As you are well aware, restaurant inventory management is a crucial aspect of running a successful business. It involves tracking the flow of food from suppliers to your kitchen and ensuring no resources are going to waste.
By maintaining accurate information about your supplies, you can better plan your purchases, minimize food waste, and optimize your menu offerings.
When it comes to creating a kick-ass restaurant inventory program, software like MarketMan Inventory and Bar Patrol Inventory can make a world of difference (yes, I am associated with both of these systems and I am biased for good reason, just to be perfectly transparent).
These systems offer detailed inventory tracking down to the ingredient level while seamlessly tying data to recipe creation, food costing, and purchasing tasks to help you stay organized and efficient.
With the right restaurant inventory management software by your side, you’ll be able to start systemizing and streamlining your operations, while making a lot more money.
So, let’s dive right in, explore your options, and grab your inventory by throat today, because efficient inventory management will ultimately lead to a more profitable and thriving business.
What Is Inventory Management Exactly?
Just in case you’re naive as a farmer in New York, inventory management is the process of tracking and controlling a company’s inventory of goods and materials.
For bars and restaurants, inventory management includes monitoring the physical items required to provide service to customers, such as food, dry goods, spices, liquor and beverages, cooking equipment, linens, and worker uniforms.
Got it? Good.
Understanding Restaurant Inventory Management
Definition of Key Terms
Inventory management is a crucial aspect of any restaurant operation. To better understand the elements of inventory, it is essential to be familiar with some standard terms used by industry experts.
Sitting inventory
Sitting inventory refers to the amount of inventory that a restaurant has on hand at any given time. This includes all the food, beverages, supplies, and equipment that are sitting in the restaurant’s storage areas. To calculate sitting inventory, restaurant owners and managers must take a physical inventory count and record the quantity and value of each item.
Depletion
Depletion refers to the amount of inventory that has been used or sold during a specific period of time. For example, if a restaurant uses 50 pounds of flour in a week, the depletion for flour would be 50 pounds. Depletion is important to track because it can help restaurant owners and managers identify trends in usage and adjust their inventory levels accordingly.
Usage
Usage refers to the amount of inventory that is used or sold during a specific period of time, such as a day, week, or month. Usage can be calculated by subtracting the ending inventory count from the beginning inventory count and adding any inventory purchases during the period. For example, if a restaurant starts the week with 100 pounds of chicken, purchases 50 pounds during the week, and ends the week with 80 pounds, the usage for chicken would be 70 pounds (100 + 50 – 80).
Variance
Variance refers to the difference between the actual inventory count and the expected inventory count. Variance can be caused by a variety of factors, such as theft, spoilage, or inaccurate record-keeping. To calculate variance, restaurant owners and managers must take a physical inventory count and compare it to the expected inventory count based on usage and depletion.
Yield
Yield refers to the amount of usable product that is obtained from a raw ingredient or product. For example, if a restaurant purchases a 10-pound case of tomatoes and yields 8 pounds of usable product after trimming and discarding waste, the yield for tomatoes would be 80%. Yield is important to track because it can help restaurant owners and managers calculate recipe costs and adjust their inventory levels accordingly
Why Should Restaurants Care About Inventory Management?
Effective inventory management is crucial for restaurants to ensure they have enough stock to serve all customers while avoiding spoilage and loss. Proper inventory management can help restaurants decrease food waste and loss, work with vendors, decrease the overall cost of goods, increase profits, and keep customers happy.
In addition, by viewing inventory system analytics, you can pinpoint exactly where your losses are going, as well as areas where you can increase your profits.
Inventory Management Benefits for Restaurants
Inventory management provides several benefits for restaurants:
- Less food loss: Up to 10% of food purchased by restaurants is wasted before it even reaches the consumer. Restaurants often buy too much food at a time, which ends up spoiling before being served to customers. Effective food inventory management can minimize that loss and reduce waste.
- Lower cost of goods: Food costs generally make up 28% to 35% of total costs for a restaurant. When food is lost or spoils, this percentage increases, leading to higher costs. Effective inventory management can help restaurants reduce food waste and spoilage, which in turn lowers the cost of goods sold and ultimately increases profits.
- Better vendor management: Restaurants can use inventory management to closely track their food and purchases, allowing them to better manage purchases and payments to vendors. This can help restaurants negotiate better prices and payment terms with vendors.
- Automatic inventory supply: Inventory management provides insights into a restaurant’s supply levels and creates automatic processes that replenish food supplies to the appropriate amounts. This not only avoids waste but also ensures that the restaurant always has enough ingredients on hand to prepare all menu items.
- More satisfied customers: Effective inventory management can help restaurants develop repeat customers and keep them happy by ensuring that ingredients for all menu items are always available.
- Increased profits: The total cost of goods sold is a major component that determines net profits. Effective inventory management decreases waste, which lowers the cost of goods sold and ultimately increases profits.
- Improved decision-making: With a clear understanding of your inventory, you can make more informed decisions regarding menu planning, pricing, and procurement, all of which contribute to the overall success of your restaurant.
When you manage your inventory effectively, using tools like MarketMan Inventory and Bar Patrol Inventory, you set yourself up for success in the competitive restaurant industry. Remember, a casual approach to inventory management can make all the difference in your operational efficiency and bottom line.
What is the Difference Between Food Inventory and Bar Inventory?
When it comes to inventory management in a restaurant or bar, counting and controlling food inventory is different from bar inventory.
Food inventory involves keeping track of the amount of food items in stock, checking expiration dates, and ensuring that there is enough inventory to meet customer demand. Simply the sheer volume and different types of items that need counting make food inventory a beast.
Bar inventory, on the other hand, involves keeping track of the amount of alcohol and other beverages in stock, checking pour sizes and waste, and ensuring that there is enough inventory to meet customer demand. Bar inventory is typically predictable because it mainly consists of four main items: beer, liquor, wine and non-alcoholic beverages.
Because of this, many bars and restaurants will use two different inventory systems to count their bar and food inventory. More on that below.
Software for Restaurant Inventory Management
Benefits of Using Restaurant Management Software
Using inventory management software can greatly improve your restaurant’s efficiency and profitability. For starters, it helps automate inventory tasks, such as performing inventory counts, updating food inventories as menu items are sold, and reordering ingredients when supplies are low. This not only saves you time but also reduces the risk of human error.
Additionally, these tools can help you maintain accurate inventory information, track suppliers and recipes, and digitize purchasing records such as invoices and receipts. This makes bookkeeping and forecasting much easier. By cutting down on food waste and keeping better track of food costs, you can ultimately save money and minimize losses.
Best Restaurant Inventory Management Systems
Here are some top inventory management software options you should consider for your restaurant. One specializes in food while the other specializes on the bar side of things. However, both systems are capable of counting both bar and food inventory.
MarketMan: I have recently partnered with MarketMan because of its powerful restaurant inventory software that has produced remarkable results. MarketMan is a cloud-based inventory management software suitable for restaurants and hospitality operations of all sizes. The platform is especially helpful for food and can help you get your food costs under control and streamline your back-of-house operations, thanks to its user-friendly interface. Simply put, MarketMan is a robust restaurant inventory program. For a free demo, click here.
Bar Patrol: On the bar side of things we have Bar Patrol which is a bar inventory management app and software system designed specifically for bars and restaurants. The app uses a Bluetooth scale for precision accuracy and allows users to count inventory on multiple devices for fast results. The app helps bars and restaurants manage their liquor inventory, monitor their pours, and track purchases to increase profits. With the app’s deep insights and analytics, bars can identify areas where they can improve their operations and reduce costs. Overall, the Bar Patrol Inventory App provides a powerful and affordable solution for managing bar inventory and increasing profits. Click here to see how it works.
Remember, choosing the right inventory management software for your restaurant depends on your specific needs and preferences. Explore different options and select the one that best fits your operation and budget. By doing so, you’ll be able to reap the benefits of better organization and cost control in your restaurant.
Implementing Inventory Management
Choosing the Right System
When it comes to inventory management, selecting the right system can make all the difference. Look for a system that fits your restaurant’s needs and is user-friendly.
As you consider options, take into account your restaurant’s size, unique requirements, and budget. Additionally, prioritize systems that enable you to track raw materials, monitor dish performance, and keep a close eye on your vendors’ pricing changes.
Training Staff
After choosing the perfect inventory management system for your restaurant, it is crucial to provide proper training to your staff. Start by assembling a dedicated team responsible for managing inventory. This team should consist of both management and employees who handle inventory on a daily basis, like chefs and bartenders. From there:
- Create step-by-step instruction manuals or training materials that cater to different learning styles (visual, auditory, kinesthetic).
- Hold hands-on training sessions, allowing your team to familiarize themselves with the software.
- Provide real-time feedback and support during the initial implementation phase and as needed.
- Encourage regular communication and collaboration within your inventory-focused team.
With the right inventory management system in place and trained staff, you’ll notice a positive impact on your restaurant’s efficiency, cost control, and overall profitability.
Tips and Best Practices
To help manage inventory more effectively, there are several best practices that restaurants can implement. Here are eight of them:
- Organize inventory: Putting labels on shelving can help staff find items quickly and make restocking easier. Restaurants should identify the most-used goods and keep them in the same, easily accessible spot.
- Keep stock levels as low as possible: Using an inventory management system can help keep just enough stock to satisfy customers without spoiling or taking up unnecessary space. This can free up space for more equipment or even more tables for customers.
- Monitor the sell-through rate: Tracking how much of a specific item is sold during a given period can help restaurants adjust their inventory levels. Restaurants should track their sell-through rate for different items and groupings of items, such as meat, bread, beer, etc.
- Track all inventory: Restaurants should track every item they use, from food items to napkins and staff uniforms. The frequency of inventory counts will vary depending on the type of item.
- Safeguard against mistakes: To avoid inventory mistakes, restaurants can consider putting two employees in charge of inventory and having them check each other’s work. They should also create an inventory sheet that corresponds to where things are stored onsite for easier counting.
- Employee accountability: Training employees on how inventory is tracked can help create a culture of accountability. If a restaurant uses a POS system, managers can be given permissions for employee activity and inventory reports.
- Automate reordering: Inventory management systems can help restaurants set automatic reordering for when stock or supplies reach a certain level.
- Use technology to forecast demand: Using a POS or inventory management software can help restaurants forecast demand based on previous trends, seasonality, and other preset conditions.
By implementing these best practices, restaurants can better manage their inventory and reduce waste, leading to increased profits.
How to Get the Most From Your Inventory Management System
Regular Auditing
One of the most important practices in restaurant inventory management is conducting regular audits. Keeping a consistent schedule for inventory checks, whether weekly or monthly, helps to ensure the accuracy of your records. You can do this by tracking the amount of product used and comparing it to your sales data. This way, you’ll be able to identify any discrepancies or opportunities for improvement.
When using tools like MarketMan Inventory and Bar Patrol Inventory, you’ll find that regular auditing becomes a much more straightforward process. These systems offer features like real-time tracking, easy-to-read reports, and simplified stocktaking, making it easier for you to maintain an accurate account of your restaurant’s inventory.
Utilize Data
Harnessing the power of data is essential for optimizing your inventory management process. A solid data-driven approach allows you to identify trends in sales and product usage, enabling you to make more informed purchasing decisions. This ultimately helps reduce waste, lower costs, and increase profits.
With platforms such as MarketMan Inventory and Bar Patrol Inventory, you can:
- Access detailed analytics to monitor ingredient costs and usage
- Receive inventory alerts for low-stock items
- Automate processes to increase efficiency in managing inventory
- Forecast sales accurately to avoid over or understocking
By incorporating these tips and best practices into your restaurant’s inventory management strategy, you’ll be on your way to a more streamlined and profitable operation. Remember, regular auditing and utilizing data are key elements for keeping your inventory in check and setting your restaurant up for success.
Overcoming Restaurant Inventory Management Challenges
Reducing Food Waste
One crucial aspect of restaurant inventory management is reducing food waste. To accomplish this, it’s essential to keep a close eye on your stock and make informed decisions regarding food purchases. Consider implementing a first-in, first-out (FIFO) system, which ensures that older products are used before their expiration dates. Regularly track inventory levels to prevent over-purchasing and spoilage.
Digital tools like MarketMan Inventory can help you efficiently track and manage your inventory, prevent waste, and save money. This software offers real-time inventory tracking, cost control, and order automation features, enabling you to manage your restaurant inventory with less hassle.
Managing Supply Costs
Another challenge in restaurant inventory management is managing supply costs. The cost of ingredients and supplies can quickly add up, so it’s important to find ways to optimize expenses without compromising on quality. Here are a few suggestions:
- Negotiate with suppliers for better prices or volume discounts.
- Regularly evaluate and compare supplier offerings to make sure you’re getting the best value.
- Invest in eco-friendly alternatives, like reusable or biodegradable packaging, to save on disposal costs.
Using a solution like Bar Patrol Inventory Management can be beneficial as it focuses on managing costs and inventory specifically for bars and restaurants. This platform helps you track and minimize liquor costs in real-time, optimize ordering quantities, and keep an eye on usage trends.
The Future of Restaurant Inventory Management
Tech Innovations
In the coming years, restaurant inventory management is expected to undergo significant transformations, thanks to technological innovations. These platforms offer cutting-edge solutions, helping you streamline your inventory processes, reduce waste, and save time. Additionally, they provide real-time data tracking and helpful analytics that will enable you to make informed decisions for your business.
Another noteworthy tech innovation is the increasing adoption of cloud-based inventory management systems. These systems allow for seamless integration with your restaurant’s existing software, making it easier to manage inventory, menu planning, and ordering.
Sustainability
Sustainability is becoming an essential aspect of the modern restaurant industry. By focusing on sustainable practices in your inventory management, you can reduce food waste and promote eco-friendliness.
A few ways to implement sustainability in your inventory management include:
- Regularly monitoring inventory levels to avoid overstocking perishable items
- Using inventory tracking software to identify patterns in waste and inefficiencies
- Sourcing ingredients from local and organic suppliers, when possible
By incorporating tech innovations and sustainability into your restaurant inventory management, you’ll be well-prepared for the future of the industry. Remember to stay informed about new developments and continue adjusting your practices to ensure your restaurant stays ahead of the curve.
Frequently Asked Questions
How do restaurants efficiently track food inventory?
To efficiently track food inventory, restaurants can follow a systematized inventory management process including regular inventory counts, setting up alert systems, and tracking inventory levels in real-time. Implementing inventory management software like MarketMan Inventory and Bar Patrol Inventory can help streamline this process as they offer inventory tracking, analytics, and reporting capabilities tailored for restaurants.
What are some effective techniques for food stock control?
Some effective techniques for food stock control include:
- Implementing a first-in, first-out (FIFO) method to minimize wastage due to expiration.
- Monitoring food storage conditions for optimal shelf life.
- Strategically planning menu items based on in-stock ingredients.
- Training staff to accurately measure or weigh portions.
- Regularly evaluating supplier performance to ensure consistent quality and timely deliveries.
What is the best restaurant inventory management software available?
There are several top inventory management software options available. Listed below are the top 5 in our humble opinion. Each of these platforms offer features tailored to the unique needs of the foodservice industry, such as real-time tracking, supplier management, and customizable reports.
What is the ideal amount of food inventory for a restaurant to carry?
The ideal amount of food inventory for a restaurant depends on various factors, such as the size of the establishment, menu offerings, and customer traffic. It’s important to strike a balance between having enough stock to meet customer demand and avoiding excess inventory that may lead to spoilage and waste. Regularly reviewing and adjusting inventory levels based on sales data and trends can help achieve this balance.
What are the key stages of the inventory management process?
The key stages of the inventory management process are:
- Counting: Regular inventory counts and monitoring usage to detect any discrepancies or losses.
- Ordering: Ensuring that you have enough stock to meet customer demand while minimizing waste and storage costs.
- Receiving: Accurately recording and verifying the quality and quantity of delivered items from suppliers.
- Storing: Proper organization and storage of inventory to maintain product quality and shelf life.
- Analyzing: Evaluating inventory data to identify trends, adjust stock levels, and optimize costs.