Food inventory management is a central job for restaurant owners or kitchen managers. It’s a constant balancing act of keeping enough ingredients to fill every order, but not so much that food spoils and you lose money on it.
Digital food inventory management, in particular, provides a host of other benefits for businesses like:
- Tracking ingredient and food costs changes so you can keep your menu prices up-to-date
- Preventing over- and under-buys
- Tracking popular and unpopular ingredients to make menu updates
- Tracking the total cost of your inventory at any given time
- Improving your customer service by providing servers with complete transparency on sold-out menus
- Helping you keep accurate inventory records based on your restaurant's standards
Many restaurants track their inventory with pen and paper, as that’s the way kitchen managers were trained for eons. But the above benefits are virtually impossible to achieve manually. Just trying to get inventory tracking right takes so much effort that there’s very little time left for analysis of the user or available inventory. Moreover, you’d have to be a spreadsheet wizard to gain most of the insights an inventory management solution provides automatically.
Many restaurants begin to experiment with digitally tracking inventory levels by using the features built into their point-of-sale (POS) system
What is POS software?
A POS is a platform on which a restaurant (or retailer) runs its sales transactions. They can initiate a transaction, take payment, hold a catalog, run discounts, and more.
The restaurant POS systems specifically connect the kitchen and floor staff, so that the kitchen can see orders without waiting for the staff to run to the back. Management can keep track of KPIs like sales over time, which servers are selling the most, and which items are the most popular.
With the advent of easy-to-use, budget-friendly POS platforms, most restaurants run on a food inventory POS system, even tiny food kiosks.
Many POS systems also have inventory management system features built in. Since these inventory system features typically come with the POS subscription, it's with these stock management tools that restaurants first experiment with digital inventory keeping.
Common inventory management features in a POS
With that said, let’s take a look at the common inventory management qualities that a POS contains. These features are broken into three types:
- stock management
- order management
Stock management features
Because the inventory management characteristics in a POS are developed to make selling easier for a retailer's business type, the inventory management system is usually oriented around stock management features for keeping a catalog up-to-date. Typical features include:
- Creating products, including product variants and SKUs
- Set up a catalog or menu complete with specific item details and characteristics
- Tracking inventory counts and inventory records across multiple locations
- High accuracy and speed up the inventory process
- Low stock notifications
- The ability to set and change product prices
- The ability to set discounts, promotions, and create coupons
Order management features
Typically in POS software, this type of feature is the least robust, although this is likely to change as POS solutions work to develop into retail suites.
- Import products from catalogs that the software integrates with to reduce manual product entry
- Place some products and stocks on auto-reorder, usually from vendors the software partners with.
Analytics & Forecasting
Any inventory analytics features in a POS will be oriented toward managers trying to make sales decisions. As a result, these reports are most often an extension of the POS’ sales reporting features. Most modern point-of-sale systems also track market analysis to identify trends and provide reports on data in real-time giving users up-to-the-minute information on what's going on in their businesses.
- Track inventory usage over time
- Track unit costs, margins, and expenses
- Track how long certain products have been on a shelf for
- Assess inventory turnover (i.e, how fast an item is selling)
The limits of POS inventory management
While experimenting with your built-in inventory management system can be a great way to start getting comfortable with managing inventory digitally, POS inventory management systems are very limited. As noted, the tools are usually built for the retail business model, not the restaurant industry. As such, they don’t have the complexities necessary for restaurant inventory tracking especially taking food inventory management.
That's why if you use your POS’s inventory management, you’ll find that you’re completely lacking features or relying on circuitous workarounds to make a retail feature work for the realities of the kitchen. POS inventory management often lacks key features like scale integration, barcode scanning to automate inventory counting, and recipe creation.
What is restaurant inventory management software?
Restaurant inventory management software is built specifically for the unique needs of restaurants, bars, food trucks, and other food-centered. Restaurant inventory management tools understand that your inventory often isn’t your end product — rather, items get put together to create a meal or menu item.
Importance of Restaurant Inventory Management
The fact that inventory equals money is something that many restaurateurs are unaware of. Restaurants are losing a dollar value from their pockets on every food wasted. This is due to the fact that the food could have been used to generate income but is instead discarded.
If you check your inventory on a regular basis, you may discover the source of waste so that you can take measures to reduce it. Of course, there are always things beyond the restaurant's control, such as dissatisfied customers or overcooked food. It is critical to keep track of the other variables in order to maintain a sound inventory management plan, regardless of whether or not those factors are excluded.
In another instance, how would you know your true profit if you don't know what is being used and what is being wasted? Even if your entire purchasing system is outstanding, poor inventory management might leave all of your hard work ineffective.
In addition, customer service at restaurants is negatively impacted by poor inventory management. Never inform a customer that you are out of a standard menu item because someone failed to notice that you were short on it or that it was already expired. And if it occurs once, it will probably occur again.
This will lead to your restaurant's inconsistent operations that will drive customers to cease coming very soon. Nothing is worse than having a customer come to your restaurant with a specific meal in mind and then being informed, "Sorry, we ran out,"
That's why, in order to reduce the amount of food waste and maintain an optimal inventory level, restaurants should take measures to better plan their menus and inventory, in addition to training their employees on proper food handling techniques.
What are the features of Restaurant Inventory Management Software?
There are a number of features that can only be found in restaurant inventory management software. These features are made for restaurant owners and food inventory managers specifically and will help a kitchen achieve peak efficiency.
1. Reports made for restaurants
While POS solutions provide many important reports, restaurant inventory management reports are created to provide insight into the kitchen in a way retail inventory system reports just aren’t.
Reports unique for a restaurant's inventory control include:
- Sales versus consumption, so you can easily compare how your recipes are selling compared to the associated food costs. This report also makes it simple to track spillage, extra portions, or theft.
- Over-stock reports help you get rid of sitting inventory. Industry data shows that 4-10% of food in kitchens is wasted before it ever makes it onto a plate.
- Cost differences in inventory. As the cost of ingredients or the food cost changes throughout the year, you can decide what to discontinue, which recipes to raise the price on, and more. Price fluctuations can make it difficult to keep your costs under control, but with the right restaurant management software, this is a valuable tool for monitoring any food cost and preventing them from rising too high. This helps you keep a close eye on your overall food costs, so you can be aware of any price changes and adjust your budget accordingly.
- Sales-based stock estimation, so that you can have an idea of what inventory is left in between inventory counts. Ingredient levels are harder to track than typical retail inventory levels due to eyeballing, spills, and other activities unique to cooking. Restaurant inventory software is often set up with these things in mind so it keeps a more accurate estimation of how much inventory is available, rather than tracking it exclusively based on menu items sold.
- Smart order forecasting so you can pre-determined which food items are likely to increase or decrease in popularity.
- Assess beginning inventory count, receipts, transfers, production, and ending stock on hand. Compare actual versus theoretical costs to optimize your menu and the cost of goods sold (COGS).
2. Unique methods of inventory control specific to restaurants
Inputting food inventory can be very different from inputting other types of inventory. For instance, weight is often how kitchens measure a unit of inventory (e.g. you don’t track your rice levels by individual grains, but rather by weight of the total amount of rice).
So food inventory management systems often have scale integrations for measurement tracking. Scale integration allows the tool to pull the weight of an item directly from the scale, with no manual data entry required. The best food inventory systems (like WISK) even provide Bluetooth scales that are capable of reading exactly how much liquid is left in a bottle.
A restaurant inventory management system can also scan a barcode to input a product, avoiding human error and discrepancies during entry.
Finally, some restaurant inventory management systems integrate with various food vendors and catalogs, so that you can choose from pre-uploaded items, as well. (POSs will generally promise this feature, but it's essentially useless for kitchen managers since the catalogs are rarely ingredient-oriented.)
3. Ordering features made for food items
In general, the restaurant has a higher inventory turnover than a retailer. Ordering food inventory happens more frequently than other types of items, as food often quickly spoils. Food items, for instance, should be turned over 4-6 times a month.
It should be possible to define customized levels for when an ingredient is low in a restaurant inventory management system. To maintain your inventory full and fresh, but never overstocked, these parts can trigger orders to be placed directly with your suppliers. Notifications to you and your team may also be triggered by the pars.
The inventory management tool should also integrate with vendor management so you can purchase orders directly from within the system. (This is another tool many POSs claims to offer, but they often only integrate with retail-specific vendors.)
4. An offline mode for Wi-Fi-less venues or cellars
Food service often takes place in unexpected locations. Whether you’re testing a pop-up venue or figuring out how to make pandemic restrictions work for you, your business needs to be able to track inventory anywhere. At WISK, we offer an offline mode that is fully featured, so there’s no loss of activity when you lose Wi-Fi.
5. Providing alerts to your staff about low-inventory items
Low stock alerts are a feature of restaurant inventory management software that allows you to set thresholds for how much stock of an item you have on hand in your restaurant kitchen.
When the stock level reaches the threshold, the software will send an alert to your staff so they can reorder the item before it runs out. This can save time and reduce costs by ensuring that you never run out of a key ingredient again.
The best part is that this feature is straightforward to set up and maintain, allowing you to focus on your business while ensuring that you meet customer demand. Without the need of having to go back to the kitchen, servers will be able to accurately inform your customers about which menu items aren't available.
Additionally, the alerts remove the inconvenience that results from a server having to cancel an order placed for an out-of-stock item and take the customer's order again.
6. Monitors recipe costing
The key to tracking recipe costing is to carefully document every ingredient that goes into each dish, as well as the quantity used. This information can then be used to calculate the total cost of each dish and the cost of goods sold. By regularly monitoring food costs, restaurant owners can make adjustments to their recipes as needed to ensure that they are still turning a profit.
An inventory management system that uses recipe costing may assist you in maintaining consistent, up-to-date, and accurate data. Having updated vendor prices automatically pulled from your vendor invoices can eliminate the time your team spends manually entering invoices, especially if your ingredient costs vary seasonally.
Automating your food inventory management and implementing a strategic plan, managing your restaurant group's recipe expenses might help you optimize your profit margin across your menu.
7. Improve sales with a proper menu engineering
Menu engineering is a critical tool to plan and create your menu to maximize profitability. With the use of menu engineering, you may determine which specific food items to push, modify, or get rid of by mapping both their profitability and popularity.
Critical information regarding amounts sold in relation to item margin is integrated via sales mix polling, which links recipes with costing and data from your restaurant POS system. Menu engineering lets you assess if the menus are overpriced or underpriced, whether you need to change the amounts of certain ingredients or recipe portions, and how well the menu is performing overall. It enables you to weigh profitability versus popularity while making decisions.
With the help of restaurant inventory management software to automate this process, you can quickly assess these factors and get a clear sense of the margin contribution and sales success of each menu ingredient. Based on this information, you can take advantage of menu opportunities by, for instance, pushing ingredients with high margins but low sales.
8. Track food waste and control costs
Restaurant food waste is caused by a variety of circumstances.
Monitoring and recording every occurrence of food waste at the restaurant are essential for better food cost control and general best practices in restaurant accounting. You'll gain a lot more insight into your food cost percentage on both overall expenses and specific ingredient costs, enabling them to make data-driven decisions for spending that is both optimal and profitable.
Fortunately, some restaurant inventory management software comes with options that can help you keep track of the food waste at your restaurant. This enables you to create a trustworthy process such as:
- Identifying which recipes tend to produce the most waste and inventory variance across all restaurant locations
- Entering any food waste, including spilled food and food that has spoiled, into the inventory management system module.
9. Inventory task management
A smart restaurant inventory software also includes an employee management feature to cut down on the amount of time spent on administrative activities, with predefined procedures for your restaurant employees.
- Create reminders, set due dates for tasks, and keep track of everything in the shuffle.
- Create a task menu that only contains the information that your team deems to be most relevant.
- Check the status of any task
10. Invoice management
A restaurant inventory management system is an application or program for inventory tracking that can store, monitor, and analyze invoices from suppliers for inventory and supplies. The invoice management system works seamlessly with your inventory and accounting tracking processes, integrating with your bookkeeping, POS system, and inventory management software.
By combining sales, inventory, and accounting data in one platform, a restaurant owner can track profitability, cost of goods sold, ingredient levels, and more.
10. Streamline and centralize recipe management
Restaurant back offices and kitchens may benefit from restaurant inventory management to manage inventory control workflow. This can help you streamline and centralize the recipe management process to determine your cost per plate, track how much food inventory level needs in real-time, and forecast how changes to your menu will impact your bottom line.
- Establish recipe guidelines for each item on your menu (temperature, processing time, etc.) to maintain consistency in quality across all locations.
- Gain insight into your cost of goods and control stock levels to accommodate the total anticipated demand
- Standardize menu items' recipes, calculate plate pricing, and keep an eye on how shifting operating costs will affect potential sales.
The solution for restaurants
Ultimately, for a restaurant to succeed, proper inventory management is a must. You need to make sure to have both a POS and a specialized inventory management solution to run at optimal efficiency in order to conduct effective inventory management. That’s why we recommend using an inventory management tool that integrates with your POS system. (WISK integrates with more than thirty POS systems.)
With integration, you can keep the inventory management’s sales reports up-to-date and accurate at all times. WISK’s integration can read the recipes sold in the POS and quickly break that into inventory reports for you.
A comprehensive approach to food inventory management goes beyond your POS system. When you integrate specialized inventory software, you'll uncover areas for improvement and see your ROI steadily improve.
WISK is the perfect tool for restaurant businesses ready to upgrade to an inventory management system built just for them. Book a free demo today.