Keep a handle on your food waste, spoilage, and errors by recording every single instance of them in a printed out spreadsheet (keep one in the kitchen and one at the bar area).

Use that data during your inventory counts to account for discrepancies. Ultimately, this will help you understand where the money is being needlessly wasted and what you can do about it.

In Apicbase you can register wastage directly into the system. The data are automatically processed in the stock status and purchase suggestions.

Level Up Your Restaurant Inventory Management with Apicbase

If you’ve been playing stock-taking and inventory “by the ear” up until now, following these five restaurant inventory best practices will make it easier to transition to a more robust (and accurate) system.

However, if you really want to monitor CoGs and support your bottom line, you’ll quickly outgrow spreadsheets. You need to start thinking ‘software’, not ‘system’.

At Apicbase, we’re taking inventory management to a whole new level by taking something complex and making it simple:

• An easy to use system with no spreadsheets? Check
• Overview of historical sales and ordering data to facilitate forecasting? Check
• Drilling inventory data down to raw ingredients and portioning level? Check
• Instant access to various inventory calculations and percentages? Check
• Generate order lists when ingredients fall below par level? Check
• Ingredient & inventory transfer tracking for multi-outlets? Check
• Easy access to inventory data to everyone who needs it? Check