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  01 Sep 2022

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The Importance Of Inventory Management In Restaurants

According to recent estimates, the world's population wastes roughly half of the food generated. Food waste has long been a source of concern, especially in the food industry. However, with good inventory management, company owners can save a lot of money in ways they never imagined.

Anything that comes out of your kitchen has a price tag. But do you know where you're losing money? Detailed use, loss, and sales performance reports show you what's on the shelf and where money is being lost.

While it is common knowledge that inventory management is important in every sector, we will concentrate specifically on the food industry in this article, and you will learn the nuts and bolts of restaurant food inventory management, including what it means, how to keep track of inventory, and the importance of inventory management in restaurants.

What Is Inventory Management?

Inventory management is how you track and control your business’ inventory as it is bought, manufactured, stored, and used. It ensures that you always have the right quantities of the right item in the right location at the right time.

Inventory management helps companies know how much stock to order and when to order it. You need enough to meet customer demand, but you don’t want to take up too much space.

Inventory management can be accomplished with spreadsheets and manual counting but, it isn’t as effective as inventory management software. inventory management software helps ease the process and more accurately count and track your products. Additionally, it can show important financial and performance data and re-order stock when it reaches certain levels.

What Is Restaurant Inventory Management?

Restaurants have the added challenge of selling perishable food items that need to be turned over quickly before they spoil. Restaurant inventory management tracks food coming in from suppliers as it’s used, lost or leftover.

Restaurant inventory management goes beyond just counting inventory, and it is the process of monitoring the ingredients that come in and out of your restaurant. Stock management keeps track of how much food was ordered, what came out of the kitchen and bar, and what was left over as sitting inventory. In concise words, restaurant inventory management entails product transfers between stores.

Inventory control in a restaurant can be time-consuming and difficult. Although certain aspects of restaurant inventory can be measured automatically using your inventory tracking platform, others must be performed by hand on a regular, weekly, or monthly basis.

For example, your point-of-sale (POS) system can be able to automatically monitor theoretical inventory based on sales (in product or dollars). However, the automated number ignores the possibility of inventory item loss due to improper planning, kitchen waste, ordering errors, or spoilage.

Inventory Management Benefits For Restaurants

Inventory management helps restaurants keep the right amount of food and ingredients on hand so they have enough stock to serve all customers and also avoid spoilage and loss. Restaurants are more likely to find long-term success if they practice effective inventory management.

Restaurant inventory control becomes a critical aspect of restaurant operations as the company increases in size and structure. The following are the reasons why inventory management matters to any restaurant.

Recipe Costing

Calculating menu item costs by hand is inefficient and time-consuming. Recipe costs are determined by the amount of use and yield of each food ingredient, but keeping track of this on an inventory list by hand can be inaccurate.

You can better understand and manage your food costs by mapping your recipes to POS system menu items. Recipe costing dissects menu items down to the minor level, such as portion size and individual ingredients, and calculates them to the penny.

Using a restaurant inventory management system incorporated with your accounting and POS system can enable you to automatically track the yield from each food item on your menu by plotting inventory against sales.

End-To-End Inventory Management

Anything from counting and transferring to buying and invoicing is covered by end-to-end inventory management. One platform can be employed to automate invoice uploading, record stock counts, and auto-update item prices if your restaurant inventory management system is integrated with your restaurant accounting platform.

You can speed up monitoring from the sheet to the shelf and ensure you're dealing with real-time pricing data by gathering specific data in one location automatically.

Preventing Food Wastage

Maintaining the profit margins can be as simple as implementing a restaurant inventory management system. The most significant expense your company faces, along with labor costs, is replenishing your inventory.

You will reduce the amount of food wasted in your restaurant by introducing a stock management system. Food waste is a significant issue in the United States, with an estimated 30-40% of the supply ending up in the garbage.

Restaurant companies of all sizes, large and small, may see a significant reduction in wastage by using the right stock management software.

Menu Engineering

Recipe costing and sales mix polling from your POS framework notify menu engineering, which is the intersection of data regarding quantities sold and item margin.

Menu engineering increases profits by assisting you in determining the most profitable menu items so that you can subtly persuade consumers to purchase what you want.

Based on food prices, you can determine if menu items are overpriced or underpriced and make adjustments to portions or recipe ingredients. You can take advantage of new menu opportunities to sell menu products with a high-profit margin but low sales volume.

Lower Cost Of Goods

Food costs are generally 28% to 35% of the total costs for a restaurant . That goes up when food is lost or spoils. When restaurants purchase food, about 4-10% of it is wasted before it reaches the consumer.

This happens because they’re purchasing too much food at one time, and it ends up spoiling before it’s used. Proper food and inventory management can minimize this loss.

Better Vendor Management

In most cases, restaurants purchase their inventory through specific vendors. With inventory management, you can track food and purchases, payments, and more.

Restaurants can use inventory management to more closely track their food and purchases, allowing them to better manage purchases and payments to vendors.

More Satisfied Customers

Restaurants can Develop repeat customers and keep them happy by having ingredients on hand.

The ability to deal with inquiries and fill orders quickly means the restaurant is able to serve more customers and move more inventory,, resulting in higher profit.

Increased Profits

Profit margins are typically very slender in the food industry and there may only be a small profit on each menu item at the end of the day.

As a result of this, even the slightest mismanagement or miscalculation of inventory could seriously impact how much profit your restaurant brings in. Proper restaurant inventory management will ensure your business is getting the correct profit from each menu item.

The total cost of goods sold is a major component that determines net profits. Inventory management decreases waste, which lowers the cost of goods sold and ultimately increases profits.

Optimize Your Ordering

Inventory management in your restaurant will help you find your period automatic replacement (PAR) level, the optimal level of any given inventory item that you should have on-hand in your restaurant at all times. When you reduce your business costs, you can improve your company’s cash flow and drive up profits.

By using inventory management to forecast exactly what your restaurant needs to meet demand, you can optimize your ordering so that you aren’t ordering too much and thereby cutting down wastage.

Tips For Managing Restaurant Inventory

Quick-service restaurants, catering firms, and any other food and beverage company will benefit from using a stock management system. An inventory monitoring device, as previously mentioned, assists food and beverage companies in efficiently managing waste, increasing production, and controlling cash flow.

Keeping a close eye on production costs as well as the overall market value of goods is standard practice in many industries. Some food and beverage establishments, on the other hand, do not subject their menus to the same degree of scrutiny.

Maintaining an effective stock management system will assist you in reducing operating costs, adjusting menu pricing, and creating a portion control strategy. Use these tips to make sure your stock is being used effectively.

Make taking inventory as simple as possible.

Make inventory streamlined for your team if you want your food inventory to be reliable and up-to-date. Manually running inventory management can be time-consuming and sluggish, but an accessible platform with features like reusable templates can make it easier.

Consider an inventory management platform with a mobile app, which will enable your employees to navigate around the walk-in cooler and dry storage without having to drag around a clipboard or laptop.

Analyze the report based on the accounting and inventory data

Insights into past and current inventory will help you make better decisions in the future to improve your operations. You save time and ensure consistency by streamlining the collection of inventory items and budget details.

Tracking theoretical vs. actual food cost variation using real-time reports, in particular, will help you identify patterns over time and increase your food cost.

Assign a team to take inventory.

When it comes to inventory counting, accuracy is crucial. Select a few people from your team to be in charge of stock-taking at all times. Receiving orders and reviewing inventory reports can be handled by the same individuals.

You can also establish an inventory counting plan once you've formed a team. Ascertain that the inventory is counted at the same time and on the same days.

Leverage smart forecasting tools

You can take advantage of a clever, data-driven software solution when your restaurant inventory management program is part of an all-in-one accounting and operations solution that's integrated with your POS framework.

Suggestions are focused on current inventory, revenue, and forecasting, as well as information from your POS system and budgets. Food wastage is reduced, and food prices are reduced when food, beverage, and supply orders are placed at the appropriate amount.

Make daily sale tracking

Restaurants can better react to changes in real time if they track revenue and inventory levels every day. For example, if you sell a lot more of a menu item than you planned and are out of ingredients, you can order more to keep up with demand without having to take it off the menu in the meantime.

Automate Your Inventory Management With An Inventory Management System

Ultimately, inventory management is important in restaurants because of the endless benefits it could provide including increased profits, reduction in food waste, and increase in customer satisfaction.

Most modern restaurants are leveraging technology and making use of an inventory management system. An inventory management system removes the need to build an online management system from scratch and lets your concentrate on giving your clients the utmost satisfaction they deserve.

With an advanced system that allows you to manage reservations, update your rates, and tailor customer experience according to your whims, among other powerful features, Booking Ninjas is leagues ahead of our competitors in the game.

It also efficiently keeps track of and handles all your transactions so you don’t have to stress yourself over them.

For more information, check out Booking Ninjas' Restaurant Management System .


  1. .”. Food Waste FAQs, Accessed 30 June 2022.
  2. ”. Food Cost Percentage Formula - The Key to Profitability, 14 April 2022, Accessed 30 June 2022.
  3. ’. Best Restaurant Management System, Accessed 30 June 2022.

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