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Top 5 Tips for Restaurant Inventory Management

By Shuvo Roy Last Updated -- Saturday, 2021-02-27
Top 5 Tips for Restaurant Inventory Management

Do you know which part is the heart of your business? Your inventory is your resource; your stock is your asset. Restaurant inventory management is a must for a restaurant business. Food cost management is related to the inventory management of a restaurant. Moreover, inventory management lowers your operational costs and minimizes food waste. If you don't know how to manage restaurant inventory, undoubtedly, you'll never touch your expected future.

What Is Restaurant Inventory Management?

Restaurant inventory management is a plan of action for overseeing the inventory or stock of a restaurant, bar, or coffee shop that includes a lot of essential practices like tracing ordered history, tracking the ingredients coming in and out, transferring products within the stores, analyzing the current status, monitoring, reporting and gathering the data for future plan.

Inventory management is one of the most considerable management operations in every business sector. Restaurant inventory management is overwhelming because the ingredients of restaurants are perishable. So without real-time inventory tracking or managing, the ultimate goal's attainment will be out of the question. 

Controlling inventory management is a comprehensive task as you have to keep track of your business resources. The best utilization of your resources or ingredients ensures your following step. As I mentioned earlier, inventory management is interrelated with cost management. So the efficient inventory management of your restaurant assures your business profitability.

75% of US restaurants face a great challenge to turn a profit due to inventory management. National Restaurant Association

Why Is Restaurant Inventory Management Required?

Inventory management is part and parcel of business operation, isn't it? Let me clarify. 

The business professionals found that the inventory of a business is a growth parameter. If you don't manage your business's stock perfectly, your business will be broken slowly but surely. 

Inventory management can develop your business as it maintains a balance between overstock and stockout. Besides, inventory management controls your business costs so that you can increase your earnings. 

This portion of the content will discuss the importance of food inventory management briefly.

Balancing Stockout & Overstock 

Maintaining a balance between the stockout and overstock of your restaurant is a must. Nothing is as vital for your business as balancing your stock.

Suppose you don't have accurate data on your inventory. The customer demands are altering, so you need the desired items or ingredients at the right time. Before stocking out, if you are concerned about your available ingredients, it'll affect the business services.

Customer satisfaction relies on your service. On the contrary, the shelf life of food ingredients is limited. Suppose you overstock your inventory with ingredients. You'll face an inventory loss as the remaining or excess items will be wasted. 

Understanding the market demands is the basic step to maintain a balance of stock. In this case, your supply chain management is crucial.

Controlling Operational Costs

Saving operational costs helps you to provide the services to the customers at a reasonable price. In this regard, your customer satisfaction level increases. But do you know inventory management assists you in cutting excess costs and increasing customer satisfaction? 

Managing your business warehouse, tracking your orders and sales, and maintaining the supply chain is the backbone of your business. 

Inventory management helps you to keep up to date with your available stock. It assists in making your decision consciously based on your business status. A proper decision-making process affects your business profit by cutting your costs.

Upsurging The Profit

The main target of every business is to make a profit. As a restaurant owner, it's the same for you. But the question is, how can I? 

There are thousands of factors that affect business profitability. Inventory management is one of the most significant factors. Growing your business is your aim, but nothing is comparable to your strategy that you are following. 

The new technique and innovative idea is a solution for your inventory management. The advanced technology gives a blessing to the business owners. Besides, conducting a business nowadays is more intuitive and convenient. Moreover, modern technology increases the visibility of business operations. 

How Can You Manage Restaurant Inventory Conclusively?

Restaurant inventory management tips for the desired persons who really want to reduce the operation cost, save time and earn more profit. 

The below explored 5 best tips for your inventory management that can ensure your success. Expertizes follow these tips to conduct the business and manage the stock at present. 

#1. Integrate The Best Inventory Management System

Standing out in the 21st century, it's obvious you are running a business management system for your restaurant. Well, maybe you aren't, but you are looking for the best restaurant management system for your business.

While thinking about restaurant management software, a POS system is your first priority. Besides, it must have an HR management system, accounts management system, sales and orders management system, mobile app integration system.

Now come to the inventory management system. When you have a restaurant POS system with an integration system, consider a restaurant inventory management system or restaurant inventory management software.

Besides, the restaurant inventory management app helps you to maintain your business more conveniently.

Open-source restaurant inventory management systems can be your first choice as you can get it through a one-time payment process. Besides, it is extremely customizable and fully responsive.

Check Out: Top 15 Restaurant Software

#2. Expertise Your Staff

Expertise Your Staff

Your employees are an asset to your business. You have to prepare them adequately for conducting any operation. Train all your staff to maintain the inventory correctly.

The chef of your restaurant should be aware of the inventory. If your staff wastes the food, makes an error while gathering the inventory information, your costs will increase.

You have to provide an adequate learning facility to handle the inventory management system. The food inventory software helps you as a helping hand and monitors your inventory. But if the staff are not well trained in operating the management system, it's the same as before, although you adopt digital technology.

In addition to this, make your staff inventory experts.

Want to Learn? 7 Unique Ideas to Create a Restaurant Marketing Plan That Maximize ROI

#3. Utilization of Ingredients 

Utilization of Ingredients

Some ingredients of a restaurant are perishable, and some are not. You have to make a schedule of utilizing your ingredients.

Well, at first, you have to separate your ingredients which are perishable and which aren't. Scheduling is important in your inventory management software. You can regularly check the perishable products' condition, and non-perishable ingredients can be checked once or twice a week.

While utilizing your ingredients, you must be aware of the market demands and the seasonal items. Seasonal food items management is essential. In this case, you have to purchase the items based on your need.

16% of menu items of a restaurant is responsible for 80% of total sales. Study

#4. Follow A Strategy

Maybe you are familiar with a term called FIFO that means first in, first out. Well, it's a popular strategy or technique. Business professionals always follow this FIFO.

As a restaurant business owner, you must consider this model. The ingredients that come in the inventory first have to serve it first to the customers. If you can't maintain this method, it is a must; you'll face an inventory loss issue.

In this case, you can arrange your inventory by following this way. The products that come first should place at the front. 

#5. Track & Analyze Inventory

Tracking your inventory is essential but analyzing the inventory is more important. Sometimes while conducting your business, you can realize one thing: the importance of making a proper decision. 

The proper decision-making ability dramatically depends on several things. One of the most significant parts of decision-making is inventory reporting. When you can analyze your inventory status properly, you can easily take any decision for future purposes. 

Effective analytics helps you to build your business's future. Besides, the real-time report system of inventory management software ensures your food inventory management efficiency. 

The food cost and customer satisfaction will be pleasant for you if you can manage your stock with the best restaurant inventory management system.

To know more details: 7 Proven Ways for Restaurant Management - Complete Breakdown

How Does Food Inventory Management Affect Profitability?

You know the food cost calculator and food cost formula plays an inevitable role in managing a restaurant's food cost. It is obvious to understand how to calculate restaurant food costs.

Besides the accurate calculation, inventory management affects your restaurant's food cost. So it has a significant impact on your profitability. Here, how food inventory management influences the profit of your business will be clarified. 

Are you familiar with the term COGS? COGS means the cost of goods sold. It means the total cost of preparing your menu items. 

COGS = Initial Inventory + Purchased Inventory - Final Inventory

When calculating your net profit, COGS is a part of it.

Net Profit= Gross Profit (COGS) - Labor Cost + Total Operational Cost

The above equation proves that a lower COGS means a higher net profit.

But the question is, how can you lower your COGS?

You can follow any of the following ways like

  • Conserving more ingredients
  • Purchasing fewer ingredients
  • Lowering food cost
  • Negotiating with existing suppliers
  • Finding out new suppliers
  • Integrating the best restaurant inventory management software
  • Handling the POS system perfectly
  • Managing the waste efficiently
  • Reevaluating menu pricing and overhead cost

The Biggest Challenges With Inventory Management

Suppose you are a restaurant business owner. Take a paper and a pen and write down the challenges that you face. Either it's a common issue or an unusual issue, you should put down everything.

This part will explore some greatest challenges that affect inventory management and the restaurant business professionals face those difficulties. 

Biggest Challenges of Restaurant Inventory Management

Supply Chain Issue

The supply chain of a restaurant is an important operation. Collecting the raw materials to offer the prepared product to the customers is included in supply chain management. 

Maximum restaurant owners face a problem while managing the supply chain. If your supply chain management is inappropriate, inventory management is negatively influenced.

When a restaurant can't maintain a good relationship with suppliers or the suppliers are not the desired one, then the business will face difficulty.

Click here to know more: Top 5 Functional Ways to Restaurant Supply Chain Solutions 

Communication Gap

The proper communication system within the workplace also ensures a congenial working environment. When a restaurant owner fails to establish a healthy relationship, the communication gap creates an unwanted situation.

Suppose your staff and the suppliers are not cooperative, and you don't have a good relationship with the suppliers. In this case, you'll confront a significant problem in maintaining your stock.

Check Out: Top Chatbot for Website

Improper Planning

Planning is an essential process. Your improper planning negatively impacts your entire business. You have to be aware of your business planning.

If you don't plan systematically, you can't manage your business. Your future step depends on the planning. How you maintain a balance of demand and supply, it's up to you. But you must confront a challenge at the end of the day when you don't have any plan.

Expertise Deficiency

Sometimes the restaurant owners don't have enough facilities to provide adequate training to the employees. In this case, the employees of the restaurant are amateur in handling any adverse situation. 

The lack of proper knowledge and technical skills is a great barrier to the improvement of the business. When you have modern inventory management software, your employees have to know how to operate the inventory with the latest and efficient system. 

Loss of Inventory

Okay, your stock is running well, and you have sufficient ingredients in your inventory. But have you ever realized how inventory loss negatively affects your business profit?

Let me say. When your inventory is overstocked and your balancing between stock in and out is not proper, the inventory loss is evident in this circumstance. 

The restaurant owners face inventory loss due to several reasons, and one of the most common issues is improper monitoring and data collection. 

Tracking Complexity

If you can't track your inventory timely, you will face an inventory management problem. When you have no advanced technology to track your inventory, it'll be a great challenge.

When you don't have any visibility or control over your restaurant's stock, inventory management relies on effective monitoring.

Change of Demand

The customers can change the demand frequently. In this case, if your stock is fulfilled with the thing that is not demandable in the contemporary market, you will face an inventory issue.

Sometimes the restaurant owners collect the ingredients a huge amount when those ingredients are available so much. But the customers can change their requirements anytime. In this case, you will face a problem as you already invested so much in that items.

Poor Efficiency

When the productivity of your restaurant decreases, your profitability also goes down. The traditional system is always lower efficient than the advanced system. 

If your business efficiency is low, it will be difficult for your business in the long run. 

The business owners who can't decide the best strategy and technique to solve any business problem face this issue most often.

Inadequate Technology

Adequate technology is essential for conducting business operations if you don't have the updated technology to operate the business. 

The insufficient adoption of modern technology decreases your business efficiency so that you will face a great issue while calculating your profit at the end of the day. 

Manual Input

Business organizations that haven't modern technology can't handle the data automatically. In this case, the manual input and calculation have a great probability of going the wrong way. 

Besides, the manual reporting system may provide inaccurate data and analytics. In this case, the business owners face a problem in the long run.

Inaccurate Reporting

Several business professionals face a great problem in reporting and analytics. Modern technology helps them to overcome the challenge.

The improper and wrong reporting drives them in the wrong direction. Because the business organization takes future steps considering the business report. If the report is wrong, the following steps and plan will undoubtedly fail. 

Lack of Visibility

The visibility should be increased in the present situation. Without increasing visibility, your business will be derailed. When your business operations are out of your control, and you don't know how to manage them properly, it is critical.

The managers can't monitor the entire business operations easily. It is a great challenge to manage the inventory. If you don't know your stock's exact status, how you can take the next step for your business.

However, these mentioned challenges are being faced by the restaurant owners. So you have to consider these issues to get rid of your problems. Your awareness is the best solution in this regard to managing your business, especially inventory.

What Is The Solution of Restaurant Inventory Management?

Restaurant Inventory Management Efficiency

Source: Hubspot

What type of inventory solution are you searching for? Well, the question can create a dilemma. The solution to your business can occur in two ways.

  • Awareness
  • Adopt new technology

Suppose you are not aware of your business challenges and don't know about the modern management system. In this case, you have to be updated to the newer and updated technology. 

Sometimes, you can feel the need for the desired system that can fulfill your requirements. Suppose you are a restaurant manager, and your chef and other staff help you keep your business alive. 

But which system can increase your business's efficiency is a big concern. In this case, you have to be aware and need to have proper knowledge of advanced technology.

Want to Know? A Complete Guide of Restaurant POS System

Adopt A Robust Restaurant Management System

Restaurant Inventory Management System Integration

You may think, what benefit you'll get if you have adequate knowledge of current or trendy technology. 

Restaurant inventory management software reduces about 17% of inventory loss. Besides, it helps to manage your food waste so you can save your food cost. 

It's crystal clear. If you want to adopt an inventory management system to overcome the challenges you face, you need to invest. But before knowing the exact information about the management system, you shouldn't spend a single dollar.

Integration with the best restaurant management system can be your ultimate solution by which you can manage your order, customers, staff, accounts, inventory, and other essential operations. The best POS system helps you to overcome all the challenges.


There is no alternative left for you without integrating an automation system to manage your inventory. Now, it's your decision which restaurant inventory management you are going to choose.

First, grow your knowledge and then implement it systematically. It helps you to grab success slowly but surely. 

However, success is your dream, so walk on the desired street. 

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