Restaurateurs & restaurant managers understand the challenges associated with inventory management. Restaurant Inventory management aims to hold resources at the lowest possible cost while ensuring uninterrupted supplies for ongoing operations. Restaurants need a system with which they can understand & analyze the consumption rate of inventory and improve their operations.
Restaurant inventory includes all the items or raw materials required to prepare dishes. Restaurant inventory management helps you understand and analyze your consumption rate to improve your restaurant operations and save costs.
Importance of Proper Restaurant Inventory Management
Inventory management the right way for your restaurant offers multiple benefits! Here are some of them!
- According to research, up to 10% of raw-material gets wasted before it reaches consumers. Managing your inventory well can save you from buying extra stock and reduce food wastage
- Buying food occupies a significant chunk of your restaurant cost. If you can reduce food waste and use it on time by managing your inventory correctly, you can reduce your food cost
- Once you have a hold on your food wastage, track their expiry and use them timely, it will help you manage your vendor better
- And all this will lead increase efficient & planned usage of resources which will reduce cost & higher profits!
How to Take Restaurant Inventory?
Generally, restaurants take inventory once a week. Depending on your output & consumption rate, you can consider taking it more frequently.
Start by counting everything. Take physical inventory of edible ingredients, cleaning supplies, dinnerware etc. It is recommended to assign two separate staff members the task of taking inventory separately so that any potential errors can be highlighted.
You can also create printed inventory sheets that can be easily checked & cross-checked.
- Type of Item, here, you list the type of item you are taking inventory of. For instance, bread, tomatoes etc. Typically, your inventory table can have the following rows:
- The unit of measurement could be the number of bread packets you buy, while in the case of tomatoes, it could be kgs of tomatoes. Keep the unit of measurement consistent to avoid any miscalculations
- Inventory amount, list how many packets of bread you have here
- Unit cost, divide the price of one unit of a particular item (a packet of bread) by the number of total units (packets here) you have
- For total cost, multiply the unit cost of each item by the amount of that item you have in your inventory. For example, if the unit cost of a packet of bread is INR 20, and you have ten packets of bread in your stock, your total cost is INR 200
To understand how to calculate the cost of your kitchen inventory, read our blog here.
5 Pointers For Better Restaurant Inventory Management
Restaurant inventory management takes enormous time and energy. However, your inventory cost reduces manifold if you develop a reliable procedure. Follow these tips to help manage your inventory better.
1. Accessible, Organized, Standard
It is critical to keep your inventory accessible, adequately organized and streamlined.
- There needs to be a precisely assigned place for all the items, kept with uniform labelling in a standardized & sanitized storing place
- Organized and clean storage space will make it extremely easy to manage your inventory. Make your storage standardized and accessible for your staff
- The process of taking inventory should be standardized
- It can be time-consuming to take inventory manually on an inventory sheet regularly. You can use an efficient POS system to make it easier for your staff
2. Recipe Standardisations
Recipe standardisation means developing a standard recipe for the food dishes you offer in your restaurant (with specific instructions and ingredient details) to maintain consistency, taste, and better control your inventory.
- Recipe standardisation helps you narrow down the exact ingredients required for each food dish you serve. Thus, helping you keep a better track of your inventory
- It saves costs and prevents over-ordering and under-ordering ingredients. While overstocking can lead to high food wastage, understocking can cause random unavailability of items
- You can input your recipe in your POS system to assess the usage of raw materials and reach the perfect amount of ingredients you need to order. That way you won’t even have to worry about stockouts! The POS system will automatically alert you once the stock goes below the set line
- By standardizing your recipes, you can analyze the exact cost of each recipe based on the precise amount and price of each ingredient. Based on this data, you can set your selling price
3. Consistent Staff and Schedule
When you regularly count and assess your inventory, it’s best to make a consistent weekly schedule and assign the same staff.
- Designate specific people in the staff to take inventory. This way, there will be fewer inconsistencies, and they will have a better hold on your stock and inventory-taking procedure with time
- Train your staff throughout the entire process, including teaching them your inventory process, technical terminologies, and the POS system
- Creating a consistent schedule will help you accurately know how your ingredients are sold and used, making it easier to notice consumption patterns
- Make your staff cross-check the inventory count regularly or every now & then to avoid counting mistakes
4. Managing Raw Materials
It is crucial to wisely manage your raw materials to avoid or limit any food wastage.
- Keep a minimal stocking approach, especially in the case of perishables
- The First In, First Out (FIFO) method is the most effective way to manage your raw materials, as it ensures that older stock is used first
- Keep a separate sheet to track food wastage as you follow your inventory, with a column describing the reason for such waste. It will give you an idea of areas you can improve and save costs. You can circulate this sheet among your kitchen staff. They are the ones who would help you reduce your food wastage
- Each item in your inventory has a specified shelf life. Specify the time until each item can be stored and used before spoiling in your inventory sheet
- If you have surplus ingredients, try incorporating them into your existing dishes or come with special offers to avoid wastage
5. Important Terms and Concepts For Inventory Management
- Depletion means the amount of inventory used over a period of time. You can either write it in monetary value or physical amount
- Variance is the difference between your product’s cost and the usage amount’s cost. For instance, you sold sandwiches worth bread costing INR 140, but your POS system is reporting you sold sandwiches worth INR 120. Your variance is INR 20, 20/140, or around 14%
- Yield is the ratio of the amount of product your POS reports as sold compared to the amount used. Using the above example, your yield is 120/140, or around 85%
- Usage refers to how long you can use a product before repurchasing it. For example, you initially buy ten packets of bread and use two in one day; then, you have five days of usage
- Par Inventory Sheets have a set level of items managers want in their kitchen and help restaurants figure out what and how much of an item should be ordered based on their existing inventory
If you are looking to free yourself of all these inventory-management hassles, then you can always switch to the Petpooja inventory management system. The POS is designed to understand all your inventory needs!
Get more than 10 different reports on inventory consumption, item-wise consumption, online order reports, & variance reports. The system will alert you about stockouts & guess what? You can place inventory purchase orders right from the POS system! Click here to know more!
We hope this blog helps you better manage your inventory and save costs. For regular restaurant-related updates, subscribe to our newsletter and follow us on Instagram!