Last Updated:
September 6, 2022

How to Do Food Inventory: What Every Restaurant Needs to Know

Learn the basics and the how-to's of food inventory and ensure that your restaurant is stocked with the right products.
How to Do Food Inventory: What Every Restaurant Needs to Know
By
Bogdan Patynski
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Table of Contents

Any restaurant owner would agree that tracking food inventory is one of the essential tasks of running a restaurant. Food, after all, is the main component that drives your business. Without a well-stocked shelf, you might run into problems like missing items or orders that aren't taken care of right. It can cause chaos in the kitchen and a bad meal for your customers. 

In this blog post, we'll discuss how managing inventory process works to meet customer demand and keep it a profitable business in the restaurant industry. 

Any restaurant owner would agree that tracking food inventory is one of the essential tasks of running a restaurant. Food, after all, is the main component that drives your business. Without a well-stocked shelf, you might run into problems like missing items or orders that aren't taken care of right. It can cause chaos in the kitchen and a bad meal for your customers. 

This is where taking inventory management comes in. As the term suggests, food inventory management involves the processes and systems used to track and manage the stock you're carrying at any given time. Done right, the practice can keep your restaurant running smoothly and ensure that your kitchen is stocked with everything your team needs to produce the right dishes and keep your customers happy.

The benefits of doing food inventory for a restaurant

Implementing good restaurant inventory management practices at your restaurant benefits your business in a number of ways including:

It keeps you in the loop with important metrics and KPIs

Managing and tracking inventory in your restaurant will enable you to keep tabs on things like the food quantities you have on hand, along with the value of the inventory that you’re carrying. These measures can then be used to calculate essential metrics and KPIs like:

Food cost percentage. This measures the ratio of your food costs to revenue and is calculated using the formula: (Beginning Inventory + Purchases – Ending Inventory) ÷ Total Food Sales.

Variance. Restaurant inventory management variance refers to discrepancies between the stock quantities/values you have on inventory software versus the actual stock on hand. This is an important measure to track inventory, as a high variance could indicate theft or administrative errors.

Usage. Stock usage pertains to the amount of how much food inventory management you've used up over a given time period. You measure it using the formula: Starting Inventory + Received Product Orders – Ending Inventory

Taken all together to calculate usage, these measures help you make informed decisions — such as what ingredients to order, how much to price your dishes by unit cost, etc.

It reduces food waste and spoilage

Spoilage and food waste could be costing your bottom line. Research by ChefHero found that food service businesses are losing $2 billion a year in profits because of food waste.

That’s nothing to sneeze at, and if your establishment suffers from food waste and spoilage issues, you’re not just leaving money on the table — you’re virtually throwing it away.

But with proper inventory management, you don’t have to. When you’re regularly tracking your food quantities, you can avoid over-ordering unnecessary items and ensure that you use up products well before their expiration date.

All that will lead to fresher ingredients on hand, lower food costs, and a healthier bottom line.

It could surface issues such as theft and admin errors

Managing and inventory tracking closely can shed light on discrepancies between your physical stock and the quantities in your system. A large amount of discrepancy could indicate that something is amiss or you could be dealing with problems like theft or admin errors.

Having a tight process for food inventory surfaces these issues sooner rather than later, so you can investigate and resolve them quickly.

How to minimize food waste?

Over-ordering

There are many reasons why people order more than they need. Why do most people do it? A restaurant inventory management system that doesn't work well or isn't managed well can make it easy for chefs to order more food than they need. Keeping track of your inventory and doing it will help you waste less food and save money on ordering food you don't need.

Spoilage

The product can go wrong even if you don't order too much. If you don't carefully manage inventory tracking of the food that comes in, you might accept something that has already started to go wrong.  Organize your storage spaces (cooler, dry storage, freezer, and shelves) based on when you received them. Make sure all products come in have clear labels with best-by dates on the inventory items. With tags, you can use the "first-in, first-out" (FIFO) storage method to keep less food that has gone bad.

Overproduction

Another common way food goes to waste is when a dish's sales are overestimated. Chefs often prepare and cook too much food to avoid 86's. But this leads to more food being wasted. Tracking restaurant sales using inventory management software allows you to look at your menu items, change them to make them more efficient, or get rid of dishes that aren't selling fast enough. Try planning your staff meal around the extra ingredients, so you don't have to do as much prep work.

Assorted misfires

A server forgets to add a note about allergies to a dish with nuts. The line cook made the wrong dish because a line cook misread a ticket. Misfires can be very bad for your bottom line. Mistakes like these don't have to happen if the staff has proper training and the boss is on top of things.

Poor portion control

Do you throw away bags of food that hasn't been eaten every night? It could mean that your portions are too big or too small. By controlling how much you eat, you can stretch your food's actual unit cost without giving up quality. If you use the exact measurements for each dish, guests who don't want to take home leftovers won't end up throwing away too much food.

How often should a restaurant do inventory?

The frequency of your inventory sheet depends on several factors, including how much stock you have and the type of ingredients you’re using. But the consensus among industry experts is that restaurants should do food inventory management at least once a month and strive to do it more often if possible.

According to QSR Magazine:

Inventory tracking at the end of every month is okay, but in order to be really effective, effective inventory management should be scheduled once a week on the same day.

Some experts even recommend taking inventory as often as you order, so if you order produce twice a week, then that’s how often you should conduct inventory counts.

Product or ingredient types should also be taken into consideration. If you’re stocking a number of high-ticket items (such as premium steaks or truffle oil), these things should be counted and measured more frequently.

Ditto for highly perishable items. The last thing you want is to hold ingredients after their “best by” date, so keeping tabs on these products is a must. Proper stock control practices ensure that you move your inventory turnover quickly and avoid spoilage.

Let’s say you over-ordered milk and the item’s expiration date is approaching in the coming week. With this in mind, you can craft a menu special or promotion on milkshakes, so you can use up the product before it goes bad.

Restaurant inventory best practices

We covered the basics and benefits of regularly doing food inventory; now it’s time to talk about the process of implementing it.

Below are some best practices to keep in mind when conducting food inventory counts at your restaurant to avoid losing money. 

Schedule your food inventory counts

You know what they say, what gets scheduled gets done.

If you want your team to conduct regular stock counts, the task must be on their calendar.

For best results, schedule to do food inventory management on the same day and time every week or month. This builds consistency and helps your team establish an inventory routine — making the task easier over time.

When people know when the next inventory count is being done, they can make the necessary preparations and execute the task more efficiently.

Assemble a team

Select the right people for the job. The best employees to conduct restaurant inventory checks would be those who are already familiar with your stock. Staff members who order and receive products are in the best position to do your inventory because they already have an idea of what you should have.

If you have newer team members, pair them up with seasoned employees who can oversee the process and walk them through different steps.

Make sure your space is clean and organized

Restaurant inventory management is already a tedious task as it is; don’t make it harder by having an environment that makes it difficult to count items.

See to it that the spaces in which products are stored — i.e., your freezer or stock room — are clean and organized. The key is to make items simple to locate and access. Depending on how everything is laid out, you could take steps like:

Grouping and organizing items in a logical order (e.g., by category)

Keeping a key component at eye level so it’s easier to view in counting inventory

Investing in the right shelving or bins in which to store your products

Labeling shelves and containers correctly

Placing items in transparent containers (whenever possible) to improve visibility

Positioning the items in such a way that their quantities, pricing, and expiration dates are facing your employee when they’re conducting inventory counts

Have a plan

Planning is half the battle when conducting stock counts. In addition to knowing when you’re doing it, come up with a plan that details how inventory should be counted. At this stage, you should iron out details like:

Which items or areas to take care of and in what order? Determine the products that you’ll count first or the areas that you’ll start with. For instance, you could choose to count perishables first or decide to kick off the inventory count in the freezer before moving on to the kitchen and other storage areas.

The people in charge of counting specific items. You don’t want team members bumping into each other — or worse — double-counting the same products. Be organized when you’re delegating stock counts. See to it that people know each other’s assignments so they don’t overlap or get in each other’s way.

Have a solid system for entering data

Doing restaurant inventory counts includes tracking and entering the following information:

  • Date and time of the stock count
  • Item name
  • Description
  • Unit price
  • Quantity

Depending on your system, you may also need to take note of details like inventory IDs, reorder points, expiration dates, etc.

In any case, make sure you have a solid and reliable process for entering this necessary information. Some restaurants may use a clipboard and inventory consumption spreadsheet, though this isn’t recommended, as doing things by hand can slow you down. A better option is to use a mobile device so you can count and track your inventory with ease.

Avoid eyeballing products

Eyeballing or estimating product quantities defeats the purpose of doing your inventory. One of the objectives of conducting physical inventory counts is to get a precise idea of what you have on hand and ensure that your records are accurate.

That’s why it’s essential to count every item by hand and record the quantities accordingly on inventory sheets. For products that need to be measured (e.g., alcohol) use a scale so you can have precise data on how much you have. It’s tempting to “guesstimate” your inventory levels, but doing so will lead to inaccurate data and ill-informed decision-making.

Track daily sales report

Every day is best for keeping track of your sales. At the very least, a quick check in your inventory data on a consistent schedule, and a deep dive once a week would help you get started.

The better you know your numbers, the faster you can spot odd situations and act on them.

If you want to go deeper into your total cost,  sales tracking, and analysis, it won't be easy to do so without the help of a sound inventory management software system. Some of it can be done with your inventory sheet, but your best bet is to get more accurate data.

Keep some more items on hand.

For ingredients that your restaurant uses up, it might be a good idea to always keep an "in case" stock.

For example, if you run a local pizza shop, you might want to keep extra fries on hand if you get a sudden rush of customers. Keep taking inventory of how old your extra inventory is and swap it out when necessary. To avoid food waste, you might want to use the extra inventory list that hasn't been used for staff meals.

How can prior inventory knowledge help you place future orders?

How do restaurants keep track of the leftovers and freezer inventory?

As any restaurant owner knows, food is a perishable commodity. That's why restaurants have to keep a close eye on their inventory, so they don't end up with too much food that goes bad. But how do restaurants keep track of all the food that comes in and goes out? 

One way is by using a computerized system that keeps track of every ingredient in the kitchen. This way, when an order comes in, the system can automatically generate a list of what needs to be used. And when leftovers are generated, the system can track how much is left and where it's stored. This helps restaurants to minimize waste and ensure that they always have enough food on hand to meet customer demand. 

Another way that restaurants keep track of their inventory is by using color-coded tagging systems. For example, green tags might indicate food that's fresh and can be used right away, while red tags might indicate food that's close to its expiration date and needs to be used soon. This system helps restaurants quickly identify which food needs to be used first, so they can avoid having to throw out expired food. 

By using these methods, restaurants can effectively keep track of their inventory and ensure that they're always able to serve fresh, delicious food to their customers.

How to do restaurant inventory quickly

Doing your restaurant inventory isn’t the sexiest part of running a restaurant, and if you’re like most people, you want to get the task done as quickly as possible.

To that end, here are a few tips to help you complete inventory counts faster — without compromising the accuracy of the process.

Take Inventory of a habit 

Taking inventory period and by determine inventory turnover will help you track how many supplies you have so you don't over- or under-order, keep your par inventory levels and understand your COGS or cost of goods sold.

Train your team

Make sure the employees who’d be taking care of your restaurant inventory have the knowledge and skills to perform the task well. Before conducting the stock count, orient your team on your inventory management practices. Get them acquainted with your items and ingredients, educate them on how to use your tools, and ensure they’re well aware of the specific inventory procedures you have in place.

Doing so will give them the know-how and confidence to conduct inventory counts, in turn minimizing mistakes, and ensuring that counts are conducted as efficiently as possible.

Strengthen your Inventory management processes 

By doing the restaurant inventory management tell the staff who work in your kitchen to compare the orders from suppliers with the invoices to ensure the weight, quantity, and actual cost are correct when you do your restaurant inventory. They should write down any differences so you can get credit from the vendor.

Digitize your inventory management practices

We’ve alluded to this earlier, but it’s worth fleshing out in more detail. Manually managing your inventory system is a recipe for disaster. The costs that come with recording and tracking data by hand (i.e., spoilage, inaccurate data, wasted time) are far higher than the expenses you’d incur by investing in a solid restaurant inventory management platform.

The right solution can automate tedious tasks like calculating inventory values and costs, measuring stock levels, and flagging low stock.

This brings us to our next point...

Inventory Management Software

‍By tracking paper invoices and instantly pulling invoice data into cloud-based restaurant inventory management software, technology can eliminate a lot of manual data entry, mistakes, and paper pushing.

It means you can see your current sitting inventory level in real-time, based on your recent supplier prices. Your cost of goods sold statistics will be more precise, so you can make better decisions. And because no humans are involved, you can be sure there are no mistakes.

Some app even automatically uses General Ledger (GL) codes. These codes are essential to restaurant finance best practices and are necessary if you want to enhance efficiency and lower food costs percentage.

Also, the software can make the whole process of managing your stock easier by:

Getting people to count on how much inventory is used. Just choose how often, what time of day, and who on your staff will take inventory.

You can do beginning inventory with your phone, even if there is no Wi-Fi in the walk-in. Connect to the Wi-Fi when you can get online again, and the counts will be updated.

Creating a product listing from digitized invoices makes it easy to make count sheets. Historical unit prices are kept up to date, so you don't have to dig through old invoices to find prices from before. You can drag and drop products into the existing count inventory consumption spreadsheet when necessary.

Choose the best app for food inventory

When it comes to counting food inventory, equip your team with a stock management app like WISK Food, which lets them count inventory using their mobile devices. Instead of entering the data by hand, WISK enables users to scan products and confirm counts with their phone, saving time and increasing accuracy while counting.

WISK even integrates with restaurant POS systems like TouchBistro, Lightspeed, and Square, so you can keep your data in sync.

Try it for free today and see how WISK can make food inventory a breeze at your restaurant.

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