Have you ever had to 86 a top-selling menu item mid-service? Of course you have because we’re not perfect. However, there are ways to avoid this happening on a nightly basis. Done right, inventory management can reduce food waste, improve your food cost percentage, and even uncover theft or loss.
Here’s how to simplify the process and make inventory management work for your restaurant and not against it.
Start With a System (Any System)
If you’re still scribbling counts on the back of a receipt, it’s time to level up. The right system depends on your restaurant’s size, complexity, and budget. At a minimum, your inventory system should track incoming items, how quickly ingredients are used, reorder points, vendor info, and pricing.
Basic Options (Great for Small Restaurants or Startups):
- Google Sheets or Excel: Cost-effective and customizable, but more work as you’ll need to build it out and update it manually.
- Smart templates: Look for downloadable inventory templates online designed specifically for restaurants.
Advanced Tools (Time-saving, POS-integrated):
- MarketMan: Full inventory and supplier management. Syncs with POS systems, tracks food costs, and offers mobile inventory counting.
- Craftable: Built for hospitality businesses; manages inventory, recipes, ordering, and accounting.
- Yellow Dog: Works with multiple POS systems and supports detailed vendor tracking, multi-location inventory, and recipe costing.
- Toast Inventory or Square for Restaurants: If you’re using these POS platforms, check out their built-in inventory tools. They often integrate seamlessly and reduce data entry.
Take Inventory Regularly
You can’t manage what you don’t measure. So, how often should you count? It depends on your restaurant. High-volume restaurants should count at least 2–3 times a week and daily for critical items like meat or dairy. For small or lower-volume operations, weekly may be enough.
Tips for smoother counts:
- Always count inventory before you open or after you close.
- Assign counting to the same team members.
- Use a digital inventory app to record counts in real-time.
- Always count the same items in the same order and location.
Track usage over time to spot patterns, like if you’re consistently overstocked on onions or running out of takeout containers on Thursdays.
Get Organized
Restaurant inventory chaos leads to food waste, duplicated orders, and a frustrated staff. A well-organized kitchen and storage area supports faster service and easier inventory counts.
Tips for better organization:
- Group items by category: Dairy, dry goods, proteins, etc.
- Label shelves clearly: Especially for shared or rotating items.
- Use transparent containers: So you can visually spot low stock.
- Date and label everything: Include the received date and ‘use by’ date.
- Implement FIFO (First In, First Out): Place older items in front so they’re used first.
Take it one step further by assigning shelf space by par levels. If a shelf is only ¾ full, you know you’re running low; no count is needed.
Know Your Key Metrics
Data is your friend when it comes to inventory. Here are three critical numbers you should know:
Cost of Goods Sold (COGS): This tells you how much you’re spending to produce what you sell. It’s a key profitability metric. Here’s the formula: (Starting Inventory + Purchases – Ending Inventory) / Sales = COGS percentage
Inventory Turnover Ratio: How quickly you’re using inventory. Low turnover can signal overordering; high turnover might mean you’re running too lean. Here’s the formula: COGS / Average Inventory Value
Par Levels: The minimum amount of stock you want to have on hand. Once you drop below par, it’s time to reorder. Par levels should be based on your sales trends and delivery schedule. By tracking these metrics regularly, you can forecast better and avoid over- or under-ordering.
Train Your Restaurant Team and Keep Them Accountable
Everyone plays a role in preventing waste and keeping counts accurate, from front-of-house staff to dishwashers.
Make sure your team knows where inventory is stored, how to rotate stock using FIFO, how to label and date items, who logs deliveries and how, and what to do if something’s missing or spoiled.
Assign inventory duties to a few trusted team members and give them tools to succeed. Make it part of their regular responsibilities and tie it to performance reviews or incentives if needed.
Also, empower staff to report waste or theft. A “no blame” culture encourages honesty and reduces long-term losses.
Use Your Sales Data
What’s your top-selling item? What ingredients go into it? How fast are you running through them? If your POS system tracks sales in real-time, you can match usage trends to your inventory system. This is huge for forecasting.
Sales-integrated inventory can help predict what you’ll need for next week, avoid waste by adjusting orders to actual usage, and spot theft or shrinkage when inventory and sales don’t align.
If you’re not using a POS system with reporting, even tracking bestsellers in a spreadsheet can help shape your ordering habits.
Audit Occasionally
A monthly or quarterly audit helps you confirm your system is accurate, identify chronic shortages or overages, check for theft or food waste, and realign par levels based on real-time data.
How to run an audit:
- Compare physical counts to what your system says you should have.
- Note any variances and investigate recurring discrepancies.
- Adjust par levels or training as needed.
You don’t need to do full audits constantly. Spot checks on high-cost items (like meat or liquor) can be just as effective.
Restaurant inventory management doesn’t need to be overly complicated. The key is consistency. Use a system that fits your size, count regularly, keep things organized and your staff trained, and rely on data to guide your decisions.
Start with just one improvement, like organizing your walk-in or doing your first true inventory count, and build from there. You’ll save time, reduce waste, and gain better control of your business in the process.
