What is restaurant inventory?
The management of inventory has been a perpetual topic of discussion in the restaurant industry. In order to maintain reliable service, it is important that there are enough supplies on hand at all times. This is why restaurants have mechanisms such as purchasing and rationing to ensure that they have appropriate amounts of food at any given time.
Restaurant Inventory Management- How to Manage and Optimize Restaurant Inventory
What Is Restaurant Inventory Management?
Inventory management allows small businesses to determine the required quantity of stock orders and when to order. Restaurants need the right quantity of ingredients to meet customer demand and save storage space at the same time. Restaurant inventory management software also helps in tracking coming-in inventory, managing leftovers, and food waste. You can also keep track of perishable items that need to be sold quickly before spoiling.
Traditionally, restaurant inventory is manually managed with spreadsheets, but now inventory management software allows small business owners to track inventory in real-time and process food costs accurately. Plus, you can generate sales reports and analyze business performance quickly and without human errors.
Why is Restaurants Inventory Management Important?
Restaurant inventory management is crucial for restaurant owners to make sure that there is enough inventory on hand to fulfill customer orders and, at the same time, reduce food waste and loss. Restaurant inventory management is essential for the long-term success of the business. Plus, you can generate purchase orders, prepare vendor invoices, reduce the cost of goods, and boost profits with the help of restaurant inventory management software.
Here are some of the benefits of restaurant inventory management-
Note-: Restaurant inventory management is crucial for restaurant owners to make sure that there is enough inventory on hand to fulfill customer orders and, at the same time, reduce food waste and loss.
You need to know how many of each item you have in stock on hand
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Reduce food loss-
According to a study, about 10% of food inventory gets wasted before reaching customers. Restaurants purchase large amounts of food inventory at a time, which may get spoilt before reaching the customers. Restaurants can reduce spoilage with the help of inventory management software by keeping track of expiry dates of perishable items. Restaurants can use a barcode scanner app for inventory management.
Manage the cost of goods-
Typically, restaurants pay food costs of almost 28-35% of the total costs for a restaurant. These costs increase with an increase in food loss and waste. Restaurant inventory management reduces food waste and loss, resulting in a lower cost of goods and more savings.
Boost vendor relationship-
Restaurant owners can manage their payments to vendors and determine the best prices for food inventory from several vendors with the help of inventory management software. Best inventory management software like Zipinventory allows restaurants to track their purchases and payments. It sends low-stock alerts of essential inventory items before they go out of stock.
Do You Know-: Restaurant owners can manage their payments to vendors and determine the best prices for food inventory from several vendors with the help of inventory management software.
Managing inventory can be a tedious process
Learn how to optimize your restaurant inventory with Zip Inventory
Online employee scheduling software that makes shift planning effortless.
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Automate inventory levels-
Restaurant inventory management software allows restaurants to determine inventory levels accurately. You can also automate several processes that allow restaurant managers to save time and reduce waste, thus boosting your bottom line.
Boost customer satisfaction-
Restaurant inventory management software streamlines processes, allowing restaurants to have the inventory of ingredients of all menu items on hand. When restaurants can fulfill customer orders, it keeps them happy and satisfied, thus increasing the customer base.
A major component of net profits is the total cost of goods sold. Restaurants can reduce waste with the help of restaurant management software, thus reducing the cost of goods sold and increasing profits.
What Is Restaurant Inventory Control?
Restaurant inventory control refers to food inventory management in a restaurant to eliminate food waste and increase profits.
It allows restaurants to determine when and how much stock is required to fulfill customer orders. Restaurant inventory management also helps with inventory cost accounting, which is a process to calculate the right amount of goods required by a restaurant to decrease total inventory costs. Total inventory cost includes goods, storage, market fluctuation, and administration costs.
Restaurant inventory management refers to monitoring incoming goods and supplies as part of the order fulfillment process. It allows restaurants to save costs, reduce food waste and increase profits, as a result. Restaurant owners need to track inventory regularly to know exactly how much sitting inventory they have on hand and make informed decisions on utilizing the stocks effectively. Restaurant inventory control makes inventory tracking easy and effective.
Restaurants can install robust restaurant inventory management software like Zipinventory in their restaurant point of sale (POS) system easily in no time.
Zipinventory Features several tools to control restaurant management processes, making restaurant operations easy and quick.
7 Restaurant Inventory Management Tips
Inventory tracking and management can be tedious for restaurant owners. Several perishable goods spoil if not utilized before the expiry date properly. Restaurant inventory management helps manage your supplies and reduce inventory costs, at the same time. Below are some restaurant inventory management tips that will help you take inventory and optimally utilize your resources effectively-
1. Use Robust a POS System to Take Inventory
A point of sale system allows restaurant owners several advantages like order fulfillment, demand forecasting, automated accounting, and real-time inventory tracking. Traditional methods of taking inventory are time-consuming and require many resources, thus reducing inventory turnover. By utilizing a POS designed for restaurant management, small business owners can reduce spoilage and increase their revenues. An ipad barcode scanner allows warehouse managers to scan QR codes and barcodes to keep track of stocks in real-time. Restaurant inventory systems provide accurate reporting that can be analyzed easily by reducing human errors and boosting staff productivity. You can utilize your staff areas where more manual work is required, such as customer engagement, making them happy and satisfied with your services.
2. Engage staff to manage inventory
Restaurant owners can designate your staff members like restaurant managers to take inventory. Employing responsible staff members to take inventory reduces inconsistencies and boosts the bottom line. Plus, designating a staff member to take inventory will provide an in-depth understanding of demand and supply patterns. You can train staff thoroughly on the inventory-taking process to make sure that they take accurate inventory every time. Restaurant owners can follow best practices and encourage staff members by offering bonuses for food cost savings and minimizing spoilage.
3. Follow a regular schedule
Restaurant owners can maintain a scheduled check to understand their accurate requirement and usage of supplies and inventory on hand. For example, you can schedule regular checks for perishable items and ingredients of the most popular menu items daily, while you can check other items once a week. You will gradually understand a pattern in the usage of every item and order them accordingly. You can install barcode scanner software to count inventory items accurately.
4. Use FIFO method
Restaurant owners can follow the first-in-first-out (FIFO) method of inventory count. You can organize your first received supplies in dry storage, cooler, shelves, and freezers areas according to the FIFO method to reduce spoilage. You can also utilize containers and dispensers designed for FIFO distribution to make sure that items are used before spoilage.
5. Make a food waste sheet
Restaurant owners can reduce food waste by creating a designated sheet to record how much food waste is generated. By creating a food waste sheet, you will be able to understand the areas that generate maximum food waste and methods to reduce spoilage and food loss. For example, if you have significant food spoilage due to underutilized perishable goods, you can reduce the purchase of such goods or look for other ways to utilize those ingredients.
You can create a food waste sheet on your POS system with the following details-
Date and Time
Amount of food waste
You can train your staff to update the food waste sheet as necessary to make sure that food waste is recorded accurately.
6. Use extra ingredients to reduce food waste
Restaurant owners can generate food surplus reports with the help of inventory management software that will allow them to create new menu items with surplus ingredients. You can also offer discounts or special offers for customers for menu items with surplus ingredients to avoid food waste or lose out on sales.
7. Use POS to predict precise demand forecasting
You can utilize your POS system to generate accurate demand forecasting from past sales. By analyzing demand for menu items in the past you can foresee which items are best sellers or less popular. You can make decisions on which items to include in the menu from past customer trends. Your POS system will allow you to understand fluctuations in customer demand during a specific period like holidays or seasons.
Steps To Take Inventory in a Restaurant
Taking restaurant inventory is an essential process to make sure you meet your long-term goals and maintain the bottom line. There is no fixed way of taking inventory of supplies and ingredients. You can customize it according to your requirements and customer demand.
Here are some common steps of inventory tracking in a restaurant-
1. Create a restaurant inventory template-
You can create the following rows in a restaurant inventory template in a POS system or customize according to your requirements-
2. Make a list of items-
Enter every item in your restaurant under the row of the items in your restaurant inventory template. Include every item like cooking ingredients, dinnerware, cleaning items, and tableware.
3. Write measurements of items-
Enter accurate measurements of each item purchased under the measurement row. The measurements of every inventory item may be different. For example, if you buy potatoes in pounds, tableware in pieces, etc. Regardless, it is crucial to document every item available in the restaurant to eliminate miscalculations or confusion.
4. Measure or count items-
Make sure you count or measure every item in the restaurant accurately and add the values under the Amount row. You can standardize your inventory measurement this way, making inventory cost and waste calculations easy and quick.
For Example, you should enter 50 pounds of potatoes as 50, 10 boxes of pasta as 10, etc.
5. Enter unit price of every item-
Write the unit prices of all inventory items under the unit price. You can determine the price of each item by dividing the cost of one item by the total amount of that item on hand.
For example, if one pound of potatoes costs $3 a pound and you have 3 pounds in your restaurant inventory, the unit cost is $9.
6. Determine the total cost-
You can calculate the total cost by multiplying the unit price of each item with the total amount of that product in your restaurant inventory. Enter the total amount under the total amount row.
For example, if you have 10 pounds of potatoes that cost $3 a pound, the total cost of potatoes is $30.
Determine Average Daily Food Cost
Restaurant owners can also make precise purchasing decisions by calculating average daily inventory costs. You can determine the average daily inventory cost by dividing the total inventory cost for a designated purchasing period by the number of days in that period.
For example, if the total inventory cost for 90 days is $180,000, the average daily cost is $2,000.
How Restaurant Inventory Affects Net Profit
Restaurant inventory is related to your net profit, making it essential to understand your restaurant management inventory. Let's look at how your restaurant inventory is related to your bottom line.
Restaurant inventory comprises the cost of goods sold (COGS), which is the cost of creating every item on your menu. Here is the formula to calculate COGS-
Cost of Goods Sold = Beginning Inventory + Purchases - Ending Inventory
COGS is also a part of the formula to calculate net profit-
Net Profit = Gross Profit (Total Sales-COGS) - Labor Cost + Total Operating Cost
In the above equation, you can see that lower total COGS equates to lower deductions from total sales, which, in turn, means that more will be multiplied by your gross profit, thus resulting in higher net profit.
Lower Cost Of Goods Sold Results in a Higher Net Profit
To decrease the cost of goods sold, restaurant owners need to find solutions to reduce waste, purchase fewer ingredients, or decrease food costs. With an effective restaurant inventory management system, you can determine the best solutions to reduce your cost of goods sold. Restaurant inventory management systems allow you to make decisions to optimize inventory usage and reduce spoilage.