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Having a firm grip on your restaurant inventory gives you a better overall picture of your restaurant’s health. However, finding the time to work on inventory each day can feel overwhelming. Below are some restaurant inventory best practices to help you get more organized and streamlined with your inventory-taking process, plus a food inventory template you can download and start using today.

What is Restaurant Inventory Management?

Restaurant inventory management is the process of tracking, updating, and monitoring your inventory. The process of managing your inventory is an essential element in maintaining the right balance of everything necessary to make your restaurant run, from food ingredients to bottles of liquor and everything in between—it’s your restaurant inventory list that lets you know what your numbers are and signals when a new order has to be made and when. Restaurant inventory management is also a loss prevention tool; when you have a firm grasp on items in versus items out, internal theft becomes much easier to spot and address.

Just like any other retail store or business, your restaurant inventory is a detailed list of all of the goods, property, and assets associated with your restaurant. While it’s smart to track everything, most restaurants track the food and beverage items that fluctuate weekly based on consumption. More specifically, restaurant inventory centers on any and all supplies that come into your restaurant through orders, everything that goes out from your kitchen or from behind your bar, and what’s left over afterward.

restaurant inventory reporting

For those just getting started with inventory management, there are a few terms used in the process that you’ll want to understand before going forward. 

  • Sitting inventory. This is the amount of goods you have inside your restaurant. The key is to track everything consistently. You can either track items by the amount of inventory you have or the dollar amount attributed to those items. There’s no set right or wrong way, just be sure to keep it the same across the board.
  • Depletion. The amount of product or dollars (again, depending on how you track your usage) that is used up across a certain period of time. Depletion can be calculated on a variety of time scales and compared to daily, weekly, or monthly sales reports.
  • Usage. Now we’re getting into a bit of math. Usage tells you how long the products you have in-house (your sitting inventory) will last. You calculate it by dividing your sitting inventory by its average depletion time.
  • Variance. This is the amount of cost associated with an item that is unaccounted for—it’s the difference between product cost and the usage amount cost. For example, if your inventory reflects $200 worth of vodka, but at the end of the day your POS system tells you that you sold $190 worth of vodka, then $10 worth of vodka is unaccounted for and that’s your variance.

The thing about restaurant inventories is that they can be as simple or complex as you want them to be. Even if you’re staying on the simple side of things, as long as you have these four elements covered in your restaurant inventory list, you’ll be good to go.

How Restaurant Inventory Management Saves Money

Having a firm grip on your cost of goods sold (CoGS) by taking inventory means you get a clearer picture of your restaurant’s health. But regular restaurant inventory management is more than just about taking a count – your CoGS calculation gives you exact numbers. Restaurant inventory management helps you plan your budget and food spend by showing you how much is being used and how quickly. Regular inventory is the most accurate way to get a picture of your restaurant’s health.

5 Restaurant Inventory Best Practices 

1. Take restaurant inventory as frequently as possible, on a regular schedule

Some items need to be tracked daily (raw oysters, delicate herbs), while others can be done weekly (sturdy produce, beef), or even monthly (paper goods). When you pick the same day(s) of the week to track your restaurant inventory, you’re more likely to understand the norms of your restaurant and you can better plan for seasonal highs and lows as well.

Keep a restaurant inventory schedule that works for you. If you have more energy and hands before opening, take inventory each morning. If you are a night owl, do it after closing. Many restaurateurs think it is alright to take inventory while on the clock, but this can be ineffective since delivery times vary so much from day-to-day.

2. Perform quality control on all incoming stock

Before signing for a shipment, check that all your meat, produce, dairy, and other items are all up to your standards. This aspect of restaurant inventory takes some extra time at the dock, but is well worth it to avoid the hassle of returning and getting a refund for unsatisfactory items later.

paycheck protection program restaurants

3. Keep as little inventory on hand as possible

The less restaurant inventory you are holding, the lower your risk for food (and monetary) waste. Taking the extra time to plan ahead and estimate your needs as accurately as possible will help reduce this risk. It can be tempting to buy in bulk and save money but save that for non-perishable items like rice or salt, or items you use with high frequency. 

4. Utilize the “First in, First out” (FIFO) method

When your restaurant inventory arrives, don’t just toss it on the shelf in front of the older items. Label the new stock with today’s date and place it in the walk-in behind the older items. Make sure your staff is aware of this system and using items in the proper order.

5. Keep organized records

Use count sheets or templates to keep track of your restaurant inventory. This is good not only while taking inventory, but also as a log to look back and build off of in the future. If you spend just a few more minutes keeping up with an organized inventory process, you will save time and money in the long run.

Food Inventory Template and Guide

Whether you’re a restaurant inventory management pro or it’s your first go at figuring out this process, Upserve has put together your step by step guide on how to manage your inventory accurately

Inside, you’ll find:

  • An overview of what restaurant inventory looks like
  • An in-depth explanation of how to manage your restaurant inventory
  • A downloadable restaurant inventory template you can use today

Use this guide to understand the process for good restaurant inventory management. And use this template to keep track of your restaurant inventory, track your CoGS, and more. Then, you can review to see where you have variances, make menu decisions, sales and expense adjustments, and have a better command of your financial wellness.

restaurant inventory spreadsheet template

Food cost is one of the largest expenses for the restaurant, and one of the most overlooked areas for improvement and control.

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Written by   |  
Stephanie is a Providence, RI native and eight-year food industry veteran. As Upserve's Content Marketing Coordinator she creates materials that help restaurateurs, managers, and service professionals succeed. When she's not writing, Stephanie is most likely traveling, cooking, or trying new restaurants.