Last Updated:
September 26, 2022

How to manage your restaurant inventory system the right way

Managing inventory the right way not only prevents losing track of supplies and catching theft but also provides invaluable customer insights.
How to manage your restaurant inventory system the right way
By
Ciprian Rarau
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Managing inventory the right way not only prevents losing track of supplies and catching theft but also provides invaluable customer insights.

When it comes to a restaurant inventory system, there is definitely a right way and a wrong way to manage it. Inventory on its own is a pretty simple concept. For one, it ensures your remaining stock levels are in accordance with your invoice and sales records. However, bar inventory tends to be trickier than that as liquor is sold by the shot rather than the bottle.

Given the inherent complications in liquor inventory, it's incredibly important for restaurants and bars to manage it efficiently. Managing inventory the right way not only prevents losing track of supplies and catching theft but also provides invaluable customer insights. With this, you'll be able to improve your menu items, pricing, service, and more.

8 Best Practices for Maintaining your Restaurant Inventory System

While there are many different ways to keep stock of your restaurant inventory, none are as quick and easy, nor as beneficial to future sales, as using comprehensive inventory software. The following list will provide you with some restaurant inventory best practices and answer key questions that you can use to manage your liquor inventory system correctly.

1. Keeping the stocks organized and clean

Maintaining a restaurant is no easy feat.

Have you ever gone to a restaurant and seen a chef frantically running around, looking for a certain ingredient? Or have you walked into your favorite bar after a long day at work, ready to unwind with a cold drink? But instead of the usual efficient service, you find yourself waiting for an eternity as the bartender fumbles around, trying to find the right ingredients. The ice has melted, your drink is warm, and you're starting to get a headache. Sound familiar? These scenarios are all a pretty common sight for disorganized restaurant locations.

While these scenarios may seem like worst-case scenario, it highlights how important it is for a restaurant to stay organized. A messy restaurant is often the result of poor organization and a lack of attention to detail which often lead to a chaotic and stressful night for everyone involved as it slows down the whole preparation process.

There are countless moving parts that must all come together seamlessly in order to create a pleasant dining experience for guests. That is why maintaining well-organized and clean restaurant storage areas are so crucial. This will result in efficient operation, a positive reputation, and excellent customer service.

Here are some pro-tips for stock management:

  • Make sure all labels are clearly visible and legible. If they're not, they might as well not be there at all.
  • Make sure labels are placed in locations where they can be easily seen and accessed. The last thing you want is to have to search high and low for the right label.
  • Be consistent with your labeling. Use the same system for all of your food items, containers, and supplies so that everything is easy to find and identify.
  • Keep a supply of blank labels on hand so that you can quickly and easily label new items as they come into your kitchen.
  • Periodically check all of your labels to make sure they're still accurate. Things can change over time (e.g., expiration dates, contents, etc.), so it's important to stay on top of it.
  • Rotate stock on a regular basis to keep food items from spoiling and expiring.

2. Prevent errors

Inventory tracking all of the different items in stock - from food and drink to plates and silverware - is no easy task. And even if you're constantly doing inventory counting, it's easy to lose track of how much food and liquor you have on hand.

You might think that managing a restaurant's inventory is as simple as keeping track of what's running low and ordering more when necessary. However, there are a few potential pitfalls that can lead to errors in restaurant inventory management.

For liquor, one common mistake is failing to account for spillage. When bartenders are making drinks, it's inevitable that some liquor will be spilled or wasted. Similarly, drinks may be accidentally dropped or spilled by customers. To prevent these errors from adversely affecting inventory levels, it's important to keep track of spillage and adjust inventory levels accordingly.

Another potential problem is theft. Unfortunately, some employees may be tempted to help themselves to liquor or other supplies from the bar. By being aware of these potential errors, you can take steps to prevent them.

To add, when counting inventory, it's important to monitor inventory levels closely and conduct regular audits, and have a system in place to help ensure accuracy. This might include using barcodes or scanner guns to track inventory levels, or having someone conduct regular audits of your inventory system, so you can catch any mistakes or discrepancies that may exist. This, in turn, can help you to keep your inventory counting accurate and improve your overall efficiency.

So don't wait until something goes wrong - conduct regular inventory counts of your inventory to avoid potential problems down the road.

3. Identify the optimal inventory level

If a restaurant doesn't know how to stock its inventory levels, it could either be swimming in food or left high and dry.

For instance, a restaurant is trying to decide how much stock to order for the month. If the restaurant orders too much, then they will be stuck with too much food inventory that will ultimately go to waste. On the other hand, if the restaurant doesn't order enough inventory, then they will run out of food and be forced to either cancel orders or turn away customers. In either case, it's clear that it's important for restaurants to find the perfect balance when it comes to stock inventory levels.

Understanding how to determine the optimal inventory levels help restaurants reduce food costs and ensure that they always have enough inventory on hand to meet customer demand.

4. Make a strategy for coping with unanticipated shortages or excesses.

Restaurants are in the business of food, so it stands to reason that they would have a pretty good handle on the inventory management system. This allows them to buy the correct amount of food, minimize waste, and keep their prices competitive.

However, even the most well-run restaurants can find themselves caught off guard by unanticipated shortages or excesses. The key to mitigating these situations is to have sales forecasts that are based on accurate data. This way, restaurant owners can adjust their ordering accordingly and save money by avoiding overstocking. In addition, sales forecasts can help to minimize food waste by ensuring that restaurants only order what they need. For example, if sales are unexpectedly low, a restaurant might choose specials or discounts to attract customers. On the other hand, if sales are higher than expected, the restaurant might adjust its menu or increase its prices.

By being proactive and using accurate data to make business decisions, many restaurants can avoid the financial pitfalls of unanticipated shortages and excesses in stock levels.

5. Train your employees to conduct inventory correctly and take stock consistently

Inventory management in the restaurant industry requires consistency and well-trained employees to be successful.

One of the most important things you can do as a business owner is to train your employees to conduct inventory correctly and take stock consistently. This will ensure that administrative tasks are carried out smoothly and effectively and that reporting tools are accurate. It is especially important to conduct inventory regularly at restaurant locations, as employees can quickly deplete stock levels.

To start, pick a few employees to train as this will minimize differences in counting and other inconsistencies.

Most importantly, your employees should be trained on how to measure the amount of liquid in each bottle and how to account for incoming orders (since the last inventory check). In addition, utilizing a scale to manage your restaurant inventory system will go a long way to ensuring accurate measurements across employees and bottle types. Beyond using the same techniques, instruct your employees to do inventory at the same time of the week and day. Next, give each their own login to your bar inventory application or software for tracking.

For example, if you have three employees trained to take inventory, you must ensure that if one takes inventory on Monday at 3 pm, then they all take inventory on Monday at 3 pm. This is incredibly important whether inventory is taken once per week or once per month. As a result, you'll be able to avoid any gaps in calculations, costs, or missed products.

6. Integrating inventory systems with your other software and processes

Restaurant POS systems with inventory software are one of the best ways to streamline the inventory process and avoid mistakes. In fact, integrating all the systems or applications you have at your disposal allows you to automatically update your stock levels based on each sold drink. Because of this, you'll save yourself time and hassle.

In addition to tracking the drinks that you sell, integrating with your POS system allows you to thoroughly track profit made off different drink recipes. This is done to better maximize what you make and which type of liquor to use for your most popular drinks.

Also, using additional restaurant management systems EatApp, an application designed to make organizing online reservations easier, in combination with your other software is something you seriously need to consider if you want to ensure a successful establishment overall.

Trying to keep track of sales information without integrating software requires accurately tracking inventory stock, customers, purchase orders, and beverages that sell each day. A manual inventory management procedure involves regularly updating your spreadsheets very carefully with full attention to detail. Clearly, it's much easier to allow your inventory management software systems to do all the hard work for you.

7. Pay attention to customer wants and seasonal trends

Even the best-kept spreadsheets and most advanced inventory systems aren't much help if you don't take the time to learn from the information made available to you. On a day-to-day basis, study your customer's habits and preferences to go with the most cost-effective liquor for your mixed beverages. In other words, you should go with the liquors and menu items that will give you the best ROI (return on investment). Good restaurant inventory management software should help you accomplish all of these things and more, without needing to invest significantly more time or effort in tracking inventory.

Another effective strategy is to identify trends, this includes previous and current restaurant sales data trends to gather useful information. This will help you predict when you'll need additional inventory or might experience increased demand for specific products. For instance, you wouldn't want to go into a holiday like Cinco de Mayo without ordering extra tequila or guacamole.

8. Keep profitability in mind

The last and most important of the restaurant inventory techniques is to always keep an eye on profit. It's not only critical to minimize any loss of profit, but also to maximize sales.

In the world of liquor and food inventory, there are several negative aspects to be aware of. The first one is shrinkage, which means any inventory that goes unaccounted for from spills, overpouring, free drinks, misplacing products, or simply miscounting. Next is employee theft, which can be counted as a part of shrinkage but requires its own unique, delicate strategies to solve. Another significant risk is dead stock or a product that takes more than six months to sell.

At the same time, managing your restaurant inventory system the right way provides information that allows you in monitoring sales. When using inventory software, you can accomplish intelligent ordering and anticipate your future inventory needs more accurately. Ultimately, you should use your inventory data to optimize drink prices, create deals and promotions, and more.

Now that you're equipped with best practices to manage your restaurant inventory system, we'll answer a few common questions and clear some potential roadblocks.

Do restaurants use a periodic or perpetual inventory system?

In restaurant management, liquor inventory can be a tricky business. On the one hand, you want to make sure you have enough liquor on hand to meet customer demand. On the other hand, you don't want to overstock your shelves and tie up too much of your working capital in inventory.

So, what's a restaurant manager to do? The answer may surprise you: it depends on the type of inventory system the restaurant uses. Restaurants can either use a periodic or perpetual inventory system for liquor items. With a periodic system, inventory is only counted and updated at specific intervals, such as once a month. This can make it difficult to keep track of inventory levels, but it can also save time and money. On the other hand, a perpetual system means that inventory is constantly being monitored and updated. This can be more expensive and time-consuming, but it provides a more accurate picture of inventory levels. So, which is better? It all depends on the needs of the individual restaurant.

How does the restaurant take inventory?

Manual inventory management consumes a significant amount of time, which is why it's critical to establish an automated inventory management system. But first, what does restaurant inventory actually involve? What kind of inventory management processes that the restaurant do to track their food inventory?

Ordering Process

If you've ever wondered how your favorite restaurant gets all its food, it's time to learn about the vendor management. This is the process of ordering food and liquor from various suppliers, often in large quantities. To do this, a restaurant needs to have someone in charge of keeping track of menu items and their recipes, as well as the cost of each ingredient. They also need to know how much inventory they have on hand, so they can order accordingly and avoid too much-sitting inventory. Sitting inventory is the food that sits on the shelves, taking up space and costing money, but never getting eaten. The best way to avoid sitting inventory is to be strategic when ordering ingredients and supplies. Once all this information is gathered, the vendor management team can place orders with suppliers and negotiate to price. This is how restaurants make sure they always have the ingredients they need to keep the kitchen operational.

Receiving the Supplies and Goods

The restaurant does a physical count of the inventory and compares it to what was expected based on the vendor invoices delivered. This simply includes checking the paper invoices and to make sure that they received everything that they ordered. If there are any discrepancies, the restaurant needs to investigate and correct them. This is where having good inventory management tools comes in useful as it helps streamline the process. In addition, the restaurant can easily catch any mistakes that were made in the invoices.

Purchase Requisitions

Restaurant operators know that the sitting inventory in large quantities is a surefire way to cut into profits. That's why many restaurants have a system of purchase requisitions in place to help manage inventory and keep supply levels low. Basically, when an item falls below its par level, a requisition is sent to the purchasing department. The purchasing department then orders the necessary amount of the item to bring the stock back up to par. This system helps to ensure that restaurants don't run out of items and that they're not sitting on large inventories that tie up capital.

Of course, the process of purchase requisitions is not without its challenges. For example, if requisitions are not managed properly, they can quickly become backlogged, leading to delays in receiving new supplies. Additionally, if the par levels are set too low, restaurants may find themselves constantly running out of items and having to place rush orders. Nonetheless, when used effectively, purchase requisitions can be a helpful tool for managing restaurant inventory.

Inventory reconciliation

If you've ever worked in a restaurant, you know that liquor inventory can be a headache. For one thing, it's easy to lose track of how much alcohol has been sold, since customers often order multiple drinks at once. Additionally, restaurants have to deal with the potential for theft and spills, which can further complicate matters. As a result, many restaurants choose to reconcile their liquor and food inventory on a regular basis. This process involves comparing the stock levels in the POS system with the actual goods sold. This information is then entered into an inventory consumption spreadsheet, which is used to track how much of each item is being used over time. The data based on the regular consumption patterns can help make adjustments accordingly to ensure that they always have the right amount of supplies on hand and that you're not overspending on the stock.

Any discrepancies are then investigated and corrected. Reconciliations help to ensure that restaurants have an accurate picture of their food inventory management.

How to take liquor inventory in a restaurant?

Liquor inventory in a restaurant or bar setting revolves around tracking supplies to ensure existing stock matches invoices and sales. That's why frequency is key– so you're not overstocking perishable items, excessively giving away free drinks, or overpouring. The process for taking inventory works like this:

First, break up your alcohol stock into categories. For most restaurants, these categories will be beer, wine, and liquor. Liquor should also be divided into major types such as vodka, whiskey, rum, etc.

Next, count the number of bottles of each brand currently on hand and check them against your sales records. This is where a POS integration with your restaurant inventory management app comes in handy! If you have no reason to suspect theft and are not working to make up for past inventory mistakes, then conduct inventory on a weekly or biweekly basis. If theft or miscounts are suspected, you should do inventory more often until the situation is resolved.

It's important throughout the inventory process to account for shrinkage. Unfortunately, it's almost impossible to avoid losing small amounts of alcohol in a restaurant. To help account for lost stock when possible, train employees to report significant spills or broken bottles.

How much liquor inventory should a restaurant carry?

Evidently, a restaurant needs to be equipped with enough alcohol to meet its customers' needs without running out or without even coming close to running out. However, you also want to avoid overstocking as unused supplies can be a drain on your bottom line.

So, how much liquor inventory do you need and how much is too much? To find out, you'll need to calculate your usage. In order to do this, you must take your starting and ending inventory count and your record of any product inventory you received during a given time period.

Then, you will need to use a relatively easy formula: starting inventory + received inventory - ending inventory = usage. Usage will tell you how much liquor your restaurant used in a specific time period, allowing you to order accurately for the future and plan for busy or slow periods as well. (Note: most inventory software will calculate usage for you).

How do you calculate ending inventory?

Your ending inventory, mentioned above in the usage formula, is how much liquor your bar has used since the last inventory check. So, every time you take inventory after the very first time will give you an ending inventory.

It's calculated by subtracting the amount of liquor you have on hand from your final number at the previous count. This is not including any additional purchase orders during that time.

How does Restaurant Inventory Affect Its Net Profit?

There's no secret that proper inventory management is essential for any restaurant and bar business. After all, if you can't keep track of what you have in stock, how can you ensure that you're ordering the right amount of food? This is especially important when it comes to perishable items, as wasted food means losing money. But what many people don't realize is that restaurant inventory can also have a significant impact on net profit.

Food cost percentage is one of the most important factors in determining profitability. To simplify, it's the amount of money spent on food divided by the total revenue generated. For example, if a restaurant has a food cost percentage of 30%, that means they're spending $3 on food for every $10 in sales. The lower the food cost percentage, the higher the profit margin.

Another way that restaurant inventory affects net profit is through the cost of goods sold (COGS). This is the total cost of all the ingredients used to make a dish, including overhead and labor costs. COGS is essentially the opposite of gross profit; it's the amount of money spent before any other expenses are accounted for. The higher the COGS, the lower the net profit will be.

In short, effective food inventory management is essential for any restaurant business looking to improve its bottom line. By keeping track of what ingredients are needed and when they're needed, restaurants can avoid over-ordering too much food and reduce waste. In turn, this lowers food costs and helps to improve profitability.

What's the optimal inventory to sales ratio?

Just like Goldilocks, restaurants strive for an inventory to sales ratio that is "just right." That said, unlike the fairytale character, there is no definitive answer to what the optimal inventory to sales ratio should be. The ideal ratio depends on a number of factors, including the type of restaurant, the menu, and the local market. However, most experts agree that a healthy inventory to sales ratio falls somewhere between 2 and 4 percent. In other words, for the goods sold or every dollar value of sales, a restaurant should have between two and four cents worth of inventory on hand. While there is no magic formula for success, maintaining a balanced inventory is a good place to start.

How can restaurants reduce food waste in a highly efficient way?

Every day, millions of dollars worth of meals are wasted or thrown out by the restaurant industry all across the United States. According to one research, restaurants generate around 0.5 pounds of food waste per establishment, whether it's due to what is left on a customer's plate or in the kitchen. About 85% of the food that isn't eaten in a typical American restaurant is wasted, with only a tiny portion ending up as recycled or charity. With over 42 million individuals in the nation who are food insecure, this is unquestionably a serious problem, with so much food waste!

Restaurants may reduce food waste in a variety of ways, and menu engineering is one of the most effective. Menu engineering is the process of designing menu items in such a way that they boost profits while reducing food waste. For example, a menu item might be designed to be very popular, so that it will sell out quickly and generate less food waste. Or, a menu item might be designed to use less popular ingredients, so that they don't go to waste. For example, if you find that a particular dish is costing you more money than it's bringing in, you may want to consider removing it from the menu or raising its price. On the other hand, if you find that a certain dish is popular but not particularly profitable, you may want to consider increasing its portion size or adding a side dish to boost its appeal.

Another way to reduce food waste is to be more mindful of your ordering. This means closely monitoring how much food inventory or stock levels and only ordering what you need. You can also take steps to extend the shelf life of your food, such as investing in quality storage containers.

How essential is food inventory management in a restaurant?

Any business owner will tell you that losing money is the worst thing that can happen. Unfortunately, without proper food inventory management, it's all too easy for restaurants to let valuable ingredients go to waste. This is especially true for businesses with multiple locations, as it can be difficult to keep track of what needs to be ordered and when. Automated inventory systems can help to take the presumptions out of food management, but they are not always foolproof. Ultimately, it's up to the restaurant owner to ensure that their business is running smoothly and not losing money needlessly.

Create a Sheet for Food Waste

While tracking food waste may seem like a lot of work, the benefits make it well worth the effort. A food waste sheet is simply a document that tracks how much menu items are being wasted on a daily basis. This information can be useful for restaurant management for a number of reasons.

  1. It can help you adjust your menu mix to reduce waste. For example, if you see that a particular dish is being wasted more often than others, you may want to consider removing it from the menu or replacing it with a more popular dish.
  2. Tracking food waste can help you identify issues with your inventory management. If you're consistently wasting a certain ingredient, it may be time to re-evaluate your supplier or reconsider how much of that ingredient you're ordering.
  3. Food waste data can be helpful for recipe costing. By knowing how much of each menu item is being wasted, you can make sure that your recipes are priced correctly and adjust them accordingly if necessary.

Why do you need restaurant inventory management software?

If it wasn't already clear, there is a lot of work involved in conducting restaurant inventory the right way, especially with multiple locations. The software makes the whole process easier with an automated inventory process. The more features the inventory management system has, the easier the process is.

Restaurant inventory management software can help take the guesswork out of these business decisions, and it can also help you save money on labor costs and improve your cash flow. For example, let's say you've got a busy weekend coming up and you need to make sure you have enough chicken breasts on hand. With inventory management software, you can quickly see how many chicken breasts you have in stock and make a decision about whether or not to order more. This kind of information is invaluable when it comes to making decisions about your business, and it can help you save time and money in the long run.

From predictive analytics to an integrated scale and automated purchase orders, there are many factors to consider when making the decision of which restaurant inventory software to choose. You'll need to go with the one that makes the most sense for your business and its needs. To do this you should consider the number of users available, total cost, and whether it integrates with your existing systems.

The solution? WISK.

There's clearly a lot to consider when it comes to choosing software to manage your restaurant inventory system. Luckily, there's one that has everything you need to run a successful business and it's WISK. Our team is made up of restaurant owners, so we understand your business and what you need.

Above all, WISK is the right move for your bottom line. Our software is proven to decrease the restaurant's inventory time by 80 percent and minimize overpouring by 90 percent. Interested? Check out our current happy customers and book a demo online to experience it for yourself. Please visit here for more information.

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