When your customers walk into your restaurant, they see the best of the best—hand-crafted cocktails, unique appetizers, beautifully-plated entrees, and delectable desserts. What they don’t see is all of the hard work that gets the food and drinks on the table, including hours of brainstorming menu ideas, ordering food and drink items from suppliers, setting your mise en place and finally cooking and plating a meal. They see the end result on their plates, tasting the fruits of your labor within minutes of the plate leaving the kitchen.
Behind the curtain, restaurant managers, chefs and bartenders face many obstacles that stand in the way of success. Inventory management is one of them. As one of the biggest challenges for managers, the taboo subject is something we’re bringing to the forefront of our conversations about the restaurant industry.
Inventory management can make or break a restaurant—and we’re here to help.
What is Inventory Management?
Inventory management is how you measure how profitable your restaurant is, by knowing:
- What supplies come into your restaurant
- What goes out of your kitchen
- What’s left over in the back of the house and its value (aka $$$)
Sounds simple enough, right? Not for everyone. Food cost makes up 28 to 35 percent of your gross sales, and 60 percent of restaurant operators say food costs are a significant challenge to their business.
The State of Inventory Management
With endless items to count, scattered suppliers and management platforms isolated from your restaurant POS system, inventory management is often a manual and disconnected process done by multiple people in a business. This results in missed communication, human error and, most importantly, a lack of accurate inventory data. When this issue is magnified with hundreds or thousands of food and beverage ingredients in your restaurant, it could make a mess behind the scenes.
Most restaurants order from upwards of 15 suppliers, and if you’re not using inventory management software, you’re likely placing your orders in 15 different places, too. With a huge disconnect between the ordering process and POS system, how do restaurants get the data necessary to make informed decisions? Unfortunately, many don’t. Because of techniques like using a pen and paper or an Excel spreadsheet, hours are taken out of the busy days of those responsible for keeping track of inventory.
There’s a better way to do this, and it’s with an inventory management system that integrates with your POS system. As items sell, inventory is updated in real time and you know the cost of your food at the end of each day without any manual labor on your end.
Food cost is one of the largest expenses for the restaurant, and one of the most overlooked areas for improvement and control.Get The Guide
Restaurant Inventory Management Tips
In addition to using a product like Upserve Inventory to manage your inventory efficiently, we have four tips to help you manage your inventory like that boss that you are.
1. Get Organized
Take a close look at all of your storage spaces—your meat cooler, produce cooler, dairy, dry storage, prep area, liquor—and be sure that you’re using FIFO. First In, First Out is a process where you use the ingredients you receive first, constantly moving them to the front of your shelves. This leaves room in the back for new inventory.Get your team organized, too, by teaching line cooks and other BOH staff to make notes of spillage, errors or rotten food, so that you have an accurate wastage report at the end of the night.
2. Start Counting
By designating a specific day of the week to count inventory, you’ll set yourself up for success on delivery day. Counting inventory the day before your deliveries will give you the most accurate information for the inventory you currently have and reduces the risk of mixing up your current and received products. It’s also effective to practice shelf-to-sheet counting—count what you have based on what’s actually on the shelf, not by what you have listed on your paper or spreadsheet.
Consistent and proper counting will show you your actual versus theoretical inventory, so you actually know how you’re using the food you paid for. Is it being plated or wasted?
3. Track Pricing
You know what inventory you have and what you’ve used, but what about the cost? Using prices on your most recent invoice will help you track pricing from your suppliers, since we all know pricing can change from week to week or season to season. You need to know the most accurate prices to know how much food is costing you, so keep track of your invoices and use them as leverage in future conversations with suppliers. Utilize all of your data to prove how much you’ve spent over the years to negotiate better pricing or other perks, like first pick at the fresh produce.
4. Calculate Your COGS
Now that you know your stock and your pricing, you can figure out your actual food cost. In case you’re not quite sold on why this is important—you need to know how much of your budget went to food cost for the day, week and month. How much are specific ingredients costing you? Is Himalayan salt getting a little too pricey? Do you need to adjust its quantities in your menu items or maybe stop buying it all together? How much are your specific suppliers costing you? Can you review them and negotiate better terms?
The most important piece to managing your inventory efficiently is to be in the know. Know what is on your shelves, know how much items cost and know what you need to have on hand at all times. By combining our best practices, using a smart inventory management system that integrates with your POS and leveraging your restaurant’s data to make informed decisions on the fly, you can become an inventory boss in no time.