The 9 Most Effective Techniques for Managing Restaurant Inventory

Posted by Priya December 1, 2021 Online Ordering

In any restaurant, inventory is the foundation. However, most restaurant owners struggle to implement inventory management.

Restaurant inventory tracks down the raw materials used for the recipe preparation. Your long-term goals are easily achievable by managing day-to-day operations.

Integrate your restaurant with an online ordering system to control the stock flow. When your restaurant grows, then restaurant inventory management becomes a crucial part. A survey reports that 10% of food wasted before the customer plates- which means 10% revenue ends up in loss.

And this can happen in your restaurant also. Let us start exploring the restaurant inventory management techniques.

What Is Restaurant Inventory Management?

Restaurant food inventory control becomes a vital element. Restaurant owners often look for ways to prevent loss. In recent days, people talk more about the restaurant inventory system. It is because you need to know what you lose and gain in your restaurant. Inventory tracking records what your restaurant receives, and supplies to the customer. Now measuring restaurant profitability is no more a big challenge. You take full control of whether restaurant staff effectively handles raw materials. Keeping track of the inventory enables quick reordering than the usual procedures. And that’s why you need to know about inventory management.

Few areas that cause loss need restaurateur attention. For instance, kitchen staff mistakes or accidental spillage or theft will end up in loss. If you stick to the logic that every ounce of raw material reaches the customer plate, then that’s not the truth.

Why Is Restaurant Food Inventory Management Important?

Inventory management turns out tedious for the majority of restaurant owners. But restaurants consider inventory management for its indefinite profits. Every restaurant owner wishes to get maximum profit. But that is easily achievable by optimizing food costs. Inventory management data reports assist you in planning the menu and managing expenses. You will never face an over or under-ordering situation in a restaurant. 

Just try online ordering systems to check the current stock status and reorder. The inventory management system captures the stock discrepancies to fix food costs. Assign staff and any wastage is accountable by the particular restaurant staff.

Restaurant Inventory Management Best Practices 

Restaurant Inventory System Terminologies

  1. Food Cost Percentage – This parameter gives the dish preparation price with ingredients divided by the menu price. Generally, experts suggest the food cost percentage ranging between 28 to 35%. Even though there may be fluctuations due to the delay of the supplier goods or any other issues. Anyhow, the restaurants must maintain the percentage to move through the progressive graph.
  1. Variance – Variance gives the difference between the theoretical and the actual usage of raw material costs. For instance, theoretically, a food value is 600. But the inventory reports 1000 rupees spent on the dish. So the variance is 1000-600 = 400. The average variance for the restaurant is set to 2 to 5%.
  1. Sitting Inventory – It gives the current stock amount residing in the restaurant. You can specify the sitting inventory in terms of dollars or quantity. Maintain consistency in the measurement unit types.
  1. Waste – Every restauranteur wishes to avoid a loss of either spoiled food or improperly prepared food. Food wastage is categorized into two types: pre-consumer waste and post-consumer waste. Food tossed out before it reaches the customer comes under the pre-consumer waste. Post-consumer waste is food unconsumed by the customer after they receive the food. Find out the better techniques to decrease the pre-consumer part.
  1. Inventory Turnover Ratio – It is the rate at which stock is utilized in the inventory over the time period. Every year inventory turnover ratio is measured.

           Inventory turnover ratio = average beginning/average ending.

  1. Costs of goods sold (COGS) – COGS gives charges of the food preparation offered to the customer. Record inventory levels at the start and end of the given time limit. You can also include the additional inventory purchase charges. COGS relates to the goods depletion over the specified period.

COGS = Beginning inventory + purchased inventory cost – final inventory

  1. Par level – This parameter gives the minimum inventory level that matches customer demand. In this way,  you can eliminate unnecessary waste.

Inventory par level = Weekly inventory charges + stock usage / Number of food deliveries per week.

  1. Depletion  – The product charges used over a specific period. You can calculate this value either weekly or monthly.
  1. Usage  – The usage of the stock gives how long the stock item lasts based on the restaurant usage.

Usage = Siting inventory / Average depletion over the specified time.

For instance, a restaurant uses 25 liters of oil and 12 liters of oil used every week. It shows 25 liters of oil for one month.

  1. Catchweight – Unprocessed foods purchased inappropriate weights or catch weights. For example, meats purchased in pounds every week charged varying either high or low. catchweight can highly affect inventory management. So you need to take care of expense records. 
  1.  Recipes – It gives the ingredient amount used in the recipe by the restaurant staff. 
  1. Recipe Cost Management – Standardized recipes help in the effective usage of inventory. Ask the chef to prepare a list of ingredients and quantity of day-to-day usage. When the recipe changes, the purchase of ingredients and quantity also varies a lot. So keep your recipe list updated. 

Implement FIFO Approach

One of the inventory management best practices is the FIFO approach. The FIFO method ensures that no ingredient spoiled anymore. On purchasing the new stock to the inventory, move the older raw materials to the front. So that the chef uses the old elements and then opens the new raw materials for the food preparation. Label the stock containers with the date of opening. Instruct the employees to use the new ingredients after finishing the older items. If your restaurant is always flooded with stock materials. Labeling the stock materials would help you a lot. 

Also, instruct your employees to consistently monitor the stock over time. Implement the FIFO policy in the dry storage areas, shelves, and coolers. This way it reduces food wastage. It is also essential to check the expired items and remove them from inventory. As using expired items by mistake may affect your brand reputation. Above all, there are a few things that you need to consider:

  • Check the item remains tasty and fresh upon the serving.
  • Fix the storage limit based on the weekly or monthly sales.
  • See to that the food item is not overcooked or undercooked.
  • Set up a conservative purchase plan for perishable items.
  • Have an eye over raw materials not used and update the storage quantity for every item in the inventory.
  • Always fix to the highest quality standard of stock items. Food quality compels customers to return to the restaurant.

Stock Monitoring

Process the fresh stock orders by checking the stock of the inventory. Online ordering software tracks down stock on every restaurant opening and closing day. Balance stock is automatically notified by verifying the physical stock present in the inventory. Stock variance is another important factor that needs consideration.  

Variance is the remaining physical stock against the orders through the ordering app.  If the variance ranges from 2 to 5 % then it is acceptable as only items wasted range from a few items. Exceeding 5% shows more stock items wasted or theft of stock items needs a close look of a restaurateur. 

Manage Food Waste

Inventory management best practices recommend preparing an inventory list. Now you know about ingredients and supply quantities used in the restaurant. The food wastage sheet gives the inventory elements that do not account for sales. Wastage sheet offers a better solution for ingredients lost in the restaurant. For example, the food wastage sheet shows excessively spoiled vegetables. And restaurant owners need to take action to reduce the purchase of vegetables. Food wastage may result in wrong order processing, or the chef may try new recipes.

Share the wastage sheet with the restaurant staff regularly. So that your employees can understand the problem and resolve it in the future. If you have leftover excess ingredients, use them in the existing dishes to avoid wastage.

Administrate Your Recipes And Pricing

You can control food costs by mapping recipes to the online food ordering software. The recipe cost gives the ingredient purchase cost and preparation cost. Moreover, it controls the portion size offered to the customers. Manual calculation of the recipe cost usually results in an error and consumes more time. Restaurant owners have an idea to find the usage and yield of the raw material of the recipe. But if you want to track the items, aligning with the inventory is a bit tough.

A food ordering app offers automatic inventory tracking. You can profit gained by the menu item. A chef will specify the standard amount of each ingredient for a recipe. The inventory management system gives how many days the stock will exist to run the restaurant. And now you know when to place reordering of the raw materials. Generally, the food preparation cost ranges 30% of the menu price offered to the customer. Knowing about menu pricing becomes essential to move towards a profit pathway.

Keep Track Of Raw Materials

Restaurant food inventory becomes an unavoidable factor all over the food industry. As a restaurant owner, you always wish to eliminate food wastage. But this is easily possible with restaurant management software. Manage your stocks effectively by following a few tips.

  • Purchase the perishable stock elements at the minimum to avoid wastage.
  • Prepare smart menu design by using the season’s special fruits and vegetables. Follow this approach to attract customers who look for new menu items.
  • Assure that the older items are utilized first following a FIFO approach. Newly purchased items used only when the previous stock elements are over.
  • Connect your restaurant with an online ordering system to receive reordering notifications. You can set a reorder level for each ingredient in the inventory. Whenever the stock is below reordered level, the restaurateur receives the reorder notification. Now restaurants can place the orders in advance. No more running out of stock during working hours.

Set Up A Regular Schedule

Always set up regular monitoring of stock. Now you know the ingredient amount and supplies used in the restaurant. For instance, you can check the perishable daily basis. Check non-perishables or bulk items once or twice a week.   Irregular inventory measurement gives the wrong values of COGS, usage, and turnover ratio.  When you start practicing, you can visualize the changes in the menu and orders.

Train Your Staff Members

You can have a small team for inventory management, and the rest of the employees can do their tasks. Train your restaurant staff to handle the inventory problems. Make them understand that they should have an eye over the variance and check stock. Transform the restaurant staff into tech-savvy people. As the online ordering system automatically provides inventory tracking.  Since the restaurant staff mostly deal with ingredients and raw materials. Restaurateurs must take care of pre-consumer waste. Instruct them to record the rotten food or discarded food of order errors.

Make Use Of Smart Forecast Tools

Restaurant inventory management software maintains the day-to-day accounting and inventory operations. A special benefit of an online ordering system is smart data-driven reports.  The food ordering app regulates the inventory process, reordering, and sales forecast. Purchasing the stock items at the right time reduces food wastage and menu prices.

Maintaining The Shelf Life Of Goods

Inventory management best practices incorporate a vital element of shelf-life management. Every item in inventory has a specified life duration. Other than rice which lasts for years, few vegetables or fruits may spoil within a week. 

Perishables need effective management to extend their shelf life. You can label the duration of stock usage, enabling the chef to use the items before it’s spoiled.  At times you may have slow sales, and the stock items remain unused. Make a note of it and specify the reason for unused raw materials.

Reports And Analytics

Managing restaurant inventory effectively includes reporting and analytics essential for successful restaurant operations. Insights of the reports streamline the budget and purchase of inventory items. Thus the reports save your time and offer accurate levels of the stock.

You can forecast and plan for the stock based on the sales reports and analytics. The stock sale reports offer the profit and loss of the restaurant business.

Inventory reports help you-

  • Analyzing the inventory trends helps in deciding the menu of the restaurant. Detailed reports contain how far the stock lasts based on daily usage. With the reports, you come to know the day-to-day ingredients used in the restaurant.
  • Maintain an accurate list of stock and supplies in daily or weekly usage.

Online ordering systems offer unique features of stock and inventory management. Opening a new restaurant, you need to know the checklist of restaurants.

Check the restaurant sales daily or weekly to align with goals. You can bring changes to your restaurant kitchen and the inventory every minute of the day. The timely menu adjustments will help you plan your inventory better. In this way, your provisions arrive on time at the restaurant.

  • Make The Right Investments In Technology 

The current restaurant competitive world requires frequent technological upgradation.   Restaurant owners face major challenges in data analysis and tracking. Are you fed up with monitoring the inventory manually? Just try online ordering software that allows you to direct access inventory management.  Now you can figure out the variances and find out the reason for the loss. 


Restaurant revenue generation is directly connected with effective restaurant inventory functionality. Restaurant inventory management system insights offer comprehensive control over the accounting and operations. 

Cloud-based ordering app provides updated information on stock, reorder, and food price. If you wish to know more about inventory management techniques, schedule a free demo with us.

Author Bio


Priya is a passionate writer and enjoys writing articles about software, technology, and marketing. Through her informative blogs, she regularly discovers new tips and tricks that drive sales for restaurants.

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