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5 Restaurant Inventory Challenges That Are Costing You Money (Keep an Eye On #4)

Restaurant inventory mistakes

Restaurant inventory challenges are the Gordian knot that almost all restaurant operators struggle with — they’re what keeps even the most experienced owners, F&B managers and chefs up at night, often more so than staff training, admin, or menu engineering.

You hack away at them but, try as you might, you just can’t get your counts right, your par levels spot on, or your food cost to behave.

Well, it’s time to do something about that.

Because, as easy as it is to ignore losing € 100 per month due to restaurant inventory mistakes, when that number hits € 1,500, that becomes a problem that can quickly sink your entire operation.

In this post, we’ll pick apart the five most common inventory problems, and share a few quick fixes that will help streamline your inventory management processes.

Whether you’re a fast-casual restaurant, an event hall or catering company, the solutions to these common stock challenges will help you keep your food cost low, the quality high and your staff happy.

Ready to become an inventorying mastermind who laughs in the face of inventory challenges?

You’ll be halfway there after reading this post, so let’s dig in.

1. Imprecise Counts That Leave You With Unreliable Data

food inventory purchasing restaurant business
Accurate ordering without correct stock numbers is a Herculean task. You’ll end up wasting time and not getting the results that you desire.

Accurate stock counts are the backbone of every efficient and profitable food service operation.

They are also one of the biggest restaurant inventory challenges operators are faced with.

Just imagine it…

…your team is wrapping up a 10-hour shift, having served delicious meals to hundreds of people… and now they have to spend an hour counting stock before they can head home.

Want to guess how long it’ll take them to start taking lucky shots? Or simply use the last week’s ordering lists to speed things up?

Hint – if you’re not keeping a close eye on things, they’re probably already doing it.

Your team’s wish for expediency is not an issue here — however, cutting corners where corners should not be cut is going to increase your food cost.

Accurate ordering is a Herculean task unless you’re working with correct stock numbers. You’ll end up wasting time and not getting the results that you desire.

How To Fix This:

The first thing you should do is make stock-taking a team sport — a lone manager or co-worker stuck in a stockroom after hours will start to glaze over the shelves pretty quickly.

But three people doing the count? They’ll keep each other honest and they’ll double-check each other’s work so no mistakes creep in.

Also, making sure that your staff knows how accurate counts affect them will motivate them to get better at inventorying. After all, how can you consider pay raises and bonuses if your food cost is 5% above target at all times?

Make things a bit easier on everybody (but retain the level of accuracy that you need) by not doing full daily counts.

Instead, create a list of extreme perishables, expensive items, and top-sellers.

These you count every day.

This way, you will still have total control over those ingredients that tend to balloon up your food cost.

Full inventory counts, on the other hand, remain a weekly chore. You will still have access to reliable and recent data but they won’t take up so much of your staff’s time.

2. Poor Knowledge of Costing, Portioning & Inventory Management

This is a frequent restaurant inventory mistake. In most restaurant operations, managers and executive-chefs are usually responsible for menu creation, recipe costing, and ordering.

Consequently, they’re the only ones who know how to do it all blindfolded (and perfectly).

This means that line chefs, junior chefs, and assistants will often make small mistakes in these areas — but those mistakes tend to create serious restaurant inventory problems.

Here are three all-to-common examples:

… a junior chef who regularly puts an extra helping of sliced turkey breasts in a club sandwich…

… a waiter who manages to get only five glasses of wine from a bottle, when it would be six to hit the food cost target…

… a kitchenhand who stores a barely used flour sack on a potato shelf, causing a miscount during weekly stock-taking…

These things add up over time, and they will negatively impact your inventory and your cost calculations.

How To Fix This:

Aside from the obvious – striving to hire capable BoH staff and investing in their continuous training – there are a few additional things that you implement so that everyone is on the same page:

  • Let everyone know you have an inventory system in place and that it’s there for a reason — when staff is aware that you’re tracking and monitoring things, they’re more conscientious about sticking to recipes and prescribed portions, and managing food waste (aka avoid wasting).
  • Get everyone involved in stock-taking – by the way you can download our free template for accurate restaurant stocktaking. Not only will they get good at it and be able to lend a hand when needed, but they’ll also learn where specific ingredients are stored (reducing storage and inventory mistakes in the process).
  • Use software to make portioning easy – for example, create step-by-step videos (accessible over tablet or smartphone) that show correct portioning and plating for each of your menu items. This gives your staff an easy-to-follow blueprint (which is especially important for busy multi-outlet operations).

Free Restaurant F&B Inventory Template for Excel & Google Sheets.

Our ready-to-use stock count template helps you keep your food costs under control and calculates your stock variance and gross profit margin.

A quick word on inventory management for multi-unit businesses

Accurate portioning is especially important if you’re running several locations. Executive chefs can’t be everywhere at the same time, and they need to be able to rely on local staff to execute every single plate perfectly.

The reason for this is two-fold:

A. dish consistency – if you want the ability to compare apples to apples across units, dish consistency is key.

Also, it will help you build a reliable brand that turns out happy customers at each and every location.

B. meeting targets – in the restaurant business, margins are slim as it is so you want to make sure that none of your locations are overspending, thus turning a profitable dish into one that barely breaks even.

3. Difficulty Tracking Internal Orders & Transfers Between Multiple Restaurant Units

Inventory management for multiple-unit restaurants is tricky. You have to track ordering, stay on top of inventory usage, and be able to compare the data of each location.

Running a single restaurant location is rife with inventory problems and challenges. However, it pales in comparison to running an operation with several units scattered around the city.

Consider this situation:

A shift manager in one unit is having an unexpected rush due to a nearby conference he didn’t plan for. He phones his counterpart in a unit across town to send him three crates of Coca-Cola, 24 premade bacon sandwiches, and a keg of beer. A delivery van rolls by in an hour and everything is delivered.

The day is saved!

Only… both managers were in such a rush that neither of them made a note of this.

Now, a diligent inventory and orders manager is looking at the numbers at the end of the month, and notes down two things:

  • unit A is doing great – their food cost variance is almost zero, and they’re managing to keep the overall food costs at the target level, and
  • unit B is missing a lot of stock – a conversation with the managers there is in order to try to figure out why they are wasting so much and if there’s any theft involved.

Well, we both know that this is completely wrong but that’s what the data is showing.

Inventory management for multiple-unit restaurants is especially tricky because it adds additional inventory silos for each location.

Not only do you have to track central ordering but now you have to keep on top of how several locations are using inventory, and be able to compare that data to get actionable insights.

This means having two similar but distinct systems in place, which is difficult to juggle unless you’re using software that provides a performance overview for each unit.

How To Fix This:

If you’re running a multi-outlet business, keeping track of orders and transfers becomes that much more difficult to handle with spreadsheets.

It’s still possible but only if you assign these tasks to detail-oriented and conscientious team members.

Instruct them to record every transfer and internal order, and to share these records daily with inventory and procurement managers.

That way, these managers can make location-specific adjustments to ingredient par levels, ordering exact amounts for every location and decreasing the need for transfers (and avoiding tracking mistakes).

Alternatively, you could use a dedicated restaurant inventory management software. With it, internal orders and transfers (as well as external orders) are all instantly recorded in the same place, and everyone who needs access to this information can simply log in and find it.

4. Money Tied Up In Unused Inventory

A lot of restaurants carry ingredients that they don’t actually need or use.

They made it on to the order list a couple of years back because the chef wanted to try something new, and you’ve been ordering them ever since, even though half of those dishes have been discontinued.

Things like…

… 10 jars of expensive Maille Chablis mustard…

… two kilos of matsutake mushrooms (dying as you’re counting them)…

… 12 bottles of aceto balsamico di Modena (and eight of them are open and half empty)…

Some of these are super pricey. Others are not. But the point is that you don’t use them, don’t need them, and they account for 30% of your waste every month.

In short, they are bleeding you dry and are a prime example of money wasting away in perishables.

How To Fix This:

This is a relatively easy restaurant inventory mistake to fix…

Identify those ingredients that are not being used (or frequently go to waste) by comparing historical inventory counts, and then making budget-conscious menu engineering decisions that are based on hard numbers and sales forecasts.

If you notice an ingredient is being carried over frequently (and the chefs are still ordering it), investigate why that’s happening.

Look at the recipes that use that ingredient and:

  • order less in the future and monitor usage,
  • replace it with a cheaper ingredient and monitor use, or
  • alter recipes so they no longer require that ingredient.

This is where accurate stock counts are imperative — you can’t eyeball things and still be able to get this specific and laser-precise with your ordering.

To get to this point, you need to know what’s in your stockrooms at all times, and you need to be almost 100% sure in your quantities.

5. Lots of Data – But Very Little Actionable Insights

You are dealing with different data silos. If you are managing these manually (or with spreadsheets), things get messy and complicated.

Let’s assume you’re religious about your weekly and monthly inventory counts:

  • You go through everything twice, just to make sure the numbers add up…
  • You record all your waste, shrinkage, and inventory mistakes
  • You note down transfers between outlets to know what goes where…

… and, in the end, you’re left with a mountain of data that’s difficult to make heads or tails out of and is too complex for spreadsheets to handle.

So you file it away and forget about it.

A lot of operators are guilty of committing this particular restaurant inventory mistake (though you could say the same about other back-of-house data).

Not out of laziness or lack of knowledge — but mostly because there are not enough days in a month to deal with it properly.

How To Fix This:

Set inventory goals on a per month basis or a location basis.

That way, you will have something tangible to calculate once you collect all the inventory data.

In most cases, when you’re setting goals, you should focus on a narrow set of inventory calculations and metrics, such as cost of goods sold, food cost variance, par levels, and sitting inventory.

Are you ordering more than six months ago, or less. Does outlet A have a significantly lower food cost than outlet B. Why is that?

Calculating specific inventory data every month will help you identify those areas of your inventory management that you need to focus on to curb unnecessary costs and increase profits.

However, because you will be dealing with a lot of different data silos if you’re doing this manually (or with spreadsheets), things can get pretty messy and complicated.

Having a dedicated restaurant inventory management software can make your life a lot easier — you’ll enter the stock counts, waste counts, transfers, and internal orders, and the software will do all the hard math for you. De system will tell you your F&B stock has evolved over time and how the different units are performing.

Are you ordering more than six months ago, or less? Does outlet A have a significantly lower food cost than outlet B – why is that?

Using a software lets you get a quick overview of all the data that you need to make cost-saving decisions, and you can go as deep and granular as you want (by locations, by months, by specific ingredients or dishes, and so on).

Don’t stop at inventory mistakes and challenges – read our recent post on Restaurant Inventory Best Practices, where we share tips and tricks on how to correctly set up your inventory management system from the start.

Avoid Restaurant Inventory Mistakes With Apicbase

Achieving inventory management excellence is difficult if all you’re using is pen and paper (or even spreadsheets). To really master it, you need the help of a dedicated restaurant inventory management software.

At Apicbase, we’re turning the tables on inventory and stock-taking — and we’re saving you hours every week by taking something complex and confusing and making it simple and accurate:

  • An easy to replicate and use system that gets rid of spreadsheets
  • Historical sales and ordering data to facilitate forecasting
  • Drilling inventory data down to raw ingredients and portioning level
  • Instant access to various inventory calculations and percentages
  • Generate order lists when ingredients fall below par level
  • Ingredient & inventory transfer tracking for multi-outlets
  • Easy access to inventory data to everyone who needs it

Schedule a demo today

In less than 30 minutes, you’ll discover how restaurant inventory management software boosts your business margins and protects growth.

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