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Food Inventory Management: What It Is and How to Do It Well

21 Oct, 2017 | Business Tips

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Effective food inventory management is essential for running a profitable restaurant.

Effective food inventory management is essential for running a profitable restaurant. For a restaurant owner or manager, there’s nothing better than hearing customers “Mmm!” and “Ahh!” over your savory food and refreshing drinks. And there’s nothing worse than going out of stock or serving a spoiled dish to your loyal patrons.

So what makes the difference between a high-quality restaurant serving mouth-watering cuisine and a low-quality restaurant serving rotten grub? Food inventory management.

If you get it right, your restaurant will grow its profits. If you get it wrong, you could lose your restaurant – 17% of full-service restaurants fail in their first year. If you want to learn how to do food inventory management effectively, we’ll give you a few tips to get started on the right foot. Before we do that, let’s define food inventory management.

What is Food Inventory Management

Food inventory management is your system for tracking what stock comes into your restaurant, what inventory leaves your restaurant, and what’s leftover.

A good food inventory management system is also the most useful tool for gaining insight into the ways you may be losing money.

You might have a few thieves on your payroll, or your chefs, bartenders, or servers are wasting inventory. You might also have a quality control problem, and too many people are sending back poorly prepared dishes – costing you hundreds of dollars a week in discounts.

With granular insights into how you’re losing money, you can start implementing strategies and policies for saving money and increasing your revenue – which is the ultimate goal in restaurant inventory management.

To help you achieve this goal, here are a few ways to optimize your food inventory management process for maximum effectiveness.


Tips for Effective Restaurant Food Inventory Management

Sell your staff on the benefits of food inventory management

You’re going to need the help of everyone on your staff to make food inventory management efficient and worthwhile. Don’t just force a new system onto your staff.

Sell them on it first. Show them why it will make them more successful at their jobs, and make the restaurant more successful in the market, which equals more customers and more money in their pockets.

Remind them that a smart restaurant inventory management system is the spine of the restaurant – it supports everything they cook, create, and serve, and helps guarantee their jobs.

And for you as a business owner or manager, remember that it helps you reduce food waste, prevent under or over-ordering, identify theft, and keep track of the health of your business.

Without it, you’d be lost, and so would your employees.

Create a Team and Train Them Well

After you sell your employees on the idea of a food inventory management process, it’s time to train a select team for carrying it out.

Identify hardworking people who are trustworthy, detail-oriented, and aren’t afraid of a little number-crunching.

Train them in your process – whether it’s an Excel inventory management system or a cloud-based inventory management system – and make sure they understand your inventory categories, purchase units, etc.

But food inventory management doesn’t have to be the sole task of your inventory team.

Your cooks can identify and report waste and spillage when it happens, along with your bartenders and servers.

Get everyone involved in looking for ways to streamline your processes and improve the flow of inventory into and out of your restaurant.

Keep Your Restaurant Clean and Organized

A good inventory flow is only possible with a well-organized and clean restaurant.

Your chefs should be cleaning the hoods, pots, pans, and other kitchen equipment every night.

Your stockroom should be neat, tidy, labeled, and cleaned regularly to avoid stickiness, smells, or mould growth.

Your liquor should be labeled, and organized by top selling and most used items to worst selling and least important items.

And your kitchen equipment should be logically organized for quick retrieval and return.

Perform Regular Stocktakes

Your stocktaking process is one of the most important parts of a workable food inventory management system.

Establish a stocktaking schedule and stick with it, whether it’s weekly, monthly, yearly, or daily. The more often you take inventory, the better.

If you want to know how to make this process easier, then you need to know the difference between perpetual vs periodic inventory.

Calculate Your Reorder Point

A reliable reorder point formula will help you determine exactly when you need to reorder stock.

Your “par level” is the minimum amount of any item you can afford to have on hand to satisfy customer demand before ordering more.

Once you hit that level, it’s time to place a purchase order.

Knowing your reorder point or par level is essential for avoiding stockouts.

Cross-Utilize Your Inventory

It’s more efficient to use one product for multiple dishes and drinks than using one product for one menu item.

For example, ordering mangoes for only one dish can become expensive if that dish isn’t a top seller.

Instead, you could use mangoes to make a sauce, to garnish a dessert, and flavour a cocktail.

Menu design goes hand in hand with effective food inventory management. The more you can cross-utilize your products, the higher your rate of inventory turnover, and the lower your cost of inventory.

Safety Stock Inventory

Even with the best food inventory management system, you can still experience unexpected shortages.

A snowstorm might halt your incoming shipment of goods, or you might get an unprecedented dinner rush where everyone seems to be ordering the same dish – and you might find yourself out of stock of a critical item.

This is where safety stock inventory comes in handy.

Safety stock is a “just in case” batch of extra inventory you store away for emergencies.

For some businesses – like those that run on a just-in-time (JIT) inventory management system – safety stock doesn’t make sense.

And safety stock doesn’t always make sense for food products that spoil easily.

But for frozen meats, desserts, liquor, and the like, safety stock can be invaluable when you find yourself quickly running out of an item while waiting for the next shipment.


Use Food Inventory Management Software

Instead of calculating everything by hand, you should invest in a food inventory management software that tracks it for you automatically.

Good software can automate purchase orders when you reach your reorder point for easy inventory receiving, can implement batch tracking to reduce spoilage, and can optimize your working capital for the long-term growth of your restaurant.

A well-designed inventory management software can also help your restaurant meet its inventory KPIs, reduce your lead time, and allow you to run the front-end of your restaurant without worrying so much about the back-end.

Where can you try out such powerful software?

Right here at DEAR Systems. Get 14 Days Free Access.

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