Restaurant Inventory Management Software | 3 mins read

What to Know Before Choosing Restaurant Inventory Management Software

what to know before choosing restaurant inventory management software
Jin Hyun

By Jin Hyun

Discover the key features of restaurant inventory management software, how to monitor food costs, as well as the importance of automation in inventory monitoring.

Having a successful restaurant takes a vision, a great chef, and the right inventory management procedures. Customers may love the location, the menu, and the wine list, but without effective stock management, the restaurant won't be profitable or sustainable.

Restaurant inventory management software is a comprehensive monitoring tool that tracks each ingredient, supply order, and meal that goes into or out of the kitchen. Inventory management increases efficiency in the kitchen, reduces inventory loss such as food spoilage or food waste, and drives up profitability by cutting food costs.

Why Is Restaurant Inventory Management Important?

Restaurant inventory management includes monitoring all stock, standardizing recipes, and planning the menu based on current inventory. It calculates usage (or the number of days the inventory will last), as well as depletion ( the inventory used in a day or a week).

This allows for accurate tracking of both inventory and profit margins. Inventory management
will accurately predict restaurant ingredient needs to prevent over or understocking. It also notifies of any surpluses or shortages before it's too late.

Automation of inventory management using software will simplify this process, reduce errors, and engage more staff in minimizing food waste. Some restaurants may lose as much as 10% of their inventory due to poor inventory management, and these errors can be avoided with the right restaurant inventory management software.

Monitoring Food Costs With Software

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Taking accurate inventory is the key to running a successful business. Stock counts should be taken at the beginning and end of each day, and include all ingredients ordered throughout the day, as well as food left on the shelf.

Software tools will make it easy to manage stock, minimize food waste, and maximize efficiency. It will also automatically calculate the food cost percentages or the percentage of operational costs that are spent on food. This is vital information for inventory budget planning and should be tracked to avoid overspending on unnecessary ingredients.

The food cost percentage is the difference between the money spent on inventory and the revenue that inventory brought in when sold to customers. To calculate the food cost percentage, start with the value of inventory received in a week, both at the beginning of the week and throughout the week. Subtract the ending inventory from the total inventory purchased, then divide it by the total food sales for the same week.


On average, the food cost percentage for casual restaurants is about 25%, while fine dining restaurants have an average food cost percentage of around 35%. Monitoring inventory usage with inventory management software makes it easy to calculate the food cost percentages and track revenue. If your food cost percentage is too high, look for ways to reduce waste, avoid surpluses, and manage staff error.

The Key Features of Restaurant Inventory Management Software

There are many different inventory management systems to choose from, so take some time to understand what the business needs. When researching restaurant inventory management software, make sure it includes these key features-

  • Automatic inventory updates - Excellent inventory management software will provide automatic inventory updates when linked to the POS system. When recipes and ingredients are linked to menu items, the restaurant inventory management software will receive real-time updates on inventory depletion and can accurately predict inventory needs.
  • Communication with all vendors - Restaurant inventory management software will store all vendor information in one place, and facilitate supply orders and delivery notifications. The software will create notifications when stock is running low, suggest purchase orders, track payments, and automatically adjust inventory when a shipment arrives.
  • Facilitates transfers between locations - Restaurant inventory management software makes it easy to run multiple locations at the same time. Rather than purchasing more inventory at one location, a surplus at another location can be transferred with the help of the software, reducing unnecessary purchases or food waste.
  • Seamless communication between warehouse and locations - Restaurant inventory management software will integrate the warehouse and all locations to facilitate seamless communication. The software makes it easy to track deliveries at the warehouse and coordinate inventory at all locations. It will also suggest when new orders should be placed to keep the warehouse stocked, and prevent shortages.
  • Up-To-Date and Accurate Reports - One of the most important functions of an inventory management system is creating accurate financial reports, and calculating food cost percentages. Access financial reports every day for a clear picture of the business, including all sales, inventory losses, and current stock levels. Easily generate reports without having to manually collect data or risk errors in reporting.

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Restaurant inventory management software takes the stress out of managing stock. It reduces common sources of shrinkage by tracking products as they come into the kitchen and as they leave.

Understanding exactly what inventory is being used and what is being lost optimizes operations.
Having up-to-date information about both inventory and sales allows the software to protect users against food spoilage and food waste to increase restaurant efficiency.

When purchasing restaurant inventory management software, make sure it can integrate all locations, communicate with all vendors, and generate reports to take the stress out of inventory management and increase profitability.